Australia’s energy exports to hit record high on surging coal and gas prices

Energy export and mining revenues for Australia are set to hit a record high of US $286 billion in the year until June 2023, bolstered by surging coal and gas prices in the wake of the Ukraine conflict, the Australian government said on Monday.

Revenues for the country’s energy export and mining sectors are forecast to grow by at least 3%, the government said.

“The outlook is for the prices of energy commodities to remain strong for longer than previously forecast, as Western nations look for alternatives to Russian energy supplies,” the Australian Department of Industry said in its resources and energy quarterly report.

The government, however, cautioned that higher global interest rates to combat inflation could hurt global economic activity and in turn lower resource and energy export earnings.

According to a recent KPMG survey, more energy industry executives were upbeat about the need for mining and minerals —as the industry moves towards decarbonisation and energy transition accelerates, minerals like lithium, cobalt, graphite and others could see enormous growth in demand.

More than 56% of the executives said they were more optimistic about the outlook for their organisation compared to a year ago, including 18% who are “significantly” more optimistic, according to KPMG.

The value of LNG exports is forecast to jump 19% to A$84 billion in the year to June 2023, the government report showed. This is despite a decline in volumes by 3% with output reducing from gas fields feeding the North West Shelf and Darwin LNG plants.

"With inventories of energy in the Northern Hemisphere well below normal, any supply disruptions will result in more price surges," the report said, pointing to potential declines in coal output due to heavy rains lashing eastern Australia.

The export of thermal coal used in power generation is expected to rise 15% to A$44 billion on strong prices and a small rise in volume, as Australian coal is considered the main alternative to Russia's higher coal grades, the government said.

Revenue from metallurgical coal – mainly used in steelmaking - is meanwhile forecast to climb 3% to A$60 billion.