Main features

Overview

• The index of export prices of energy and mineral resources declined by 15 per cent in the March quarter 2009, reflecting lower commodity prices for oil, metallurgical and thermal coal and the majority of metals, with the exception of gold.
• In the March quarter 2009, Australia’s mineral resource export earnings declined by 18 per cent to $38.7 billion.
• Export volumes decreased for the majority of commodities including copper, diamonds, metallurgical coal and bauxite.
• Australian production of mineral commodities was lower in the March quarter with only around 30 per cent of commodities covered recording increased production.
• The Australian dollar averaged US66.6 cents in the March quarter 2009, slightly lower than the US67.4 cents average of the previous quarter. Reflecting this, movements in the exchange rate had a negligible influence on export values in the quarter.

Prices

In the March quarter 2009, the index of export prices for Australia’s energy and mineral resources (export unit returns) declined by 15 per cent compared with the December quarter 2008. Export unit returns for energy minerals decreased by 17 per cent, mainly reflecting lower export prices for oil (14 per cent), metallurgical coal (18 per cent) and thermal coal (11 per cent). The index of metals and other minerals prices decreased by 8 per cent, as export prices for most metals declined with the notable exception of gold, which increased by 14 per cent.

Compared with the March quarter 2008, the index of export prices was 42 per cent higher, as prices for energy minerals increased by 84 per cent and prices for metals and other minerals increased by 16 per cent. Higher export unit prices are partly attributable to a 26 per cent depreciation of the Australian dollar and higher contract prices for bulk commodities.

Exports

Earnings from energy and mineral resource exports decreased by 18 per cent to $38.7 billion in the March quarter 2009 compared with the December quarter 2008. This decrease reflects falling prices for many commodities and lower export volumes.

Commodities that recorded significant declines in export earnings include: iron and steel, down $200 million (48 per cent) to $218 million; bauxite, down $25 million (43 per cent) to $33 million; diamonds, down $68 million (42 per cent) to $95 million; metallurgical coal, down $4.9 billion (39 per cent) to $7.6 billion; copper, down $565 million (36 per cent) to $1 billion; and LNG, down $1.3 billion (35 per cent) to $2.5 billion.

Lower export values for metallurgical coal, copper and LNG reflect both lower export volumes and export unit values. Export values for bauxite and diamonds declined during the quarter because of lower export volumes, while export unit values were relatively stable. Higher iron and steel export volumes were more than offset by lower export prices resulting in declining export earnings.

Commodities that recorded significant increases in export earnings in the March quarter 2009 include: rutile concentrate, up $34 million (53 per cent) to $98 million; refined gold, up $1.5 billion (39 per cent) to $5.4 billion; uranium oxide (U3O8), up $47 million (19 per cent) to $293 million; synthetic rutile, up $9 million (15 per cent) to $68 million; ilmenite concentrate, up $5 million
(14 per cent) to $42 million; and petroleum refinery products, up $16 million (8 per cent) to
$210 million.

Increased export values for refined gold and rutile concentrate are driven by both higher export volumes and higher prices. The export value of ilmenite concentrate and petroleum refinery products increased in the quarter, as higher export volumes more than compensated for declines in export unit values. The export value of uranium oxide and synthetic rutile increased as a sharp rise in the export unit value more than offset lower export volumes.

Production

Production was lower in the March quarter 2009 compared with the December quarter 2008, with only around 30 per cent of commodities recording production increases. Significant production declines occurred for: intermediate nickel (45 per cent); refined nickel class 2 (40 per cent); refinery liquefied petroleum gas (LPG) (38 per cent); mined silver (36 per cent); iron and steel (35 per cent); and zinc ores and concentrates (24 per cent).

Intermediate and refined nickel class 2 production declined in the March quarter, partly reflecting the closure of BHP Billiton’s Ravensthorpe mine and reduced production at the company’s Mount Keith operation. Mined silver production declined because of lower production at BHP Billiton’s Cannington mine and at OZ Minerals’ Century mine. Reduced production at BlueScope’s Port Kembla steelworks was the primary driver of lower raw steel production in the March quarter. Mined zinc production was lower in the quarter as OZ Minerals’ Century and Golden Grove operations experienced declining production.

Increased production was observed for mined tin (62 per cent); refined gold (45 per cent); refined nickel class 1 (22 per cent); rutile concentrate (10 per cent); and zircon concentrate
(7 per cent).

Mined tin production was higher in the quarter, reflecting the continued ramp up of capacity at Metals X’s Renison operation, having started production in the September quarter 2008. Production of refined gold increased in the March quarter, primarily because of an increased availability of overseas scrap for refining in Australia. Higher production of refined nickel class 1 reflected higher output from BHP Billiton’s Kwinana refinery. Increased production of rutile and zircon concentrates reflected higher production at Iluka’s mineral sands operations.

Commodity highlights

Energy

Oil and gas

In the March quarter 2009, Australia’s production of crude oil and condensate was 6.9 gigalitres, 9 per cent lower than in the December quarter 2008 but 16 per cent higher year on year. Natural gas production was also lower in the March quarter, declining by 4 per cent to around 9.7 billion cubic metres. Lower oil and gas production reflects adverse seasonal weather conditions off the north-west coast of Western Australia. This was partly offset by an increase in crude oil production from the Cooper-Eromanga basin in South Australia and increased gas production from the Fairview coal seam methane field in Queensland.

