Helped by a weaker Australian dollar, this year's total resources and energy exports are expected to earn a record $264 billion. They will generate more than half the total value of Australia's exports, a strong reminder of the economy's continued reliance on commodities.
According to the government's December 2018 Resources and Energy Quarterly report, Australia has also become the largest single gas exporter in the world, ahead of Quatar. Earnings from gas are set to reach $50 billion, increasing more than 60% from $31 billion in 2017-18, with annual gas exports set to rise to around 75 million tonnes a year. Both earnings and volume of gas exports will then remain close to this level in the following year.
This is on the back of a continued period of rapid expansion in world LNG (liquid natural gas) trade, with Europe and Asia - foremost China - driving demand, while at the same time there is also a rapid expansion in LNG supply on the horizon. Especially the US is ramping up production, and will account for around two-thirds of the increase in supply capacity between 2018 and 2020. It will make the US the third largest exporter of gas in the world (behind Australia and Qatar), the report forecasts.
Natural gas will be the fastest growing fossil fuel, as forecast by the International Energy Agency, and is going to become the dominant fuel in the global energy mix, while the consumption of coal (and oil) is set to fall.
However, for the time being coal remains Australia's largest commodity export, with earning set to exceed $67 billion this year. However, earnings are then expected to drop sharply down to $60 billion in the following year, dragged down by falling export values of both metalurgical coal and thermal coal.
Iron ore exports are predicted to increase from $61 billion in 2017-18 to $64 billion in 2018-19, but then also are set to drop to $57 billion in 2019-20.
There is positive outlook for petroleum exports, which are set to rise by almost 60%, from $7 billion in 2017-18 to $11 billion in 2019-20.
The report also highlights a notable turnaround for uranium, with world market prices recovering from a long period of historical lows, on the back of growing demand of nuclear power in Asia, with a string of new reactors coming online in China pushing global nuclear generation above 400 gigawatt for the first time. Australia is the 3rd largest producer of uranium (behind Kazakhstan and Canada), and holds 31% of the world's proven uranium reserves. Globally, nuclear power now makes up 11% of global electricity generation.
With $87 billion, China remains the by far largest buyer of Australian resources and energy exports, followed by Japan with $41 billion.
Around $170 billion in resource projects are now at the feasible stage and rated as either ‘likely’ or ‘possible’ to proceed to construction.
A notable development is a new interest in rare earths and critical minerals (some of which are important in battery manufacturing), which has facilitated smaller, high value commodity production that accounts for a third of the projects listed at the feasibility stage.