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Resources and energy exports remain robust, according to federal government

The outlook for Australia’s resource and energy exports has improved over the past three months, as global economic activity rebounds from the COVID-19 pandemic, with resources and energy exports to remain robust after earning a record $291 billion in 2019–20.

The December Resources and Energy Quarterly forecasts resources and energy exports will earn $279 billion for Australia in 2020–21, and $264bn in 2021–22, up by $22bn and $12bn respectively from the September quarter forecasts, with improved global economic activity set to drive even stronger demand.

Minister for Resources, Water and Northern Australia Keith Pitt said the figures, compiled by the Department of Industry, Science, Energy and Resources, underlined the resilience of Australia’s resources sector, with record forecasts for iron ore and gold offsetting lower returns for coal and LNG.

“The diversity of Australian commodities and the investment in technology and innovation over the past 20 years helped producers and exporters overcome the challenging conditions of the past year and made sure Australia remained a reliable source of resources and energy,” Minister Pitt said.

“Australia now stands ready to help supply our export partners as they rebound from the global economic downturn caused by COVID-19, with the development and rollout of effective vaccines contributing to global optimism.

“Australia’s success in reaching new markets is an important part of our future success.

“The Coalition Government remains focused on pursuing new investment in the sector and new export markets, which will boost incomes and jobs in Australia’s towns and regions, and contribute to the prosperity of all Australians.”

The December Resources and Energy Quarterly shows iron ore export earnings are set to reach an all-time high of $123bn in 2020–21, as strong demand from China and supply problems in Brazil keep prices at high levels.

Australia’s gold exports are on track to set a new record of about $30bn in 2020–21, making gold Australia’s third largest commodity export behind iron ore and LNG.

The demand for base metals is also expected to rise, as world industrial activity recovers from the pandemic. Output and consumption are expected to grow for lithium, copper, nickel and zinc, which are all important to supporting renewable energy, electric vehicles and batteries.

Coal exports have been hit by uncertainty surrounding coal exports to China and a COVID-19 induced slowdown in the steel industry. The value of metallurgical coal exports, used in steel making, is forecast to fall to $22bn in 2020-21 from $34bn in 2019-20, before recovering partially to $27bn in 2021-22.

Earnings from thermal coal exports, used mainly for electricity generation, are forecast to fall from $20bn in 2019-20 to $15bn in 2020-21 before rising slightly to $16bn in 2021-22.

Australian LNG export earnings are forecast to fall from $48bn in 2019-20 to $31bn in 2020-21 due to weaker global prices and demand, before a partial recovery to $37bn in 2021-22.

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