Total earnings from Australian minerals and energy exports are forecast to rise 6% to $59.9 billion in 2002/03.
Vivek Tulpule, the Australian Bureau of Agriculture Resource Economics' (ABARE) research director, announced the news at this week's Outlook 2002 conference in Canberra.
Tulpule says export earnings are forecast to rise further in 2003/04 to $60 billion in real terms (2001/02 dollars), before easing to $54.9 billion in 2006/07.
"Following weak consumer demand in 2001/02, world minerals and energy demand is forecast to improve considerably over the next two years as world economic activity rebounds," he says.
In the long term, however, mine-production capacity of most commodities is expected to rise, increasing global supplies and resulting in lower world prices. This, coupled with the assumed appreciation of the Australian dollar, is forecast to result in a fall in Australia's export earnings in real terms, Tulpule says.
Jim Lennon, executive director of commodities research at Macquarie Bank, adds that world minerals markets are embarking on a period of slower growth in traditional consuming countries.
"The stunning rise in the importance of China and, on a smaller scale, the possible resurgence in demand growth in the former Soviet Union and eastern Europe," will all
contribute to this trend Lennon believes.
A powerful bull market in base metals over 2003/04 is offset by the outlook for low capital expenditure in new capacity and doubts in China's ability to grow supply for most metals, he says.
John Akehurst, managing director of Woodside Petroleum, says that oil explorer companies will have to incorporate declining oil prices into their investment decision making from now on.
"Australia is currently effectively consuming oil reserves three times as fast as [it is] finding them. Australia is at a critical point in its ability to continue to meet the majority of its oil requirements from local production.
"Petroleum demand continues to grow, production from existing fields is declining and the industry's interest in new oil exploration areas in Australia is at a low level. However, options are available to slow down this trend in the growth of oil imports.
"Australia currently has over 100 years of gas reserves at current production levels. Substitution of gas for oil is hence an important issue for Australia, with the substantial reserves of gas that Australia has," he says.
Bob Kirby, president of carbon steel minerals at BHP Billiton, told delegates there is a sound rationale for consolidation in the resources industry.
It would provide stability to cash flow required for long-term views on every aspect of the resource business, diversify commodity portfolio positions to allow better management of volatile operating conditions and better results for stakeholders, and an enhanced capacity to serve customers with a wider scope of offerings.
Encouraging professionals to seek careers in mining exploration, production and processing is vital to ensure a viable future for the resources industry, Kirby says.