The Australian reported that strong Asian demand will continue to drive growth in Australian coal, iron ore and liquefied natural gas exports but commodity prices are unlikely to regain the record levels achieved in the last few years.
The white paper said that while Australia is past the peak of the resources boom investment in the sector will remain high into the next decade.
It said that “While demand for Australia’s commodity exports is likely to remain strong, their prices have probably passed their peak as new global supplies enter the market, as expected. Record investment in the resources sector is already beginning to boost the economic capacity of the economy and will continue to drive higher export production for many years to come.”
Iron ore prices are down by about a third from last year’s record of USD 190 a tonne, while coking coal and thermal coal prices have dropped by half in the past 12 months.
Despite the price slump, the long term fundamentals remain healthy with USD US10 trillion in current capital investment across Asia forecast to double by 2030.
It added that “Coal and iron ore mining output will continue to grow, while liquefied natural gas production is expected to develop rapidly to become a major export industry of global rank.”
According to government forecasts, China’s iron ore imports are slated to breach 1 billion tonnes by 2025, with infrastructure investments across Asia and industrialization boosting demand for resources such as aluminium, gold and zircon.
Despite strong growth expectations improving productivity and assessing the regulatory environment will also be critical to driving strong demand for Australia’s energy and mineral resources. It emerged last week that labor productivity in mining has been losing ground to the non mining sector at a rate of 8% a year over the past decade, leading federal Resources Minister Martin Ferguson to accuse mining companies of becoming fat and lazy during the commodities boom.
With new competitors emerging to challenge Australia’s dominance as a minerals supplier to Asia, the white paper also calls for the creation of a globally competitive mining services sector to diversify earnings.
The paper said that “Construction and engineering services and manufacturing will support resources development; research and design services will, in turn, support manufacturing and engineering.”
Meanwhile, an estimated USD 200 billion of committed liquefied natural gas projects under way in Australia have also been targeted to help kick start the expansion of local energy and downstream industrial infrastructure.
Source - The Australian
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