The release of the Resources and Energy Quarterly by the Chief Economist of the Department of Industry, Innovation and Science for the December quarter has again highlighted the significant, ongoing contribution the mining and energy sectors provide to Australia’s economy.
The report notes that mining alone has increased its contribution to Australia’s economy by 50 per cent over the last decade; from six per cent to nine per cent of GDP.
In 2015-16, Australia’s resources and energy export earnings are forecast to be $166 billion. Although these figures are down on last year due to lower commodity prices, export earnings are projected to grow by more than 40 per cent to $235 billion in real terms by 2019-20.
Importantly, mining alone continues to directly employ 220,000 people and many more indirectly.
Short term challenges do exist for these important sectors. As the Chief Economist notes, slower economic growth in emerging economies is likely to limit consumption growth and a significant price recovery for commodities in the short term. However, there are positive signs:
- global LNG demand is forecast to increase by eight per cent, with Australian exports forecast to increase by a staggering 45 per cent, to be worth more than $20 billion in 2015-16;
- Australian iron ore export volumes are forecast to grow by 13 per cent in 2016; and
- world copper, nickel, and zinc consumption are each forecast to increase by more than three per cent in 2016.
Australia’s energy and resources industry remains a great success story. We are the world’s largest exporter of iron ore providing a staggering 56 per cent of world trade, we are projected to shortly become the world’s largest coal exporter, and we are projected to become the world’s largest exporter of LNG by 2020.
Importantly, even in a challenging year, 15 projects worth around $13 billion have been approved for investment while there is more than $220 billion worth of projects at the committed stage, and around $180 billion of investment at the feasibility stage.
The existing short term challenges reinforce the Government’s focus on implementing initiatives to ensure these vital sectors remain strong going forward. These include removing $4.5 billion of red tape from the economy, encouraging new exploration through a $100 million Exploration Development Incentive, and opening new and expanding existing market opportunities.
