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Main features

Overview

The index of export prices of energy and mineral resources increased by 20 per cent in the September quarter of 2008, with this growth underpinned by a 28 per cent increase in energy prices and a 6 per cent depreciation of the Australian dollar. In the September quarter, Australia’s mineral resource export earnings increased by 22 per cent to $42.6 billion. Export volumes were higher for most major commodities including thermal coal, crude oil, uranium, iron ore, copper, diamonds and zinc. Australian production of mineral commodities was higher in the September quarter with around two-thirds of commodities analysed recording increased production.

Recent commodity price movements

Commodity prices have fallen sharply from record highs in early July 2008 as the global financial crisis has adversely affected world economic growth and demand for commodities. While prices had begun to fall from the highs early in the September quarter, the most significant declines in commodity prices occurred following the collapse of a number of key financial institutions in the United States and Europe in late September 2008. This publication provides price, production and export data for Australia’s energy and mineral sector for the period from July to September 2008 and, therefore, does not fully capture the effects of the collapse in commodity prices.

Prices

In the September quarter, the index of export prices of Australia’s energy and mineral resources (export unit returns) increased by 20 per cent compared with the June quarter 2008. Prices for energy minerals increased by 28 per cent, reflecting substantial increases for metallurgical coal (55 per cent) and thermal coal (24 per cent). Metals and other minerals prices increased by nearly 13 per cent as the export unit value for iron ore increased by 27 per cent. Supporting export prices for energy and mineral resources was a 6 per cent depreciation of the Australian dollar. Compared with the September quarter 2007, the index of export prices for energy and mineral resources was 52 per cent higher, as prices for energy minerals increased by 95 per cent and prices for metals and other minerals increased by 26 per cent.

Exports

Earnings from energy and mineral resource exports increased by 22 per cent to $42.6 billion in the September quarter 2008 compared with the June quarter. This reflects the combined effect of higher export prices for bulk commodities and increased export volumes for most major commodities. Commodities that recorded significant increases in export earnings include: metallurgical coal, up $3.5 billion (53 per cent) to $9.9 billion; iron ore, up $2.6 billion (38 per cent) to $9.4 billion; thermal coal, up $1 billion (37 per cent) to $3.8 billion; gold, up $967 million (34 per cent) to $3.8 billion; liquefied natural gas (LNG), up $365 million (21 per cent) to $2 billion; aluminium, up $237 million (20 per cent) to $1.4 billion; crude oil, up $187 million (6 per cent) to $3.3 billion; and copper, up $159 million (9 per cent) to $1.9 billion. With the exception of metallurgical coal and copper, higher export earnings reflect both higher export volumes and export prices. Commodities that recorded significant declines in export earnings in the September quarter include: nickel, down $603 million (63 per cent) to $355 million; diamonds, down $48 million (30 per cent) to $110 million; petroleum refinery products, down $41 million (17 per cent) to $199 million; uranium, down $23 million (13 per cent) to $148 million; and titanium dioxide, down $17 million (19 per cent) to $73 million. Lower export values for nickel are in line with lower prices and lower export volumes. Export values for diamonds and uranium declined as increased export volumes were outweighed by a decline in export prices. Refined petroleum and titanium dioxide export earnings declined as lower export volumes offset increased export prices.

