Australia will continue to ramp up supplies of iron ore and liquefied natural gas into the global market, despite the prolonged slump in global commodities prices.
The country's mining exports, which are dominated by iron ore, are expected to increase by seven per cent in 2016/17 and another 7.5 per cent in 2017/18, according to the federal budget papers.
Australia exported 760 million tonnes of iron ore in 2015, more than three times what it supplied a decade ago. This number is expected to increase by around 16 per cent over the next four years.
Australia is already the world's biggest exporter of the steel-making ingredient and accounts for more than one-third of global production.
The increase in supplies comes even as iron ore prices touched a decade low of $US38 a tonne late last year, as demand from China's slowing economy wanes.
Prices have rebounded in recent months on expectations of a stimulus by the Chinese government to meet GDP targets, but are still down two-thirds from their peak in 2011. On Tuesday, iron ore traded at $US62.50 per tonne.
The government has used $US55 a tonne to base its budget forecasts on, an improvement on the $US39 used when it released its mid-year update last December,
"Commodity prices are however weaker than those seen over recent years leading to lower terms of trade and there is a risk that more recent increases will not be sustained," Treasurer Scott Morrison said.
The heightened uncertainty is, however, reflected in the investment numbers.
Mining investment slumped 27.5 per cent in 2015/16 and is expected to shrink a further 25.5 per cent in 2016/17 and 14 per cent in 2017/18, according to the budget papers.
While some of this has been on account of completion of projects, mining companies have also largely shied away from making new investments amid falling prices and pressure to cut costs.
The result has been a drag on overall business investment, which is expected to fall five per cent in 2016/17 and then remain flat the next year.
LNG exports are expected to triple over the four year period, as a spate of large LNG projects come online, according to the budget estimates.
With more than $200 billion invested in large LNG projects over the past decade, Australia is expected to overtake Qatar as the largest exporter in 2018.
Share
