Mineral exports expected to growadmin
The export of metals and minerals is expected to grow in the coming financial year as mining projects expand or start production to capture demand from the urbanisation and industrialisation of emerging economies.
The federal government said in its 2007/08 budget papers that “non-rural commodity exports are expected to grow” as new projects and expansions come online.
Exports of iron ore, a key steel making ingredient, and mineral fuel are forecast to “grow particularly strongly”, while coal export volumes will be constrained by the capacity and efficiency of transport infrastructure, it said.
Strong growth in world demand for iron ore and coal used in electricity and steelmaking has rapidly outstripped supply in recent years and helped to drive up bulk commodity prices.
Base metal prices, however, are expected to fall amid an increase in supply in these markets and slower world growth, the government said.
Mineral fuel exports grew by 20.5 per cent in 2006/07 after recording average annual falls of 5.8 per cent over the preceding four years.
The industrialisation and urbanisation of China, and to a lesser extent India, has been the primary driver of demand and has underpinned commodity price gains over the past seven years.
China’s growth of 12 per cent in 2007 was its strongest in over a decade and the outlook is for continued “strong” growth this financial year, albeit at a slightly slower rate than last year, the government said.
“Urbanisation and infrastructure investment are continuing at a brisk pace, driving rising demand for energy and raw materials,” the federal government said of China.
The India economy recorded the third largest contribution to world growth after China and the United States and is expected to remain strong over the next two years.
Australia’s overall exports are estimated to have grown by three per cent in 2007/08 and to grow by six per cent in 2008/09, with commodity exports – rural and non-rural – to account for more than three quarters of the growth in 2008/09.
Over $20 billion worth of iron ore, oil and gas mining and related infrastructure projects have begun production since the start of 2006.
Meanwhile, the government is expecting Australia’s terms of trade to grow strongly in 2008/09 on the back of higher contract prices for coal and iron ore.
The terms of trade is expected to rise by 16 per cent in the financial year from levels that are already the highest in more than 50 years.
“Robust growth in emerging economies, particularly China and India, is expected to drive further large rises in Australia’s terms of trade, boosting income and price pressures,” Treasurer Wayne Swan told parliament.
Australian coal contracts have recently been settled for US dollar price increases ranging from 125 per cent and 240 per cent.
Iron ore contract prices are expected to increase by at least 65 per cent.