Exports: value
	unit	2008 Sept qtr	Sept 07 to Sep-08 % change	June 08 to Sep-08 % change
Bauxite	$m	74	26	100
Alumina  a	$m	1  552	1	6
Aluminium (ingot metal)	$m	1  439	4	20
Coal, black
metallurgical	$m	9  941	196	53
thermal	$m	3  763	122	37
Copper  b	$m	1  934	17	9
Diamonds  cs	$m	110	–40	–30
Gems, other than diamonds	$m	10	–29	–9
Gold, refined	$m	3  789	39	34
Iron
iron ore and pellets	$m	9  390	127	38
iron and steel	$m	520	30	19
Lead  b	$m	485	–6	–3
Manganese ore
And concentrate	$m	718	243	5
Nickel  bs	$m	355	–65	–63
Petroleum
crude oil and other
refinery feedstock	$m	3  303	48	6
LNG	$m	2  063	76	22
LPG	$m	340	11	31
Refinery products	$m	199	–44	–17
Salt	$m	59	12	–2
Silver, refined	$m	48	–3	33
Tin  b	$m	2	–75	–71
Titanium
ilmenite concentrate d	$m	31	38	48
leucoxene concentrate	$m	4	–56	100
rutile concentrate	$m	69	5	3
synthetic rutile  s	$m	69	–16	–3
titanium dioxide pigment	$m	73	–28	–19
Uranium oxide (U3O8)	$m	148	–48	–13
Zinc  b	$m	632	–44	–1
Zircon concentrate e	$m	127	26	21
Other mineral resources  f	$m	1  319	3	–39
Total mineral resources  g	$m	42  566	63	22
Total merchandise	$m	61  014	42	14
Total goods and services	$m	75  203	36	13
a Includes aluminium hydroxide. b Value of all ores, concentrates, intermediate products (where applicable) and refined metal.  c Unsorted and sorted. d Bulk and bagged ilmenite before January 1992; bulk only thereafter. e All grades, bulk and bagged, before January 1992, standard grade only thereafter. f Derived as the difference between total mineral resource exports, below, and the sum of the above items. g Total mineral resource exports on an ABARE balance of payments basis. s ABARE estimate. Sources: Australian Bureau of Statistics, Canberra; ABARE.

Exports: volume
	unit	2008 Sept qtr	Sept 07 to Sep-08 % change	June 08 to Sep-08 % change
Bauxite	kt	2  822	29	70
Alumina  a	kt	3  771	–3	–3
Aluminium (ingot metal)	kt	438	0	14
Coal, black
metallurgical	Mt	36	5	–1
thermal	Mt	32	18	10
Total	Mt
Copper  bs	kt	204	13	10
Diamonds  cs	‘000 ct	4  839	–3	55
Gold  bs	t	125	16	32
Iron
iron ore and pellets	kt	86 191	26	8
iron and steel	kt	444	–28	–7
Lead  bs	kt	172	14	9
Manganese ore
and concentrate	kt	1  131	–5	–17
Nickel  bs	kt	22	–37	–51
Petroleum
crude oil and other
refinery feedstock	ML	4  066	1	3
LNG	Mt	4	12	0
LPG	ML	660	–16	28
Refinery products	ML	237	–57	–18
Salt	kt	2  734	14	0
Tin  b	t	132	–77	–71
Titanium
ilmenite concentrate d	kt	265	19	48
leucoxene concentrate	kt	9	–81	157
rutile concentrate	kt	110	26	–1
synthetic rutile  s	kt	129	–2	0
titanium dioxide pigment	kt	31	–31	–29
Uranium oxide (U3O8)	t	2  572	3	18
Zinc  b	kt	436	13	14
Zircon concentrate e	kt	166	9	3
a Includes aluminium hydroxide. b Metallic content of all ores, concentrates, intermediate products (where applicable) and refined metal. c Unsorted and sorted. d Bulk and bagged ilmenite before January 1992; bulk only thereafter. e All grades, bulk and bagged, before January 1992, standard grade only thereafter. s ABARE estimate. Sources: Australian Bureau of Statistics, Canberra; ABARE.

