Australia will reach a record $230 billion in energy exports this financial year driven by an LNG and oil boom.
The March 2018 edition of the federal government’s Resources and Energy Quarterly forecasts a buoyant export market that will hit more than $230 billion this year and the next, before slipping below $230 billion from 2019 until 2022, when it will rise to about $240 billion in export value.
Mining and energy exports are forecast to generate about $1 trillion for the national economy during this period.
LNG will become Australia’s biggest resources export by 2022, generating $39 billion, up from the $30 billion this year, “driven by higher export volumes and, to a lesser extent, higher prices,” the report stated.
“Gas is expected to record the strongest growth of the fossil fuels, assisted by low prices, growing supply and its role in reducing air pollution and carbon emissions.
“Gas use in power generation – the largest gas-consuming sector – is also expected to rise, but demand growth will be constrained due to competition from renewables and coal.”
Around 70 per cent of all gas produced in Australia is likely to be exported.
It comes as LNG demand is forecast to hit new highs across the world.
The latest data from Bloomberg New Energy Finance predicts that in 2018 demand will reach 300 million tonnes.
Thermal coal is believed to have reached a high watermark this year as it hits $22 billion, with forecasts predicting a continued downward trend over the next five years, generating $17 billion in 2022-23.
However, it is not entirely bleak for coal.
“Going forward, strong growth in demand in emerging Asia will largely offset softer demand in the OECD,” the report said.
Metallurgical, or coking, coal will track roughly a similar trajectory, peaking this financial year at $39.9 billion before it begins to slide down in value, hitting $33 billion by 2022-23.
On the metals front, iron ore is forecast to decline significantly from $65 billion to $55 billion, as the price slips to $US55 a tonne by the end of this year.
The government report highlights the need for renewed growth in exploration and investment as the mining boom comes to an end.
“By the turn of this decade, the investment cycle, which ramped up in the late 2000s and peaked in 2012 will have bottomed out, and the heightened production that investment gave rise to will have levelled off,” the report said.
“This effectively marks the end of the mining boom. The legacy of the boom will continue to be reflected for many years to come in high production and export volumes, but future sources of growth will require new exploration and investment activity.”
At the end of last month, the Turnbull government called a snap review of Australia’s mining industry – the first in nearly three decades – in a bid to find new reserves, attract more investment and end bitter political debate over the future of the lucrative resources sector.
In a major speech defending coal as a “great and beautiful industry,” Resources Minister Matthew Canavan declared the “mining boom is not over” and call for big business to go beyond “high profile campaigns on tax policy” and publicly back the resources sector.