In line with lower production, export volumes of crude oil decreased by 16 per cent to 4 gigalitres. Export earnings from crude oil in the March quarter 2009 decreased by 27 per cent to $1.6 billion. Export earnings from LNG also decreased by 35 per cent to $2.5 billion from the December quarter 2008, reflecting a reduction in export volumes and prices.

Coal

Production of salable and raw black coal is estimated to have decreased in the quarter. Black coal export volumes also decreased by 14 per cent to 58 million tonnes.

In the March quarter, export unit values for thermal coal declined by 11 per cent, reflecting lower spot prices. The combination of lower export prices and the decrease in export volumes resulted in export earnings decreasing by 13 per cent to $5 billion. Export unit values for metallurgical coal declined by 18 per cent in the March quarter, reflecting increasing volumes sold at a discount to contract prices. Weaker global demand for steel-making raw materials was reflected by a 26 per cent decline in export volumes for metallurgical coal, which contributed to a 39 per cent decline in export earnings to $7.6 billion.

Uranium

Australia’s uranium production declined by 14 per cent to 2297 tonnes U₃O₈ in the March quarter, as production at both Energy Resources Australia’s Ranger operation and BHP Billiton’s Olympic Dam declined as lower grade ore was processed. Uranium export earnings increased by 19 per cent to $293 million in the quarter as a significant increase in average export prices offset a 14 per cent fall in export volumes.

Metals and other minerals

Iron ore

Despite interruptions caused by heavy rain at Rio Tinto’s and Fortescue’s Pilbara operations, iron ore production remained flat in the March quarter 2009 compared with the December quarter 2008. However, export volumes increased by 13 per cent in the March quarter 2009. This increase more than offset a decline in the export unit value, resulting in a 3 per cent increase in iron ore export earnings to $9 billion.

Gold

Gold mine production remained unchanged at 54 tonnes in the March quarter, while refined production grew strongly by 45 per cent to 129 tonnes. A three-fold increase in the volume of overseas sourced scrap refined in Australia for re-exporting was the main contributor to higher export volumes in the quarter. A strong rise in the US dollar denominated gold price and a modest depreciation of the Australian dollar led to an 14 per cent increase in unit export values. As a result of both increased export volumes and a higher Australian dollar denominated gold price, export earnings increased by 39 per cent to $5.4 billion in the March quarter 2009.

Copper

Copper mine production declined by 13 per cent in the quarter, partly attributable to lower production at Xstrata’s Ernest Henry and Mount Isa mines and a number of other smaller operations. Reflecting lower mine production and the closure of some SX-EW capacity in the quarter, refined production declined by 19 per cent to 109 tonnes. Export volumes fell by 27 per
cent in the March quarter. This combined with lower export prices resulted in the value of copper exports declining by 36 per cent to $1 billion.

Nickel

Nickel mine production declined by 10 per cent in the March quarter to 44 000 tonnes, as a result of a number of mine closures during the December 2008 and March 2009 quarters. These closures also affected production of intermediate products and class 2 refined nickel, with production of both down by more than 40 per cent. However, class 1 refined nickel production increased by 22 per cent, to 28 500 tonnes, as production at BHP Billiton’s Kwinana refinery resumed full production following disruptions in the September quarter 2008. Nickel export volumes declined by 14 per cent as a result of lower production of ores and concentrates, and intermediate products. Export values declined by 16 per cent as lower nickel prices reinforced the effects of falling export volumes.

Zinc

Zinc mine production fell by 24 per cent to 298 000 tonnes in the March quarter 2009 compared with the December quarter 2008. Lower production at a number of mines contributed to this decline, with the largest falls occurring at Oz Minerals’ Golden Grove and Century mines, and Xstrata’s Mount Isa operation. The value of zinc exports declined by 23 per cent to $358 million in the March quarter 2009, mainly attributable to a 18 per cent fall in the volume of zinc exports.

