Contents

Executive Summary 4 Resources insights

Overview 5 Aluminium – Box 11.1
Russia’s aluminium/alumina/bauxite production and trade 111
Macroeconomic Outlook 15

Steel 25

Iron Ore 34

Metallurgical Coal 44

Thermal Coal 54

Gas 65

Oil 76

Uranium 85

Gold 91

Aluminium 101

Copper 113 Trade summary charts and tables 143

Nickel 122 Appendix A: Definitions and classifications 150

Zinc 128 Appendix B: Glossary 153

Lithium 135 About the edition 159

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Department of Industry, Science and Resources, Commonwealth of Australia
Acknowledgements Resources and Energy Quarterly September 2023.
The authors would like to acknowledge the contributions of: The Commonwealth of Australia does not necessarily endorse the content of this
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and Crystal Ossolinski. addressed to [email protected]

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Executive Summary Nonetheless, reduced global supply of energy commodities following the
implementation of Russian sanctions has raised the vulnerability of
The profile for Australian resource and energy export earnings is little gas/LNG/coal prices to supply outages and demand spikes. As such, there
changed from the September 2023 Resources and Energy Quarterly is more uncertainty than in the past around how energy prices may
(REQ) report, improving slightly in aggregate. Exports are forecast to be develop through the Northern Hemisphere winter and summer demand
$408 billion in 2023–24, down from a record $466 billion in 2022–23 — peaks. Stockpiles of gas in Europe are high heading into winter. Likewise,
when the fallout from the Russian invasion of Ukraine contributed to a high stocks of thermal coal in China and Europe have seen thermal coal
major spike in energy prices. Exports are forecast at $348 billion in prices come down.
2024–25 as prices soften and the AUD/USD lifts.
There has been a surge in uranium prices in recent months. New supply
World economic growth remains relatively soft, weighed down by tighter problems have added to the impact of hoarding and, on the demand side,
financial conditions; central banks in the major Western economies some nations continue to favourably reconsider the role nuclear power can
continue to clamp down on inflation, and inflation appears to be easing in make in meeting their ‘net zero’ targets and ensuring their energy security.
some nations. The IMF’s latest forecasts (October) are largely unchanged.
However, concerns around a hard landing in the US have eased Bond yields recently hit decade highs, as the fixed interest market
considerably and the outlook for China has improved, given stronger than reassessed how high the US Fed Funds rate would need to go and for
expected economic results and the Government taking further measures how long. High bond yields would normally have hurt the gold price, but
to stabilise the nation’s residential property sector. Both developments geopolitical tensions have helped sustain gold at close to US$2,000 an
help the outlook for resource and energy commodity demand. ounce.

Strong capital expenditure (on infrastructure and in the manufacturing There are high chances of drier than normal conditions in eastern Australia
sector) and rising motor vehicle exports have helped sustain Chinese steel over the next 3-6 months. This lowers the risk of wet weather and flooding
production in the face of falling residential construction. Steady world steel that have adversely impacted mines and transport routes since 2020.
output and low Chinese iron ore inventories recently helped push iron ore However, the El Niño-driven drought in Indonesia is lowering river levels,
prices above US$120 a tonne. Other bulk commodity prices also remain making it increasingly difficult to barge thermal coal to export ports.
high in historical terms. The metallurgical coal market remains tight due to Lithium prices have fallen further from the record peak in late 2022. Driving
supply problems, including lower Russian exports. Improving supply is the fall has been concerns about short term demand for electric vehicles
expected to see bulk commodity prices to drift down in the outlook period. and ongoing increases in lithium supply. Export volumes of Australian
To date, there has been very limited impact of the conflict in the Middle lithium ores and chemicals are still expected to grow strongly over the
East on the global economy and energy prices. After repeated OPEC+ outlook period, with lithium hydroxide set to account for a rising share of
supply cuts, world oil stocks remain relatively low, keeping oil prices more those exports. The long-term outlook for lithium demand remains strong,
vulnerable to supply shocks. Worries that the Hamas-Israel conflict could as does Australian lithium producers’ ability to compete.
cause a disruption to Middle East oil and LNG supplies sparked a rise in
energy prices early in the December quarter. But weak world demand and
the absence of any fallout on Middle East oil supply has helped move oil
and LNG prices back close to pre-conflict levels.

