25/06/2008 - 22:00

Miners leading export surge

25/06/2008 - 22:00

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Australia's commodity exports are tipped to surge 40 per cent to $212 billion during the coming financial year, led by massive growth in the minerals and energy sectors.

Miners leading export surge

Australia's commodity exports are tipped to surge 40 per cent to $212 billion during the coming financial year, led by massive growth in the minerals and energy sectors.

The predicted growth is up from a forecast increase of 30 per cent released just three months ago.

In the interim, there have been further big increases in commodity prices, led by coal and iron ore.

But the forecasts, released this week by the Australian Bureau of Agricultural and Resource Economics, could already be out of date.

Rio Tinto announced this week that its subsidiary, Hamersley Iron, had achieved a surprisingly large 85 per cent increase in its average sale price for 2008-09.

"The agreement reflects the continuing very strong demand in the market for Hamersley's products," Rio Tinto Iron Ore chief executive Sam Walsh said in a statement.

Other iron ore exporters, led by BHP Billiton, are likely to accept a similar price increase.

Abare's export forecasts assume 18 per cent growth in the volume of iron ore exports next financial year, helped by the emergence of Fortescue Metals Group as a third major exporter.

Notably, commodities produced mainly in Western Australia are expected to achieve the biggest volume growth, led by iron ore (18 per cent), liquefied natural gas (15 per cent) and nickel (11 per cent).

In contrast, coal exports, which have been constrained by infrastructure bottlenecks on the east coast, are expected to grow by just 7 per cent.

Big increases in coal prices ensure it will remain Australia's number one commodity export.

Abare said farm sector exports were predicted to rise 12 per cent to about $30 billion, with the good news covering everything from wheat and barley to sorghum, sugar and wine.

But the rosy forecast does depend on good rainfall as parts of the country remain in drought, Abare acting executive director Karen Schneider said.

Minerals and energy exports are tipped to reach $178 billion, up from $120 billion in 2007-08.

"While the forecast recovery in farm-sector performance is very encouraging, the strength of Australia's minerals and energy exports continues to underpin commodity sector performance," Ms Schneider said.

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