As global economic growth slows, Australia’s resource and energy sectors are experiencing a cooling-off period following their record highs of 2022-23.
While export earnings are set to decrease, the industry remains crucial to the country’s economic wellbeing, supporting hundreds of thousands of jobs and vital export markets.
Resources Earnings Slow Amid Global Trends
Australia’s export earnings from resources and energy are forecasted to ease from their peak of $415 billion in 2023-24 to $372 billion in 2024-25, driven by slower global growth, falling commodity prices, and a stronger Australian dollar.
This decline comes after a surge in resource prices during the height of post-pandemic demand. However, the sector still remains a significant contributor to Australia’s economy, providing a steady stream of revenue and employment.
Despite a drop in some commodity prices, industries like gold and iron ore have shown resilience.
According to Madeleine King, Australia’s Minister for Resources and Northern Australia,
“The resources and energy sector continues to underpin Australia’s economy and support more than a quarter of a million direct jobs.”
Forecasted Export Earnings by Commodity
Commodity |
2023-24 Forecast |
2024-25 Forecast |
|---|---|---|
| Iron Ore | $111 billion | $99 billion |
| Metallurgical Coal | $47.2 billion | $41 billion |
| LNG (Liquefied Gas) | $90.3 billion | Not yet forecasted |
Although the projected earnings are lower, export volumes for key commodities like iron ore and coal are expected to increase, reflecting ongoing demand from major trading partners.
Demand for Clean Energy Minerals on the Rise
While the outlook for traditional resources may appear subdued, there is a silver lining for the clean energy sector. The global shift towards low-emissions technologies has led to a rise in demand for critical minerals like copper, aluminium, and lithium.
These minerals are essential for the production of electric vehicles, renewable energy technologies, and energy storage systems, all of which are gaining traction worldwide.
According to Minister King, the rise of these technologies presents significant opportunities for Australia’s resources sector.
“Lower prices for critical minerals underline the need for government support for our critical minerals sector through policies such as the Production Tax Incentive.”
This focus on cleaner energy resources has also been supported by international partnerships. The Minerals Security Partnership Finance Network, signed with countries such as the United States and Japan, will help boost investment and create jobs in Australia’s critical minerals sector.
Minerals Driving Future Growth:
- Lithium for electric vehicles.
- Copper for renewable energy infrastructure.
- Aluminium for energy-efficient technologies.
Global Pressures and Industry Challenges
Despite the positive outlook for clean energy minerals, the industry faces challenges from a broader slowdown in global growth. The China and India markets, which are critical for Australia’s resource exports, are showing signs of mixed growth trajectories.
China’s recent slowdown in property investment and India’s infrastructure boom are creating a complex landscape for resource demand.
At the same time, the global prices for Australia’s key exports such as iron ore and LNG are forecasted to drop further.
Iron ore prices, for example, will decline from $100/tonne in 2023 to $76/tonne by 2025, driven by China’s economic shift away from steel-intensive growth.
Price Projections for Major Commodities:
- Iron ore: Falling to $76/tonne by 2025.
- Metallurgical coal: Decreasing from $264/tonne in 2023 to $205/tonne by 2025.
- Spodumene (lithium): Projected to average $1,139/tonne in 2024.
Government Support for Long-Term Sustainability
To mitigate these challenges, the Australian government has introduced policies aimed at bolstering the sector’s long-term prospects.
The government has introduced initiatives like the Critical Minerals Production Tax Incentive to boost investment and support the exploration and development of essential resources.
Minister King highlighted the government’s proactive stance:
“The Albanese Government is stepping up to lead on critical minerals for the benefit of Australia and the world.”
This commitment ensures that Australia’s resource and energy sectors remain competitive, not just in traditional exports but also in emerging markets focused on sustainability.
A Steady Path Ahead
Australia’s resources and energy sectors may be facing a period of adjustment, but they remain integral to the nation’s economy.
With the global shift towards clean energy accelerating, Australia can leverage its wealth of critical minerals to maintain its key role in global energy supply chains.
While earnings may ease, the future is still bright for Australia’s resource-driven economy, supported by government policies and growing demand for the materials essential to the green energy transition.
Sources: THX News & The Australian Government.
