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Mining upturn drives $278bn export forecast

Australia’s resources export values are expected to hit $278 billion in 2018–2019, a “sizeable upward revision” due to an improved outlook for iron ore, according to forecasts by chief economist Mark Cully.

The Australian Government’s Office of Chief Economist report, which provides a five-year outlook for Australia’s major resource and energy commodity exports, credited recent and significant supply shocks in commodity markets due to the sharp drop in iron ore exports from South America.

The largest of these follows the collapse of Vale’s Brumadinho mine tailings dam in Brazil in January this year. But some of the supply outages do not favour Australia, according to Cully.

“Huge rainfall and other weather-related problems in Queensland have disrupted a few mines, rail-lines and a port, with notable impact on metallurgical coal,” Cully said.

“As metallurgical coal is used to make steel, this brings further uncertainty into iron ore markets, adding to the problems of some coal exporters.”

Aside from that, the report forecast strong market conditions for thermal coal, liquefied natural gas (LNG), bauxite, copper and zinc.

Copper, for instance, is likely to experience big swings in prices and inventory levels over the next few years due to disruptions to production, according to Cully.

Queensland Resources Council chief executive Ian Macfarlane said it was critical there was stable and predictable policy and royalty tax rates, or Queensland would fail to benefit from the improved outlook across key commodities. Read more…

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