Australia’s resource and energy export earnings are forecast to hit another record in 2021-22. The March 2022 edition of the Resources and Energy Quarterly (REQ), produced by the Department of Industry, Science, Energy and Resources, reveals earnings will rise to $425 billion for the period.
“While new waves of COVID-19 cases and the Russian invasion of Ukraine are likely to have checked the global economic recovery (and hence commodity demand), Australian resource and energy export earnings are likely to be lifted by surging energy prices,” the report says.
The report’s overview says the outlook for Australia’s mineral exports remains strong, as the world economy rebounds from the impact of the COVID-19 pandemic and energy shortages persist.
It states high prices, good volume growth and a weak Australian dollar are driving a surge in export earnings. Some decline in prices is likely in 2023, as supply rises and demand growth moderates.
Export earnings are forecast to lift by 33% to a record $425 billion in 2021–22, then fall to $370 billion (in real terms) in 2022–23. Earnings should steady out at $263–293 billion over the rest of the outlook.
Energy prices have jumped, on the prospect that the fallout from Russian invasion of Ukraine will intensify energy shortages. Commodity prices should settle back, as inventories rebuild and as world trade re-organises.
While this financial year’s result will represent a big increase on 2020–21, exports are expected to ease to around $370 billion in 2022–23, with further falls (in both real and nominal terms) out to 2027. Driving the fall will be a retreat of bulk commodity prices from current historical highs towards more typical levels.
Minister for Resources and Water Keith Pitt said the forecast showed “a stunning” 12 per cent on the December 2021 REQ projection of $379 billion.
“The March 2022 REQ has found that soaring demand and high prices for Australia’s gas, coal and oil are a key contributor to our record export earnings. In short our resources sector is knocking it out of the park and underpinning our economic growth, our energy security and our national security,” Minister Pitt said.
“Critical global shortages in energy and resource commodities have led to record prices for many of our commodities.
“The REQ notes that with international coal prices at record levels – as the war in Ukraine and the ongoing La Niña weather conditions affect supply and demand – Australia’s combined coal export earnings are forecast to rise to about $110 billion in 2021–22.
“Coal becomes only the second Australian commodity after iron ore to break through the $100 billion annual export mark.
“The combined export earnings for lithium, nickel and copper will likely exceed $23 billion in 2021-22, which would be an increase of 38 per cent on the 2020-21 earnings.
“These forecasts again confirm just how important Australia’s resources and energy sector is to the nation’s economic and energy security.
“These record earnings will keep the benefits flowing to all Australians, including through company taxes, the taxes paid by the more than 270,000 people in high paying resources jobs, the more than one million in indirect jobs generated by the sector and the royalties the states and the Northern Territory use to pay for services such as the hospitals, roads and schools across regional Australia.”
The REQ also says the further outlook, for 2022-23, could see resources and energy export earnings easing off record levels to $370 billion as bulk commodity prices return to more familiar levels. However global uncertainty and strong global demand sees plenty of upside in this forecast.
