The future for Australia’s energy and resource sectors looks bright, with a predicted LNG export increase of 150 per cent, according to a new Resources and Energy Quarterly report.
The report from the Chief Economist of the Department of Industry, Innovation and Science, for the March quarter, highlights the essential role resources and energy play in Australia’s economy.
The quarterly report predicts Australia’s resource and energy export earnings will grow by 30 per cent to $208billion between 2015-16 and 2020-21.
Notably, Liquefied Natural Gas export earnings are expected to increase by around 150 per cent to $42billion.
Further, iron ore export earnings are expected to increase by 29 per cent to $72billion. At 926million tonnes in 2021, this will account for 58 per cent of global iron ore trade.
The report said Australia’s energy and resource sectors currently account for around 10 per cent of Australia’s economy and employ more than 300,000 Australians.
Despite current challenges, mining sector employment is also more than twice the size today than it was before the mining boom.
While acknowledging that current challenges remain, the report also highlights that consumption of most commodities is projected to increase, particularly as Asian economies urbanise.
More broadly, an estimated 455million people across the world, the equivalent of the combined populations of the United States and Japan, are projected to migrate to cities over the next five years fuelling demand for energy and hard commodities. The report said India will be central to this growth.
Currently, India’s steel demand is less than a fifth per person compared to demand from OECD countries. Further, electricity use is one-third per person of the global average and 240million Indians do not have access to electricity.
This is expected to dramatically change with annual growth of 7.7 per cent over the medium term and a commitment from the Indian Government to supply all villages with 24-hour access to electricity within the next five years.
This is expected to help India’s thermal coal imports increase by around six per cent and LNG imports increase by around 19 per cent respectively, each year, over the medium term.
In the face of softer commodity prices, a lot of hard work has been undertaken to increase the competitiveness of Australia’s energy and resources sectors and this should be acknowledged.
Innovation plays an important role with research and development expenditure by resources and energy companies accounting for around 15 per cent of all such expenditure in Australia.
As a result, we are seeing autonomous drills, trucks, and underwater vehicles being deployed on many Australian sites. Importantly, labour productivity increased by 33 per cent for the sector over the last two financial years.
Boosting productivity has helped to ensure that Australia maintains its competitive edge through this challenging period. With commodity demand set to increase in the medium to long term, the outlook for these great Australian sectors continues to look bright.
View the full Resources and Energy Quarterly report here www.industry.gov.au/oce.