Iron Ore Tipped to Prolong Boom

The resources boom is forecast to roll on next year, taking export earnings from energy and minerals 15 per cent higher to a record $206 billion.

The forecast by the federal government's chief commodities forecaster, the Bureau of Resources and Energy Economics, is built on the expectation that there will be strong growth in export volumes for iron ore and coal, and higher gold prices.

''Despite the uncertainty surrounding the outlook for some European economies, Australia's export volumes for most commodities have remained strong in the second half of 2011, while prices for many commodities have remained at historically high levels,'' BREE said.

BREE's forecast growth in export earnings from $179 billion in 2010-11 helps fuel the government's confidence that revenue from the mining tax on iron and coal will at least approach levels previously projected, making its target of a budget surplus next year and beyond more attainable.

But BREE's forecasts are just that, with price weakness in recent days in gold and base metals already prompting concerns that Europe's debt woes and a slowdown in the Chinese economy could batter commodity prices in the months ahead.

BREE noted in its Resources and Energy Quarterly (December quarter), released yesterday, that risks to the outlook for Australia's minerals and energy exports had increased over the past quarter.

That is reflected in the forecast value of exports being revised down by 4 per cent from the September forecast.

The growth in export earnings is led by iron ore (up 11 per cent to $60 billion); metallurgical coal (up 13 per cent to $34 billion); gold (up 45 per cent to $19 billion); thermal coal (up 34 per cent to $19 billion); crude oil and condensate (up 21 per cent to $14 billion); and liquefied natural gas (up 15 per cent to $12 billion).

The forecast increase on a tonnage/volume basis is led by thermal coal (up 14 per cent to 163 million tonnes); iron ore (up 13 per cent to 460 million tonnes); gold (up 12 per cent to 336 tonnes); copper (up 10 per cent to 935,000 tonnes) and metallurgical coal (up 7 per cent to 150 million tonnes).

''The increase in iron ore and thermal coal export volumes reflects recent expansions to mine and infrastructure capacity, while metallurgical coal exports are forecast to be higher as production conditions improve in Queensland,'' the bureau said.