Production
	unit	2008 Sept qtr	Sept 07 to Sep-08 % change	June 08 to Sep-08 % change
Bauxite	kt	15  781	2	–2
Alumina	kt	4  813	0	–1
Aluminium (ingot metal)	kt	498	1	1
Coal
Black, raw	Mt	117	4	6
Black, salable	Mt	94	11	9
Copper
Mine as	kt	234	17	7
Blister b	kt	120	50	1
Refined	kt	134	49	0
Diamonds	‘000 ct	4  839	–3	55
Gold
Mine as	t	55	–8	2
Refined	t	92	10	14
Iron
Iron ore and concentrate	kt	93  741	26	6
Iron and steel	kt	1  996	–4	–4
Lead
Mine as	kt	157	–1	2
Bullion b	kt	44	29	5
Refined	kt	56	27	0
Manganese	kt	1  233	–9	–16
Nickel
Mine as	kt	53	20	6
Intermediate	kt	3	–77	–57
Refined, class 1	kt	13	–52	–50
Refined, class 2	kt	4	100	–33
Petroleum, field
Crude oil and condensate	ML	6  740	–1	2
LPG (naturally occurring)	ML	1  056	–8	6
Natural gas	Mm3	9  631	–10	1
Total Refined Petroleum	ML	9  945	–4	2
Salt	kt	2  790	–4	0
Silver
Mine as	t	451	–5	5
Refined	t	183	5	26
Tin
Mine as	t	207	–47	–6
Refined	t	0	0	0
Titanium
Ilmenite concentrate	kt	493	–14	0
Leucoxene concentrate	kt	40	0	–22
Rutile concentrate	kt	82	2	6
Synthetic rutile s	kt	188	5	21
Titanium dioxide pigment	kt	49	–8	9
Uranium oxide (U3O8)	t	2  649	7	18
Zinc
Mine as	kt	376	–4	–4
Refined	kt	122	–4	–7
Zircon concentrate	kt	139	–7	9
a Total metallic content of minerals produced. b Metallic content. s ABARE estimate. Sources: Australian Bureau of Statistics, Canberra; Joint Coal Board; Queensland Coal Board; ABARE.

Production

Production was higher in the September quarter compared with the June quarter, with around two-thirds of commodities recording production increases. Increased production was observed for diamonds (55 per cent); refined silver (26 per cent); uranium oxide (18 per cent); refined gold (14 per cent) and iron ore (6 per cent). It is estimated black coal production increased by 9 per cent in the September quarter compared with the previous quarter. Silver production was higher in the September quarter as production increased at Nyrstar’s Port Pirie smelter in South Australia. Diamond production was also higher as a result of re-established access to higher grade ores at Rio Tinto’s Argyle mine in Western Australia following heavy rainfall earlier in the year. Production of both thermal and metallurgical coal expanded as production recovered after heavy rainfall earlier in the year and some mines increased output to take advantage of higher spot prices. Refined gold production increased, being supported by higher imports of unrefined and scrap gold. Energy Resources Australia’s Ranger mine in the Northern Territory regained access to higher grades of ore following heavy rainfall in the March quarter, thereby contributing to higher uranium (U3O8) production volumes. Expanded extraction of ore and enhanced uranium recovery at BHP Billiton’s Olympic Dam in South Australia also contributed to increased uranium production. Growth in iron ore production in the September quarter was underpinned by ramped up operations at the Fortescue Metals’ Pilbara Iron Ore Project in Western Australia. Significant production declines occurred for intermediate nickel (57 per cent); refined nickel class 1 (50 per cent); refined nickel class 2 (33 per cent); manganese (16 per cent); refined zinc (7 per cent); and tin ores and concentrates (6 per cent). Production of intermediate nickel was lower in the quarter as BHP Billiton’s Kalgoorlie Nickel Smelter in Western Australia was closed for a furnace rebuild. The closure of the smelter resulted in BHP Billiton bringing forward maintenance at its Kwinana Nickel Refinery leading to lower refined output. Manganese production was lower reflecting declining production in Western Australia. Refined zinc production fell in the quarter as production declined because of reduced feedstock from Queensland mines. Despite the commissioning of the Renison tin project in Tasmania, production of tin ores and concentrates was lower as a result of the closure of Metals X’s Collingwood tin mine in Queensland.

