Maybe it’s true what they’ve been saying all along – Australia really is the “Lucky Country”. If what’s currently happening in our resource sector is anything to go by, it is hard to argue otherwise.
According to the September quarterly resource quarterly the value of coal and gas exports will fill the void left by a sharp fall in expected fall in iron ore export revenues in the 2021-22 financial year.
In fact the volume and value of iron ore exports are forecast to move in different directions this financial year.
The value – which topped out at $153 billion in 2020-21, will drop to $132 billion on forecast average prices of $US115 a tonne for 62% Fe fines from the Pilbara – the global benchmark. That price is forecast to fall to $US85 a tonne in 2022-23 and the value of those exports will fall to $US99 billion in 2022-23.
Volume is expected to rise from 867 million tonnes in 2020 to 870 million in 2021 before climbing to 934 million in 2022 and 948 million in 2023.
That however doesn’t take account take supply side discipline (or failures) from the majors or the exit of junior iron ore miners from the market – Mount Gibson, GRW and Venture Minerals have halted or are thinking of halting operations at their small mines.
Oil, gas and coal will fill the void left by the slide in the value of iron ore exports (as Reserve Bank Governor, Philip Lowe predicted earlier this month).
The value of LNG exports will rise from $30 billion last year to $56 billion in 2021-22 as prices continue to top the $US20 a million British Thermal Units (mBTUs) against $US5 a mBTU a year ago.
Australian oil export earnings fell to $7.4 billion in 2020-21, reflecting low prices early in the year. Higher prices are expected to lift earnings to $11.2 billion in 2021–22.
The value of coking (metallurgical) coal exports is forecast to jump sharply from $23 billion to $33 billion in 21-22, while the value of thermal coal shipments is forecast to rise to $US24 billion from $US16 billion, then fall to $US19 billion in 2022-23.
Exports of metallurgical coal are forecast to rise from 171 million tonnes in 2020-21 to 186 million tonnes by 2022-23.
Gold will see a small rise – around $3 billion on the value of exports to $US29 billion from $US26 billion in 2020-21 (which included all-time record high for gold of $2,067 an ounce in early August, 2020). It is forecast to fall to $US27 billion in 2022-23.
Australian gold mine production is forecast to rise at an average annual rate of 8.8% between 2021–22 and 2022–23. Production of 379 tonnes by 2022–23 will be propelled by both production from new mines and existing mine expansions.
Australia passed China towards the end of 2020-21 to regain top spot as the world’s biggest gold miner.
The quarterly says that the value of exports of copper, crude oil, nickel, aluminium and zinc are all expected to provide incremental increases.
Lithium is the biggest growth market but coming off the smallest base, with export earnings set to rise from US$1.1 billion last financial year to US$3.8 billion by 2022-23 (which could top the value of zinc exports).
The quarterly suggests that “Australian production is now expected to rise over the outlook period, from 217,000 tonnes LCE in 2020–21 to 306,000 tonnes LCE in 2021–22 and 374,000 tonnes LCE in 2022–23.
Correspondingly, spodumene concentrate exports are forecast to increase from 1.5 million tonnes in 2020–21 to 2.5 million tonnes in 2022–23.”
The uranium spot price is expected to average $US31.10/lb this year, but future forecast prices are expected to rise sharply after that to $US36.30/lb in 2022 and $US41.70/lb in 2023. Prices have jumped to $US50/lb in recent weeks on the back of buying from the Sprott Physical Uranium Trust and other market participants.
Uranium exports are set to hit a low of $465 million in 2021-22 before increasing as prices rise to $551 million in 2022-23. Most of these exports will come from BHP’s Olympic Dam.
The total value of Australian exports of aluminium, alumina and bauxite is forecast to increase at an annual average rate of 5.8% between 2021–22 and 2022–23, to reach nearly $14 billion by June, 2023. Copper’s export earnings are forecast to rise from $11.4 billion in 2020-21 to $14.4 billion in 2022-23, thanks to the renewables boom.
Australia’s nickel export earnings are forecast to rise on the back of growing export volumes and higher prices, reaching $5.1 billion in 2021–22 and $4.6 billion in 2022–23, up from $3.8 billion in 2020–21.
Australia’s zinc export earnings are forecast to increase from $3.3 billion in 2020–21 to around $4.1 billion in 2021–22 and $3.9 billion in 2022–23. Rising refined production is expected to offset prices.