Australia’s resources sector is transitioning from a construction to a production phase which Industry Minister Ian Macfarlane says will deliver “serious money” and boost exports.
The Bureau of Resources and Energy Economics said while construction across the resources sector has slowed, production continues to ramp up.
BREE predicts Australia’s export revenues will jump about 60 per cent over the next five years, growing at an annual rate of 7 per cent to total $284 billion in 2017, Business Spectator reports.
It expects growth to be fuelled by LNG and iron ore exports as well as a lower Australian dollar exchange rate.
“Growth in export revenue will be driven by two main factors: substantial growth in bulk commodity export volumes, particularly for LNG and iron ore; and a lower Australian dollar exchange rate,” BREE said.
LNG exports are expected to increase by 360 per cent to around $65 billion over the outlook period as “large investments in new facilities over the past three years start production” the report said.
"Australia will shortly become the second largest – or optimistically, the largest exporter – of LNG and that is nothing short of amazing," Macfarlane said.
But BREE warns uncertainty around rising domestic production costs and productivity could affect Australia’s export growth in the medium term.
“Policy decisions in Australia will have an increasingly important role in supporting growth in its resources and energy sectors,” BREE executive director Bruce Wilson said.
In its September report, BREE said it expects metallurgical coal exports to reach $35 billion in 2017/18, growing at an annual rate of 3.2 per cent.
Thermal coal exports are also predicted to increase, exceeding $24 billion in five years’ time.
According to BREE the surge of coal exports will be more than enough to combat the anticipated drop in the coal price.
“Although prices for most commodities are expected to moderate over the outlook period, the projected substantial growth in export volumes of Australia’s key commodities will support growth in export earnings,” BREE said.