Department of Industry, Science and Resources forecasters see Australia\u2019s mining and energy export earnings falling in the coming years
\nBut production growth and strengthening prices could support copper, gold and lithium exports
\nThe nickel sector is looking bearish though after BHP announced plans to shut its Nickel West business in WA<\/p>\n
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Australia\u2019s Office of the Chief Economist\u2019s has released its September 2024 quarterly for commodities and there are some great signs of improvement across copper, gold and lithium.<\/strong><\/p>\n As usual with the enduringly pessimistic analysts at Canberra\u2019s Department of Industry, Science and Resources, our export earnings are forecast to slide in the next couple years.<\/p>\n After hitting a record $466.3bn in 2022-23 and an 11% drop-off to $415.16bn in 2023-24, the Office of the Chief Economist thinks the value of all mining and energy exports will slide 10.3% again to $372.4bn in 2024-25 and 4.9% to $354.1bn in 2025-26, with only substantive export earnings growth to be seen in copper and uranium.<\/p>\n That\u2019s mainly due to some bearish forecasts for iron ore prices.<\/p>\n But with that in mind, we\u2019ve decided to drill down on Canberra\u2019s thoughts on some of the other commodities that matter to ASX investors.<\/p>\n Frst, we\u2019ll eat our veges with nickel as we run through the list:<\/p>\n \u00a0<\/p>\n Australia\u2019s nickel export earnings continue to be impacted by falling nickel prices and production cuts \u2013 none more noteworthy than BHP\u2019s (ASX:BHP)<\/strong><\/a> exit from nickel in WA.<\/p>\n It recently suspended its Nickel West operations in WA, which accounted for 80,000t of nickel, and was one of the largest suppliers of the copper demon outside Russia, China and Indonesia \u2013 largely due to the latter\u2019s ramp-up to become the world\u2019s largest source if the metal.<\/p>\n READ MORE: BHP shuts nickel operations as oversupply ends turnaround tale<\/a><\/strong><\/p>\n BHP has turned focus to copper in South Australia and South America, along with a bunch of ASX juniors<\/a>.<\/p>\n \u201cNickel prices fell to US$16,600\/t in the September quarter, as Indonesian supply growth outweighed production cuts in the rest of the world. New Indonesian supply growth and downside demand risks limit meaningful price increases over the forecast period,\u201d says Australia\u2019s Office of the Chief Economist\u2019s September 2024 quarterly<\/em><\/a>.<\/p>\n \u201cWorld demand for nickel remained robust in the June quarter 2024, however weakness in stainless steel production and EV sales may slow demand growth over the rest of the year.<\/p>\n \u201cWeaker prices and reduced production from major mine closures are expected to see Australian nickel export earnings fall by over half to $1.4 billion in 2024\u201325, declining further to $1 billion in 2025\u201326.\u201d<\/p>\n Of Australia\u2019s more than half dozen or so nickel operations at the start of 2024, only IGO\u2019s (ASX:IGO)<\/strong><\/a> Nova and Glencore\u2019s Murrin Murrin have yet to be paused or been announced as heading into care and maintenance.<\/p>\n \u00a0<\/p>\n The department says Australian gold export earnings have been revised up sharply from the June 2024 Resources and Energy Quarterly<\/em>, because of new record prices that have increased >30% since the start of 2024 and keep pushing up record highs.<\/p>\n \u201cThe increase is a result of continued and increasing geopolitical uncertainty, coupled with easing in global monetary conditions. Prices are forecast to remain elevated throughout the forecast period,\u201d says the department.<\/p>\n \u201cIn the June quarter 2024, Australian gold production decreased by 6.0% year-on-year because of lower grades and weather-related disruptions. Yearly gold production is forecast to fall slightly in 2024 before resuming growth in 2025 as new projects and expansions come online.