Australia cuts commodity export outlook despite gold price gain

[MELBOURNE] Australia cut its forecast earnings from commodity exports, as a meteoric rise in gold prices fails to offset weakness in iron ore and natural gas.

Total resource and energy export earnings fell about 7 per cent to an estimated A$385 billion (S$321 billion) in the 12 months to June, the Department of Industry, Science and Resources said in a quarterly report released on Monday (Jun 30). Income is set to fall further in the next two years because of rising trade barriers, weaker global economic growth and declining prices, it said.

Iron ore continues to be Australia’s biggest income earner, at about 30 per cent of the total. While shipments will rise, declining grades and falling prices mean earnings for the commodity will slip below A$100 billion in 2026 to 2027 for the first time this decade.

Liquefied natural gas (LNG) exports are also set to fall, as new supply from the US and Qatar is set to see prices for Australia’s second-biggest commodity drop to about US$10 a million British thermal units in 2027 from around US$15 early this year. Earnings from thermal coal will also decline, while its steelmaking counterpart will hold steady.

The outlook is much more positive for gold, Australia’s third-biggest commodity, with earnings seen jumping 22 per cent to US$56 billion in the financial year that ends on Monday. The department is also bullish on the outlook for copper, lithium and uranium.

“Higher prices for gold, and forecast higher copper and lithium exports, are partly offsetting the impact of lower prices for iron ore, coal and LNG,” Resources Minister Madeleine King said. “While global commodity prices are easing, the report suggests Australian resources companies will continue to remain competitive on the global stage.”

Finally, prices for lithium are set to “remain subdued” but Australia will remain the leading supplier of the battery metal to 2027, according to the report. BLOOMBERG