Mining boom set to continue

Australia's resources and energy commodity export earnings are forecast to reach a record $206 billion in 2011–12, up 15 per cent, according to the Resources and Energy Quarterly–December quarter 2011 report, released by the Bureau of Resources and Energy Economics (BREE).

"The 15 per cent increase in Australia's minerals and energy export earnings will be underpinned by strong growth in export volumes for iron ore and coal and high gold prices," said Professor Quentin Grafton, BREE's executive director and chief economist.

A recent blog posted by RP Data, which focused on the BREE report, said housing markets near mining centres will continue to benefit from the strong trade in resources.

"A direct benefit will continue to be seen in those housing markets that are closely tied to each of the respective commodity markets and the major service centers that provide essential services and a large component of the labour force to the mining regions," it said.

"Mining related investments are of course very sensitive to movements in commodity prices and global demand; however there doesn't appear to be any cracks emerging in these markets just yet.

"The indirect benefit, of course, will be seen in robust local economic conditions and a continuation of the two speed economy," RP Data added.

"The most recent forecasts from the RBA show GDP growth at four per cent by June 2012 before easing to three-3.5 per cent by December 2012 and underlying inflation tracking around 2.5 per cent to 2.75 per cent."

BREE said most resource demand will continue to come from China and India, along with ASEAN nations such as Indonesia, Thailand, Vietnam and Malaysia. Reconstruction efforts in Japan, post-tsunami, would also soak up resource exports.

BREE said the forecast increase in the value of Australia's resources and energy exports in 2011-12 is underpinned by higher earnings from iron ore, coal, oil, gas and gold.

The growth in earnings in 2011-12 is forecast to be underpinned by increases in export values for: iron ore (up 11 per cent to $60 billion); metallurgical coal (up 13 per cent to $34 billion); gold (up 45 per cent to $19 billion); thermal coal (up 34 per cent to $19 billion); crude oil and condensate (up 21 per cent to $14 billion); and liquefied natural gas (up 15 per cent to $12 billion).

Export volumes for the majority of minerals and energy commodities are forecast to increase including for metallurgical and thermal coal, iron ore, gold and copper.

"The increase in iron ore and thermal coal export volumes reflects recent expansions to mine and infrastructure capacity, while metallurgical coal exports are forecast to be higher as production conditions improve in Queensland," said Professor Grafton.

BREE acknowledged though that risks to the outlook for Australia's minerals and energy exports had increased. Much of this stemmed from the economic downturn in Europe, and how this undermined consumer and business confidence.

"This [negativity] is reflected in the forecast value of exports being revised down by four per cent compared with the forecast in the Resources and Energy Quarterly–September quarter 2011," it said.