Seizing the opportunities in a bright future

The Hon. Keith Pitt MP, Federal Minister for Resources and Water

Photo: Peter Turnbull Photo: Betty Seeney

Australia’s resources sector performed heroically throughout 2021, in the face of the COVID-19 pandemic, and is showing no signs of stopping any time soon.

After resources export earnings hit a record $310 billion in 2020-21, they are tipped go even higher to hit $349 billion this financial year. Already this financial year, figures show our abundant resources are the gifts that keep on giving.

The latest trade data from the Australian Bureau of Statistics show total resources and energy exports were $95.9 billion for the three months to September 2021, which is 50% higher than for the same period last year. And while iron ore’s incredibly strong run cools, soaring demand for our coal and liquefied natural gas is fuelling a surge in export revenues.

Coal has been an outstanding performer. Exports climbed to $16.3 billion in the most recent quarter, up a staggering 80% on the same period last year. Liquefied natural gas exports were $13.9 billion for the quarter to September 2021, which was 130% more than for the same period last year. This means more jobs and more opportunities for Australia, particularly in our regions.

Much of this success is due to the hard-working people of the sector, who we must thank for their dedication throughout the pandemic. And the number of Australians employed in resources has grown too, reaching about 265,000 (as of September 2021). About half are living outside our capital cities. The flow-on benefits don’t stop there. Australia’s mining equipment, technology and services companies are demonstrating similar success. In the last decade and a half, METS has doubled in size to employ around 300,000 Australians – adding tens of billions of dollars to the economy each year.

Resources are a mainstay of the national economy, and so important to our regions. They are not just exports and jobs. A Deloitte Access Economics report commissioned by the Minerals Council of Australia (MCA) estimates royalties from resources exports to be worth over $15 billion in 2019-20, which enable our state governments to pay for the hospitals, roads and schools and all the services we rely on.

The same report estimates that in 201920, company tax for the resource and energy sector represented almost 30% of total company tax collected in Australia. That’s $24.2 billion worth of taxation to support the Australian way of life. Resources development across the country is vital. That’s why the Government is standing shoulder to shoulder with the sector in maximising opportunities.

This past year, the Government committed $20.1 million to a Global Resources Strategy to identify and seize new market opportunities and enable trade, including for all-important critical minerals.

The Government will continue to support new resources development, including opening up new basins. Work to explore five key regions for gas and other resources under our Strategic Basin Plans Program is on track.

We recently released the North Bowen and Galilee Strategic Basin Plan, with $20.7 million to help crack the gas potential as well as new jobs and wealth in Central Queensland. The potential is enormous – worth billions of dollars – and it is estimated more than 5,000 new jobs can be created in this region from gas development alone.

And we published a National Resources Workforce Strategy to show how we are looking to secure the workforce and encourage Australians to take up skills, training and careers in the sector. Technology remains an integral part of future jobs and new growth. Competitive and sustainable operations rely on us staying on the cutting edge, with funding for R&D, skills and training.

Our $1.3 billion Modern Manufacturing Initiative includes numerous grants to resources technology and critical minerals projects that help Australia to capitalise further on what we do so well.

What does the future of the sector look like?

Despite some headlines suggesting the contrary, coal is set to remain an important part of the world’s energy mix decades into the future. The International Energy Agency forecasts coal will remain as one of the largest sources of electricity in 2040. Over the next 10 years, Australia will have a growing share of international coal trade. Coal demand in developing countries, particularly in Asia, is projected to substantially increase to satisfy demand for electricity and for industrial development.

The International Energy Agency’s 2021 World Energy Outlook projects that coal demand in the Asia Pacific will grow over the next 10 years by 85 million tonnes. Our coal has a higher energy content than many lower-quality coals from other countries, producing fewer emissions and more power from every tonne used.

There are currently no scalable technological alternatives to the use of metallurgical coal in steel production, making coal a critical domestic and export commodity for the foreseeable future.

China's limits to steel production, in an effort to reduce pollution, may see iron ore exports fall. But as with the swings and roundabouts of global demand, metallurgical and thermal coal demand will be far more resilient as Australia has strong trade relations with developed and emerging Asian markets in these commodities. Whether it’s for electricity or for making steel, there is demand for our high-quality coal.

Critical minerals development will also continue to go from strength to strength, given the ever-growing demand for battery metals such as cobalt, lithium and manganese. The forecast for the size of the global market for lithium alone is about $400 billion by 2030. We want to be a part of this market, but so does everybody else, so we need to get it right.

Global battery manufacturers are seeking strategic partnerships as they look to secure stable supplies of critical minerals such as cobalt, lithium, nickel and manganese. Growth in the battery sector has also fuelled demand for Australian nickel, with new projects and expansions expected to increase Australia’s nickel exports from around 181,000 tonnes in 2020-21 to 260,000 tonnes in 2022-23.

We do have an advantage in our sizeable share of critical minerals resources. Along with being the largest lithium producer in the world, Australia is also a top-5 producer of cobalt, manganese ore, rare earth elements, zirconium and titanium minerals sands, and has viable economic reserves for a number of other critical mineral resources.

Copper prices are surging with exports forecast to increase over the next 12 months to more than $14 billion, up from $11.4 billion in 2020-21. This is driven largely by economic recovery and growing demand for copper in renewable energy technology and battery storage. Copper is expected to play an important role in the future of energy, and Australia is well-placed to cater to this demand.

The future is bright for this sector. The challenge will be how best to take advantage of the opportunities that will continue to present for Australia, which is so well endowed by its resources, our innovation and the people that work in the industry.

I look forward to seeing this wonderful journey mapped every year in the Bowen Basin Mining Club Yearbook for decades to come. 