Australia has revised up its forecast for resources and energy export revenue on the back of strong coal and liquefied natural gas prices, even as the world tries to wean itself off heavy-polluting fossil fuels.
Exports are expected to hit a record A$379 billion ($271 billion) in the year to June 30, 2022, revised up by 9% from the September estimate, the government’s Department of Industry, Science, Energy and Resources said in a quarterly update.
Prices for coal and LNG, both of which Australia vies to be the top producer of, were forecast to remain elevated, “supported by ongoing shortages and strong demand,” the department said.
Demand for copper and nickel — key inputs in the clean energy transition — boosted the outlook for base metals earnings. Strength in those areas is tipped to help offset lower iron ore earnings, as supply from key competitor Brazil recovers and global demand growth slows.
Iron ore accounts for around a third of the nation’s total export revenue.
This year is likely to be the peak for Australia’s resources sector, with revenue tipped to fall to A$311 billion in fiscal 2023 as the post-pandemic global economic recovery starts to wane.
Risks to its outlook for the current year were also skewed to the downside, the department said, and included a further spike in global inflation, new coronavirus variants, and a faster-than-expected decline in coal prices.
Australia’s center-right government continues to strongly support the coal and gas industries, despite a growing clamor at home and abroad for the country to transition from fossil fuels.