Mining, energy exports to tumble from record levels

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The department, in its June Resources and Energy Quarterly, predicted that after an 11-year growth period, the downturn is likely to be “larger than assumed” in the March 2020 quarterly report.

This fall is due to the coronavirus pandemic, which has caused uncertainty for many commodities and businesses, while also slowing investment.

The impact is varying across commodities, with gold set to be a strong performer with export earnings set to reach a record of $32 billion in 2020-21.

This follows seven-year high prices of $US1700 ($2477) for the precious metal in mid-April.

Australian iron ore experts are still on track to top $100 billion for 2019-20, with coronavirus having cut Brazilian supply, pushing prices to a steady range of $US81-$US104 since March.

In contrast, coal, oil and liquefied natural gas (LNG) have experienced sharp price falls due to the coronavirus, so the Department of Industry, Science, Energy and Resources expects these commodities to be hit harder.

With decreased demand from Asia and an impact on steel production on key exporter India due to a nationwide lockdown, Australia’s hard coking coal prices are forecast to average at $US126 a tonne during 2020, down from $US179 a tonne in 2019.

While commodity exports are expected to fall, the Department of Industry, Science, Energy and Resources is confident the sector will remain a strong earner for Australia.

“Our previous forecast was for commodity earnings to reach $299 billion in 2019-20 and then fall modestly,” the department stated.

“In this edition, we estimate Australia earnt a record $293 billion in 2019-20 and forecast exports of about $263 billion in 2020-21 and $255 billion in 2021-22.

“To give better context; $263 billion is still the third largest resource and energy export figure in Australian history and $263 billion is the third highest.”

While the resources and energy sector has been resilient amid the pandemic, the department has based its forecast on the “significant risks” of a second outbreak of the virus, another surge in trade tensions or an unexpectedly slow global recovery.