Mixed News On Minerals Exports, Output

By Glenn Dyer | More Articles by Glenn Dyer

Australia’s export earnings from energy and mineral resources rose 10% a record $47.3 billion in the December quarter of last year, but that was more due to the sharp fall in the value of the Australian dollar.

While export earnings for iron ore and coking and thermal coal were high, it was a 24% depreciation in the Aussie dollar that provided most of the benefits.

Production figures for the quarter also showed the global slump having an impact on output of nickel, manganese, iron ore and copper.

According to Abare, the Australian Bureau of Agricultural and Resource Economics, the record earnings "reflected high contract prices for bulk commodities, coupled with a depreciation of the Australian dollar."

Abare’s head, Phillip Glyde said the recent collapse in commodity prices had been offset by a 24% depreciation of the Australian dollar, increased export volumes of some commodities and record iron ore and coal contract prices which would not be reset until next month.

Abare said "The index of export prices of Australian energy and mineral resources increased by 15 per cent in the December quarter.

"The energy export price index increased by 21 per cent and prices for metals and related minerals increased by 11 per cent. The increase in prices is largely a result of the depreciation of the Australian dollar."

"The positive effect on export unit returns from the depreciation of the Australian dollar, resulted in substantial increases for metallurgical coal (34%) and thermal coal (41%).

"The index for metals and other minerals prices increased by nearly 11%, supported by an 18% increase in export unit value for iron ore.

"Compared with the December quarter 2007, the index of export prices for energy and mineral resources was 8% higher, as prices for energy minerals increased by 136% and prices for metals and other minerals increased by 39%. 

"An important driver of increased export unit returns was significant increases in bulk commodity contract prices, such as iron ore and coal."

Export volumes were higher for many commodities including nickel, liquefied natural gas (LNG), thermal coal, diamonds and alumina.

Abare said that commodities which recorded significant increases in export earnings in the December quarter included: uranium oxide, up $98 million (66 per cent) to $246 million; nickel, up $174 million (63 per cent) to $452 million; liquefied natural gas (LNG), up $1.3 billion (61 per cent) to $3.4 billion; thermal coal, up $2.0 billion (52 per cent) to $5.7 billion; diamonds, up $53 million (48 per cent) to $163 million; and alumina, up $458 million (30 per cent) to $2 billion.

Commodities which recorded large declines in export earnings in the September quarter included: manganese ore and concentrate, down $475 million (66 per cent) to $243 million; bauxite, down $16 million (22 per cent) to $58 million; zinc, down $123 million (20 per cent) to $504 million; refined petroleum products, down $17 million (8 per cent) to $184 million; copper, down $116 million (6 per cent) to $1.7 billion; and iron ore and pellets, down $440 million (5 per cent) to $9.1 billion.

Abare commented: "Lower export values for manganese, bauxite and iron ore were affected by lower export volumes, which more than offset export unit value increases. Zinc, refined petroleum and copper export values declined during the quarter because of a significant fall in world prices."

Production of Australia’s major mineral and energy commodities was mixed during the quarter. Increases in coal, crude oil and natural gas production were offset by lower output of iron ore, copper and nickel. Overall, Abare said around two-thirds of commodities covered recording increased production.

"Production was higher in the December quarter compared with the September quarter, with around 67 per cent of commodities recording production increases.

"Increased production was observed for mined tin (362 per cent); refined nickel class 1 (77 per cent); mined silver (21 per cent); diamonds (12 per cent); crude oil and condensate (8 per cent); and mined zinc (6 per cent).

"Mined tin production was higher in the quarter, reflecting the ramp up of capacity at Metals X’s Renison operation, having started production in the September quarter.

"Refined nickel production in the December quarter increased, as the industry recovered from a number of supply disruptions during the September quarter. Mined silver production increased, largely because of higher production at the Cannington and Golden Grove mines.

"Diamond production increased in the December quarter, primarily owing to increased production at Rio Tinto’s Argyle mine, because of improved access to higher grade areas of the pit.

"A ramp up in production at the North West Shelf Joint Venture’s Angel oil and gas field and Woodside’s Vincent project, as well as increased production at their Laminaria-Corallina operation contributed to an increase in crude oil and condensate production for the December quarter.’

(That was apparent from the quarterly production report from Woodside and from its full year profit announcement).

Abare said that production of mined zinc increased in the quarter, largely because of higher production at OZ Minerals’ Golden Grove operation. This was because of significantly higher zinc grades.

(The high zinc production was a bit useless because of the sharp fall in world prices, and then OZ Minerals desperate fight to remain solvent from last November onwards).

"Significant production declines occurred for manganese (28 per cent); iron or

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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