\u201d<\/p>\n One of those new projects is De Grey Mining\u2019s (ASX:DEG)<\/strong><\/a> Mallina in WA\u2019s Pilbara which contains a whopper of deposit, Hemi, set to become a top five producer with a contained +10Moz gold and is still being proven up further as it bats off takeover offers.<\/p>\n READ MORE:\u00a0Gold Digger: US rate cuts spark new gold record as De Grey shuns takeover offer<\/a><\/strong><\/p>\n \u201cAustralia\u2019s gold exports were a record $32.9 billion in 2023\u201324. Higher prices should lift earnings to $34.8 billion in 2024\u201325. Higher export volumes and prices should then lift earnings to $35 billion in 2025\u201326.\u201d<\/p>\n Gold is being sought after across all stages of the exploration and development spectrum, with bullion hunters rising to the occasion, such as\u00a0Spartan Resources (ASX:SPR)<\/strong><\/a> with its hot Never Never discovery and Brightstar Resources (ASX:BTR),<\/strong><\/a> whose acquisitions of small regional players is emblematic of the M&A fever around the WA Goldfields.<\/p>\n \u00a0<\/p>\n From an average of US$9750\/t in the June quarter, refined copper prices averaged US$1000\/t less in August 2024 because of rising inventories, a weak Chinese property sector and slower US economic growth, the quarterly notes.<\/p>\n Yet that\u2019s not stopping a plethora of juniors and majors alike turning towards increased exploration and production of the red metal and has a long-term demand forecast.<\/p>\n It\u2019s not just South America that miners are turning their focus to though, as our very own mining guru Josh Chiat<\/em> tells us.<\/p>\n READ MORE: Australian copper enters new era where scale is king<\/a><\/strong><\/p>\n \u201cGlobal copper consumption is forecast to grow by 2.5% and 3.2% in 2025 and 2026 respectively. Growth will primarily be driven by manufacturing, the energy transition and construction in the US, China and India,\u201d the chief economist writes.<\/p>\n Copper prices themselves are forecast to average US$9370\/t in 2024, rising to US$9766\/t in 2026 and Australian copper export earnings \u201care forecast to reach around $15.4 billion in 2024\u201325, [while] growth in production and exports will then see export earnings reach $15.6 billion in 2025\u201326\u201d.<\/p>\n \u00a0<\/p>\n Australia\u2019s lithium export earnings are forecast to fall from $9.9 billion in 2023\u201324 to $6.3 billion in 2024\u201325 before bouncing back to $8.2 billion in 2025\u201326. But global lithium demand is forecast to rise by an insane 17% a year between 2023 and 2026, driven by rising EV adoption.<\/p>\n Australia produced around 39% if global lithium carbonate equivalent supply in 2023, analysts at the department said. That will slip to 38% by 2026 despite Australia being the jurisdiction with the largest absolute growth profile.<\/p>\n Prices will dominate the overall direction of earnings.<\/p>\n \u201cThe fall (in export earnings) will be driven by a weaker lithium price, partially offset by a 55% increase in Australia\u2019s lithium mine production over the outlook period. However, EV adoption is rising slower than expected as sales remain weak in the US and EU markets,\u201d the office says.<\/p>\n Good news is on the horizon though and many analysts think the lithium price has already bottomed out.<\/p>\n READ MORE:<\/strong> High Voltage: Lithium sentiment is up but prices are still under pressure<\/strong><\/a><\/p>\n \u201cThe market surplus is expected to narrow following the suspension of some production, including a major Chinese lepidolite mine in September 2024. Australia is forecast to add more lithium supply than any other country between 2023 and 2026, but substantial supply is also expected from Argentina, China and Zimbabwe.\u201d<\/p>\n The post Chief economist sets scene for nickel, gold, copper and lithium<\/a> appeared first on Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"Nickel woes as Aussie production slows<\/h2>\n
Gold shines for Australia once again<\/strong><\/h2>\n
Copper craze(y)<\/h2>\n
Lithium to go hard from rock bottom<\/strong><\/h2>\n