PERTH (miningweekly.com) – Australia’s resources and energy exports are forecast to hit a record high of A$252-billion in 2018/19, helped along by a decline in the Australian dollar over the past quarter.
In its newest Resources and Energy Quarterly, the Office of the Chief Economist notes that the new outlook has been revised by about A$13.7-billion from the June quarter report, reflecting the weaker Australian/US dollar exchange rate, which is expected to add A$10.6-billion in export values, while higher-than-expected thermal coal and liquefied natural gas (LNG) prices account for the rest of the forecast gain.
Federal Resources Minister Matt Canavan on Tuesday said that Australia was now the world’s number-one exporter of lithium, while coal was expected to be the nation’s number-one export earner in 2018/19 at more than A$61-billion, narrowly ahead of iron-ore at A$60-billion.
LNG exports were set to lift sharply to A$48-billion, as record investments by LNG companies in Australia continue to pay off.
“These are huge sums, and reflect the success and hard work of Australian exporters in supplying the growing Asian market,” Canavan said.
“These exports are benefitting Australians everywhere by providing jobs, wages and spending on goods and services, not just in the regions where mining is carried out but also in cities like Brisbane and Perth and other capitals, where so many mining companies have offices.
“These companies also contribute royalties that are boosting the coffers of state governments and make the provision of vital services possible.”
The Minister said the strong demand for high-quality Australian coal would see coal regain its traditional position as the country’s single most valuable resource export.
“Coal held this position for decades until it was overtaken by booming iron-ore exports in 2010 and is great news for the major coal-producing states of Queensland and New South Wales,” he said.
“With strong demand and high prices for metallurgical coal, used in steelmaking, it is expected to bring in A$36-billion. Continuing strong demand from China and India, in particular for thermal coal used in power stations, will see it earn a record A$25-billion.
“It is likely coal and iron-ore will continue to fight it out for the title of Australia’s top export-earner in coming years, and this is great news for the Australian economy.
“LNG is also performing strongly, with exports likely to increase in value by 54% from A$31-billion in 2017/18 to A$48 billion in 2018/19 – driven by both higher export volumes and higher prices – before levelling out next year.”
Canavan pointed out that the quarterly report also found that exports of spodumene ore, the precursor material for lithium, had risen from A$117-million in 2012 to A$780-million in 2017, and were expected to rise to A$1.1-billion by 2020. Even greater value could be unlocked if Australia progressed in refining these ores into more valuable forms of lithium, he added.
The Association of Mining and Exploration Companies (Amec) has welcomed the forecast rise in lithium exports, saying increased demand was offering a once-in-a-generation opportunity for Australia to further downstream value-add battery minerals.
Global lithium demand is expected to rise from 149 000 t lithium carbonate equivalent (LCE) to 1.3-million tonnes LCE in 2027, with 90% of growth driven by electric vehicles (EV).
Amec noted that Australia has structural advantages that benefit from this growth, with locally mined spodumene at a 10% to 15% cost advantage over brine producers in the process to refine to lithium hydroxide.
By 2019, Australia would account for 80% of the world’s supply from hard rock deposits, while lithium hydroxide would account for 25% of lithium compounds used in batteries by 2021 and was predicted to rise to more than 60% in the coming decade.
“The Chief Economist’s Resource Energy Quarterly has neatly summarised the enormous opportunity faced by Australia in lithium and battery minerals,” said Amec CEO Warren Pearce.
“Amec has been calling for government leadership and investment attraction to capitalise on the battery minerals opportunity.”
“The Quarterly identifies that Australia holds a strong geological advantage and suggests we are competitive on electricity and gas as well. Over A$3-billion is committed to the development of lithium mines and there are five refineries in construction.”
“The question is how far down the battery mineral chain will Australia choose to go?” Pearce said.
“As the Quarterly identifies government choices and policy will play an important role in the immediate future, the Chief Economist’s Office suggests action is needed in the coming months. Otherwise, Australia risks missing out on the opportunity to value add to our own minerals.”