Demand, prices fuel record resource figures

It has been a year of record-breaking results in the resources sector as economic powerhouses China and India fuel demand and world prices for the majority of commodities continue their upward trajectory. 

According to the Department of Industry and Resources, the strong demand overseas for resources and rising commodity prices has resulted in the value of Western Australia’s petroleum and mineral resources rising by 29 per cent to a record $43.2 billion in 2005-2006.

The preliminary statistics show petroleum was the largest resources sector by value, reaching $15.2 billion, a 23 per cent increase.

Iron ore is ranked second with a record 244 million tonnes sold at a value of $13 billion, representing a 56 per cent increase from 2004-05.

Both of these industries accounted for 65 per cent of the $43.2 billion total value for 2005-06.

Other commodities that have increased significantly in value include alumina (up 19 per cent to $4.11 billion), nickel (up 8 per cent to $3.79 billion) and gold (up 18.5 per cent to $3.57 billion).

Chamber of Minerals and Energy chief executive Tim Shanahan said the results demonstrated continued strong performance by the resources industry.

“Driven by an increasing demand for resources from fast growing economies such as China and India, as well as an increase in world prices for the majority of commodities, the Australian and state resource sector is expected to continue to experience increases in export earnings underpinning the critical role of our industry to national and state economic performance,” he said.

According to the Australian Bureau of Agriculture and Resources Economics (ABARE), WA’s export earnings from the minerals and energy sector soared to $90.5 billion, an increase of 32 per cent on last year, with coking coal, iron ore and copper the strongest performers in export earnings.

Iron ore and gold led the price charge. ABARE valued iron ore at $52.24 per tonne in 2005-06, up from $35.54/t in 2004-05, and gold was valued at US$526.95 an ounce, up from US$422.49/oz in 2004-05.  

The price of commonly quoted West Texas Intermediate crude oil increased to a high of US$75 a barrel in late April. In the first six months of 2006, the price of WTI crude oil was estimated to have averaged US$66/bl while for 2005-06 the average price was US$57/bl.

Mining royalties for iron ore and petroleum (including North West Shelf grant) remain the two biggest contributors of royalty revenue, with $806 million and $735 million respectively, according to estimated actual figures from the 2006-07 budget papers.