Mining news can come from many sources and can sway the opinion and outlook of thousands of workers in the industry.
When one of Australia’s leading authorities on mining tells us Australia will enjoy several more years of earnings growth from mining – we take notice.
Another three years of rising export revenues and energy exports
Despite the perceived end of an era when the mining and resource sector was, for want of a better word “booming”, the federal government’s Bureau of Resources and Energy Economics (BREE) can foresee at least another three years of rising export revenues and energy exports.
This comes at a time when prices for Australian mineral and energy exports are expected to be lower than they are today.
The latest prediction was realised because of the expectation that Australian mining companies will keep on producing higher volumes faster than commodity prices will slacken off. This is a trend that Australian mining companies like BHP Billiton and Fortescue Metals Group achieved over recent months.
“export earnings likely to increase 17 per cent in the next 3 months”
BREE gave an indication that in their opinion, export earnings from the Australian resources sector would be likely to increase 17 per cent in the next 3 months. At this stage earning would reach about $125 billion, which was predominantly due to the phenomenal growth in iron ore exports.
Australian mining companies dig in to reach record earning targets
If we are to believe this latest forecast by the Australian government, a yield point has been marked on the calendar in terms of when the export earnings will max out. It’s expected this point will be reached somewhere around 2017.
“LNG to drive future export earnings”
Following the latest resource sector boom in CGS and LNG, liquefied natural gas exports are hot favourites to drive Australia’s export earnings growth over the coming five years. However, bear in mind that mining exports are still expected to bring in more than energy exports by the time we reach 2019.
“iron ore prices would hover around the $US110 a tonne in 2014
Given iron ore mining in Australia has accounted for a significant result in terms of export earnings and tax revenue for the Australian government, BREE made a bold forecast that FOB (free-on-board) iron ore prices would hover around the $US110 a tonne in 2014.
As is the role of the bureau to report on what it sees as a benchmark for the next few years, it has predicted iron ore prices would continue to slacken off the next few years, with an average price of $US103 a tonne (free on board) forecast for 2015 and $US87 a tonne predicted for 2019.
Most of the Australia’s mining companies who have iron ore mining operations (BHP, Rio Tinto) would still be profitable at $US87 a tonne.
Long-term iron ore price forecasts of this nature are driven by sheer speculation based on current market trends and conditions. Five years is a long time and over that period anything can happen in terms of supply and demand.
At this present time, it’s no secret that the developing countries of China and Japan, who are massive iron ore consumers have throttled back their urbanisation development plans.
Huge stockpiles of iron ore and steel adorn the docks of many a Chinese port. Chinese steel mills are not producing what they were at a time when China was pushing the development envelope. Although, it’s widely accepted that China still has a growth forecast of some 7%, which is still something to watch in the coming years.
Iron ore price hovers at $110 a tonne
The world trade in iron ore can fluctuate in a short space of time as we can see from the price falls this year. In January and February the iron ore price was $US135 a tonne (delivered). Prices took a tumble and fell to around $US104 a tonne, although for the past two weeks we’ve seen iron ore make another recover to around $US110 a tonne.
Iron ore is easily the most lucrative export earner for Australian mining companies and the government. Mining production and iron ore exports could bring in $78.6 billion in 2014.
“staggering 35 per cent higher than in 2013”
This is a staggering 35 per cent higher than in 2013. On the other side of the mining fence, despite the ultra-low prices, coking coal and thermal coal could increase to 4 per cent and 5 per cent more in export earnings respectively compared with the last financial year.