(Australian Associated Press)
Australia will continue to ship more resources into global markets over the next two years as a ramp-up in liquefied natural gas exports offsets flattening growth in iron ore and coal.
Total resources export volumes, which are now dominated by iron ore and coal, are expected to increase by eight per cent in 2017/18 and another five per cent in 2018/19, according to the federal budget papers.
Most of the gains will come from gas exports, as under-construction LNG processing capacity comes onstream, and LNG could overtake coal as the country’s second-largest export earner next year.
Australia is set to overtake Qatar as the world’s largest LNG exporter in 2018, on the back of the rising shipments from the three massive export-focused LNG plants in Queensland, but the government has put pressure on the industry to boost domestic supplies to lower local prices.
The sharp rebound in prices for traditional revenue earners iron ore and coal is forecast to ease over the next few quarters, budget estimates show.
“Given commodity prices continue to be volatile, we have maintained conservative assumptions,” Treasurer Scott Morrison said.
Treasury expects iron ore prices to hover at $US66 a tonne – around current levels, until the December 2017 quarter. Thereafter, it is expected to slip to $US55 a tonne in the March 2018 quarter.
Prices for metallurgical coal are likely to average $US200 a tonne until the December 2017 quarter, before dropping to $US120 a tonne in the March 2018 quarter.
Still, the economy has benefited from the sharp rebound in iron ore and coal prices since mid-2016, with Australia’s terms of trade expected to jump 16.5 per cent in 2016/17 financial year, compared to a 10.2 per cent fall in the previous year.
Higher-than-expected commodity prices since December’s MYEFO forecast are alone expected to yield additional revenue of $18.8 billion over four years, the budget papers show.
Meanwhile, mining investment is forecast to decline 21 per cent in 2017/18 and a further 12 per cent in 2018/19, mostly on account of completion of major mining and LNG projects.