Quarterly export summary Australian minerals and energy sector
	export volume						export value
		Mar	Mar 08 to Mar 09 change	Dec 08 to Mar 09 change				Mar	Mar 08 to Mar 09 change	Dec 08 to Mar 09 change
			%	%					%	%
Bauxite	kt	1 157	–42	–47		Bauxite s	$m	33	–43	–43
Alumina a	kt	4 056	6	–8		Alumina a	$m	1 356	1	–33
Aluminium (ingot metal)	kt	434	5	–2		Aluminium (ingot metal)	$m	1 034	–15	–26
Coal, black						Coal, black
Metallurgical	Mt	24	–20	–26		Metallurgical	$m	7 627	163	–39
Thermal	Mt	35	16	–2		Thermal	$m	4 984	136	–13
Copper b	kt	168	–12	–27		Copper e	$m	1 013	–42	–36
Diamonds c	‘000 ct	3 175	40	–42		Diamonds cs	$m	95	–32	–42
Gold	t	124	39	17		Gems, other
Iron						than diamonds	$m	15	–19	36
Iron ore and pellets	kt	78 195	6	13		Gold, refined	$m	5 384	89	39
Iron and steel	kt	413	–17	4		Iron
Lead b	kt	126	15	–23		Iron ore and pellets	$m	8 985	81	3
						Iron and steel	$m	218	–36	–48
Manganese ore and concentrate s	kt	707	–42	150		Lead e	$m	319	–10	–32
Nickel d	kt	50	–8	–14		Magnesia	$m	19	10	–39
Petroleum						Manganese ore and concentrate s	$m	250	–34	3
Crude oil and other refinery feedstock	ML	4 044	2	–16		Nickel es	$m	534	–65	–16
LNG	Mt	4	14	–7		Petroleum
LPG	ML	549	–8	–8		Crude oil and other
Refinery products	ML	342	–25	19		refinery feedstock	$m	1 623	–37	–27
Salt	kt	2 748	1	1		LNG	$m	2 492	62	–35
Tin b	t	1 651	27	85		LPG	$m	196	–35	–32
Titanium						Refinery products	$m	210	–41	8
Ilmenite concentrate	kt	389	51	23		Salt	$m	59	–1	0
Leucoxene concentrate	kt	2	–20	–63		Silver, refined	$m	58	5	–20
Rutile concentrate	kt	148	45	28		Tin e	$m	26	40	46
Synthetic rutile s	kt	127	1	–1		Titanium
Titanium dioxide pigment	kt	26	–39	–10		Ilmenite concentrate s	$m	42	37	14
Uranium oxide (U3O8)	t	2 172	–9	–14		Leucoxene concentrate	$m	1	–24	–80
Zinc b	kt	294	–12	–18		Rutile concentrate	$m	98	37	53
Zircon concentrate	kt	174	8	4		Synthetic rutile s	$m	68	–8	15
						Titanium dioxide pigment	$m	85	–7	–11
						Uranium oxide (U3O8)	$m	293	70	19
						Zinc e	$m	358	–44	–23
						Zircon concentrate e	$m	134	25	–2
						Other mineral resources f	$m	1 093	–16	–31
						Total mineral resources g	$m	38 685	41	–18
						Total merchandise	$m	56 257	31	–16
						Total goods and services	$m	70 275	25	–13
a Includes aluminium hydroxide. b Metallic content of all ores, concentrates, intermediate products (where applicable) and refined metal. c Unsorted and sorted. d Includes metal content of ores and concentrates, intermediate products and nickel metal. e Value of all ores, concentrates, intermediate products (where applicable) and refined metal. f Derived as the difference between total mineral resources exports, below, and the sum of the above items. g Total mineral resource exports on an ABARE balance of payments basis. p Preliminary. s ABARE estimate. Sources: Australian Bureau of Statistics, Canberra; ABARE.

Quarterly production summary Australian minerals and energy sector
		March	Mar-08 to March 2009 % change	Dec-08 to March 2009 % change
Bauxite	kt	16 179	2	–3
Alumina	kt	4 810	0	–4
Aluminium (ingot metal)	kt	485	0	–3
Coal
Black, raw	Mt	105	14	–11
Black, salable	Mt	81	10	–11
Copper
Mine as	kt	198	–3	–13
Blister b	kt	101	15	–17
Refined	kt	109	8	–19
Diamonds	‘000 ct	4579	101	–16
Gold
Mine as	t	54	6	0
Refined	t	129	30	45
Iron
Iron ore and concentrate	kt	80 409	1	1
Iron and steel	kt	865	–46	–38
Raw steel	kt	1 136	–43	–33
Lead
Mine as	kt	122	–28	–27
Bullion b	kt	32	–22	–18
Refined	kt	45	–14	–20
Manganese	kt	737	–41	–17
Nickel
Mine as	kt	44	–10	–10
Intermediate	kt	6	–54	–45
Refined, class 1	kt	29	4	22
Refined , class 2	kt	3	–25	–40
Petroleum, field
Crude oil and condensate	ML	6 851	16	–9
LPG (naturally occurring)	ML	870	5	–7
Natural gas	Mm3	9 656	7	–4
Total refined petroleum	ML	9 620	3	–5
Salt	kt	2 804	1	0
Silver
Mine as	t	351	–30	–36
Refined	t	186	26	–1
Tin
Mine as	t	1439	198	62
Titanium
Ilmenite concentrate	kt	445	–18	–13
Leucoxene concentrate	kt	43	65	5
Rutile concentrate	kt	89	5	10
Synthetic rutile s	kt	190	23	3
Titanium dioxide pigment	kt	57	14	4
Uranium oxide (U3O8)	t	2297	–8	–14
Zinc
Mine as	kt	298	–18	–24
Refined	kt	126	4	0
Zircon concentrate	kt	146	–1	7
a Total metallic content of minerals produced. b Metallic content. p Preliminary. s ABARE estimate. na Not available. Sources: Australian Bureau of Statistics, Canberra; Coal Services Pty Limited; Queensland Government, Department of Natural Resources and Mines; ABARE.