Commodity highlights

Energy

Oil and Gas

In the September quarter 2008, Australia’s crude oil and natural gas production was steady at around 6.7 gigalitres and 9.6 million cubic metres, respectively. New oil projects in the Carnarvon basin, including Woodside’s Vincent and Neptune projects, offset natural field decline in mature fields. Steady gas production is underpinned by reduced production in the Carnarvon Basin, partially caused by the June 2008 Varanus Island fire, offsetting higher production in the Gippsland Basin. Production of naturally occurring LPG increased by 6 per cent in the quarter as production in the Gippsland Basin increased. Export earnings from crude oil increased by 6 per cent to $3.3 billion in the September quarter, as increased export volumes and the depreciation of the Australian dollar offset a moderate decline in the crude oil price.

Coal

Production of salable and raw black coal increased in the quarter, consistent with higher output of both metallurgical and thermal coal. Queensland metallurgical coal production picked up in the quarter following heavy rainfall earlier in the year. In New South Wales, Xstrata, BHP Billiton and Rio Tinto recorded increased thermal coal production from the Hunter Valley. In the September quarter, export unit values for metallurgical and thermal coal rose by 55 per cent and 24 per cent, respectively, reflecting the full effect of higher contract prices, increased spot prices and a depreciation of the Australian dollar. Higher export prices combined with increased export volumes resulted in black coal export earnings increasing by 48 per cent to $13.7 billion.

Uranium

Australia’s uranium production (U3O8) increased by 402 tonnes (18 per cent) to 2649 tonnes in the September quarter compared with the June quarter. Energy Resources Australia’s Ranger mine in ther Northern Territory regained access to high ore grades following heavy rainfall in the March quarter and BHP Billiton expanded production at Olympic Dam. Nonetheless, uranium export earnings declined by 13 per cent to $148 million in the quarter as falling export unit values offset increased export volumes.

Metals and other minerals

Iron ore

Iron ore production was significantly higher in the September quarter as newly commenced production at Fortescue Metals’ Pilbara Iron Ore Project approached capacity and production increased at Rio Tinto’s Hammersley mine and BHP Billiton’s Pilbara operations. Total production increased by 4.9 million tonnes (6 per cent) to 93.7 million tonnes in the September quarter. Iron ore export unit value increased by 27 per cent in the September quarter reflecting the full effect of higher contract prices flowing through and the depreciation of the Australian dollar. This, combined with higher export volumes, led export earnings to increase by 38 per cent to $9.4 billion in the quarter.

Gold

Gold mine production remained steady at around 55 tonnes in the September quarter as production increases from a number of Australia’s largest mines offset the closure of some smaller mines. Despite steady concentrate production, refined gold production increased by 14 per cent to 92 tonnes, supported by higher imports of scrap and unrefined gold. In the September quarter, lower gold prices were offset by increased export volumes, resulting in export earnings from refined gold increasing by 34 per cent to $3.8 billion.

Copper

Copper mine production increased by 7 per cent in the September quarter with higher production at a number of mines. Refined copper production was steady as lower output at BHP Billiton’s Olympic Dam was offset by increased production at Xstrata’s Townsville Refinery. The volume of copper exports rose by 10 per cent in the quarter. This, combined with a steady export price, resulted in export earnings increasing by 9 per cent to $1.9 billion.

Nickel

In Western Australia, nickel mine production increased by 6 per cent in the September quarter as higher production from BHP Billiton’s Nickel West operation was not offset by lower production from Minara Resources’ Murrin Murrin operation and the closure of Fox Resources’ Radio Hill. Production of intermediate and refined nickel was lower in the quarter as the Kalgoorlie nickel smelter was closed for a furnace rebuild. In line with lower production and declining nickel prices, export earnings declined by 63 per cent to $355 million in the quarter.

Zinc

Mined and refined zinc production declined by 4 per cent and 7 per cent, respectively, in the September quarter as some producers responded to lower zinc prices. These include Teck Cominco’s Lenard Shelf (Western Australia) and Intec’s Hellyer (Tasmania) mines (entered care and maintenance) and Perilya’s Broken Hill and CBH Resources’ Endeavor mines (reductions to planned production) both in New South Wales. Despite declining production, the volume of zinc exports increased by 14 per cent as stockpiles were drawn down. Higher export volumes were offset by lower export prices resulting in the value of zinc exports declining by 1 per cent to $632 million.