BREE: LNG to Be Main Source of Export Growth in Australia

Australia’s resources and energy commodity export earnings are forecast to decline to $186 billion in 2012–13, but grow in the medium term according to the Resources and Energy Quarterly–March Quarter 2013, released by the Bureau of Resources and Energy Economics (BREE).

“A forecast fall in the prices of key Australian mineral exports from their peaks in 2011, coupled with a high Australian dollar, is expected to result in a 3 per cent decline in the nominal export value of resources and energy exports in 2012-13, relative to 2011-12” said Professor Quentin Grafton, BREE’s Executive Director and Chief Economist. “Iron ore prices, which have been particularly volatile over the last six months, are one of the main drivers of the lower export values. Iron ore export earnings are forecast to decrease 9 per cent to $57 billion, despite a forecast 11 per cent rise in volumes”.

Between 2013 and 2018, projected robust growth in commodity volumes will support increases in Australia’s mineral and energy commodity export earnings. Export volumes of iron ore, thermal coal and metallurgical coal are projected to rise at average annual rates of 10 per cent, 11 per cent and 7 per cent, respectively.

LNG is projected to be the main source of export growth in the medium term, in terms of energy commodities, increasing from 19 million tonnes in 2011-12 to 88 million tonnes in 2017-18 as a result of huge investments in LNG production in Australia. LNG export earnings are projected to increase from $12 billion in 2011-12 to around $61 billion in 2017-18 to be Australia’s second highest export earner, second only to iron ore.

Although the value of energy exports is projected to increase substantially to 2018, Australia’s export earnings from mineral commodities are expected to peak, in real terms, in 2014-15 due to declining commodity prices, particularly iron ore.

“The nominal value of mineral exports is projected to increase by about 15 per cent from 2011-12 to 2017-18, but the real value of mineral exports in Australian dollars is expected to peak in 2014-15 at around $123 billion” said Professor Grafton. “The assumed continuation of a high-valued Australian dollar and a fall in the US$ price of iron ore over the outlook period are the principal causes of this dip in the real export values of minerals from 2014-15”.

For free downloads of the Resources and Energy Quarterly report, visit the BREE website.

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LNG World News Staff, March 28, 2013; Image: BREE