2018 to mark the 'end of remarkable resources and energy investment boom'

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Australia Coal Mining
A stacker/reclaimer places coal in stockpiles at the coal port in Newcastle June 6, 2012. Reuters/Daniel Munoz

Australia’s resources and energy sector is tipped to see great exports earnings in fiscal 2017. This, however, is not expected to last long with the government forecasting the end of the mining boom.

The expectation is that 2018 will mark the tipping point for when export earnings may head south. The Department of Industry, Innovation and Science released data on Monday, suggesting a bleaker outlook for this year - that is, billions less in earnings.

Exports earnings hit a high of $214 billion in 2017/18. The figure may drop to $200 billion the following year, according to the report.

Mark Cully, the department’s chief economist, said that 2018 will see the end of the resources and energy investment boom of the previous decade. The decline in earnings is due to a price drop of 12 percent, which will outpace growth in export volumes. Some projects are slated for the end of 2018 “concluding the current investment phase.”

“Beyond that, a slight uptick in projects that have been publicly announced or under feasibility points to a bottoming in the investment cycle,” Sydney Morning Herald reports Cully as saying.

The final quarter of 2017 had seen commodity prices declining, but this was largely offset by depreciation in the Aussie dollar. Because of the moderation in Chinese steel production and increased supplies from Australia, iron ore was under price pressure. Australia’s biggest export is iron ore while China is the largest producer of steel in the world.

Last week, mining companies in Australia jumped in early trading after commodity prices rose to a new high. The ASX 300 Metals & Mining index and the ASX All Ordinaries Gold index added 1.2 percent and 1.6 percent, respectively, ​Financial Times reports. It came as the Bloomberg Commodity Spot Index hit its highest level since 2014 when the oil market price crash begun.

World energy leader

Australia would take on the role of a world energy leader in supplying future energy demand, the International Energy Agency has predicted. The country could possibly be one of the main gas suppliers in the transition from coal-fired power to gas.

Based on a government data estimate, LNG will add $14 billion to export earnings in 2018/19 following the completion of three major projects. More than two-thirds of investment in 2022 and 2023 are expected to be on the way thanks to nine large-scale gas, coal and iron ore projects.

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