(Australian Associated Press)
Australia will ship more resources overseas over the next two years as the last of the new gas export plants begin production, and iron ore output remains strong.
Total commodities exports – dominated by liquefied natural gas (LNG), coal and iron ore – increased by four per cent in 2017/18 and will rise by another 6.5 per cent in 2018/19, according to federal budget forecasts.
Most of the growth will be a result of increased processing capacity for LNG.
Iron ore exports are also set to remain robust in the near future, and coal exports steady, as the revival in Chinese demand for higher grade commodities continues.
Growth in total commodities exports is expected to moderate to 2.5 per cent in 2019/20, but by then overall mining export capacity would have roughly doubled since the start of the mining investment boom a decade ago, Treasury said.
Despite traditional earners iron ore and coal seeing a rebound in prices over the last 18 months, the budget estimates have taken a conservative view.
Iron ore prices have been assumed at a steady $US55 a tonne over the forecast period, compared to an average of $US67 a tonne in the March quarter, while metallurgical coal prices are assumed to gradually decline in the June and September quarters and reach $US120 a tonne in the December quarter.
The price of metallurgical coal, a vital ingredient in steel production, hovered above $US200 a tonne in the March quarter.
The price forecasts are reflected in the terms of trade, which impact national income, with expectations of a stronger outcome in 2017/18, but then a fall over the next two years.
Meanwhile, mining investment will continue to fall, by 11 per cent in 2017/18 and seven per cent in the following year, but the moderating rates mean it will have far lower impact on the economy.
Treasury is predicting a 3.5 per cent rise in mining investment in 2019/20 – the first lift in seven years – as firms invest to maintain their levels of output.