Australia’s economy will suffer if the government continues to tie mining companies’ hands, the sector warns, with resource exports expected to fall sharply over the next few years.
With prices for LNG, thermal coal and iron ore predicted to drop, Australian resources companies are set to reap lower revenues and pay less tax, smashing the federal budget and contributing to a decade of forecast deficits.
Australia must attract more mining investment, not drive it away, to safeguard its financial future, Minerals Council chief executive Tania Constable said.
“If the government wants to secure the revenue it needs to balance future budgets, it must stop tying the hands of Australian industry,” she said.
“Governments need to focus on productivity-enhancing policies that create jobs, boost economic growth, and make the nation more resilient to global volatility.”
Revenues in the sector are expected to plunge from $415 billion to $372 billion in the 2024/25, the Resources and Energy Quarterly and Resources and Energy Major Projects reports released on Friday showed.
Export earnings are projected to decline again in the following financial year.
The widening conflict in the Middle East, the extended contraction in China’s property sector, and an increase in protectionism also pose risks to revenue.
In the midst global pressures and restrictive government policies, miners have been forced to drive efficiencies harder and mothball, delay, or close operations, Ms Constable said.
Iron ore remains Australia’s largest earner, but lower prices will see earnings fall by an estimated $30 billion to $108 billion in 2024/25, and then to $96 billion in 2025/26.
Lower LNG prices will mean a $4.6 billion drop in revenue to $64 billion in 2024/25, before falling further to $60 billion in 2025/26.
However, surging gold prices will mean the value of exports in the precious metal will rise to more than $34 billion, overtaking thermal coal as Australia’s fourth-highest export earner.
“The gold price continues to rise due to geopolitical tensions as investors seek safe havens,” the report reads.
“An escalation of conflict in the Middle East could impact the global supply of oil, gas and LNG, raising energy prices.”
Despite the forecast drop in earnings, the number of major resource and energy projects under development in Australia has risen to 455, up from 421 a year earlier.
The numbers show the industry is growing in confidence, with more projects in development and moving to production, federal Resources Minister Madeleine King said.
“Australia’s resources are critical to our prosperity, but also to helping the world reduce carbon emissions and reach net zero by 2050,” she said.
While the federal government has been targeted by miners for being too restrictive, its approval of four coal mine extensions has dismayed environmentalists.
“This is the ultimate dumping of rubbish on Christmas Eve,” Greens Senator Sarah Hanson-Young said.
“Our environment laws are an utter failure. A climate trigger would have stopped these projects because of the millions and millions of tonnes of emissions they’ll emit.”
The four mines produce metallurgical coal – used to make steel – were necessary for the energy transition, Energy Minister Chris Bowen said.
“I’d like an explanation as to how you can make steel without coal at the moment,” he told ABC TV on Friday.
“Green steel is coming, we’re investing in it, it’s got a great future, but it’s not here yet.”