Resources and Energy Quarterly | December 2023 4

Resources and Energy Quarterly | December 2023 5
1.1 Summary investment: with slow company sales, Chinese equities are weak, and
 In net terms, the outlook for Australian resource and energy commodity high/rising interest yields in the West are also causing capital flows away
exports has improved slightly since the September edition of the REQ. from China, where official rates are falling. In the September quarter 2023,
The world economy has not slowed as sharply as feared a few months China recorded negative foreign direct investment (of US$11.8 billion) for
ago and the Chinese Government has taken further measures to the first time since 1998. Nevertheless, there are pockets of strength: the
stabilise the nation’s residential property sector, maintaining demand for Chinese steel and auto sectors have proven significant sources of demand
a range of resource and energy commodities. for resource commodities in recent months. Chinese steel output has been
assisted by higher infrastructure spending in China and strong steel
 The latest forecast is for weaker growth in world demand and improving
exports. Chinese auto exports have risen six-fold in the past 3 years to 4.2
world commodity supply to cut Australia’s resource and energy export
million a year. China recently overtook Germany as the world's 2nd
earnings from a record $466 billion in 2022–23 to $408 billion in 2023–
biggest car exporter.
24. Another fall seems likely in 2024–25, as commodity prices soften
further and monetary policy expectations imply a stronger AUD/USD. Geopolitical developments continue to pose risks to the outlook for
 Key September-quarter price developments include: higher iron ore commodity markets. The Hamas-Israel conflict has caused volatility in
prices as firm Chinese demand persists, higher uranium prices on supply energy markets. New sanctions on Russia over its invasion of Ukraine
problems and as countries re-evaluate nuclear power, and lower lithium would further harm its ability to produce/export resource and energy
prices due to rising stockpiles and concerns about near-term EV commodities. While Europe has sourced new supplies of natural gas, the
production/demand. implications for energy pricing during hot and cold seasons in the Northern
Hemisphere are not yet well understood. Government policies to drive net
1.2 Macroeconomic, geopolitical and policy factors zero and geostrategic interests are also having ongoing impacts on the
The world economy is growing at a relatively slow rate demand for low emission minerals and energy commodities.
The world economy remains relatively subdued, mainly due to tighter Climate drivers have recently shifted. The current El Niño weather episode
monetary conditions adopted by most central banks over the past twenty has a high chance of lasting through H1 2024, and the Indian Ocean
months. Since the last REQ, most Western central banks have kept a Dipole is very high at present. Both factors suggest miners in Australia are
tightening bias to cut inflation and anchor inflation expectations. Services less likely than normal to be affected by wet weather and the flooding of
inflation in the West remains high, due to tightness in their labour markets. mines and transport routes. But drought in Indonesia is lowering river
Forecasts are for OECD economic growth to slow and labour market levels, making it more difficult to barge thermal coal to ports used by large
tightness to ease, so that services inflation should fall, giving central banks cargo ships in the export trade.
scope to withdraw their current restrictive monetary stance. There are The IMF expects global economic growth of 3.0% in 2023 and 2.9% in
signs that China’s economic growth has steadied at relatively low levels as 2024, down from 3.5% in 2022. Growth in developed nations is expected
Beijing rolls out more measures to stabilise China’s residential property to slow from 2.6% in 2022 to 1.5% in 2023 and 1.4% in 2024. Developing
sector. and emerging market economies are forecast to grow by 4.0% in 2023 and
The relatively slow rate of economic growth in China is causing higher 2024. China is forecast to grow by 4.6% in 2024, down from 5.4% in 2023.
unemployment — especially among young people — and deterring foreign

Resources and Energy Quarterly | December 2023 6

AUD finding support Figure 1.1: Australia’s resource and energy export values/volumes
The AUD/USD has steadied in recent months. Influences include market 120 480
optimism over Chinese government efforts to stabilise China’s property
sector, and currency market expectations that the Australian-US interest 100 400
rate differential is likely to narrow. The consensus forecast adopted is for

Index, 2023–24 = 100

the AUD/USD to lift over the outlook period. 80 320

A$ billion
Risks are evenly balanced 60 240
Risks to the aggregate revenue forecasts appear evenly balanced. While
the outlook for the world economy is for relatively modest growth in the 40 160
forecast period, unemployment remains low in historical terms, helping to
20 80
sustain household consumption and corporate profitability. Inflation has
eased in a number of nations Unemployment may rise as the more recent
0 0
official interest rate hikes impact fully. A widening of the Hamas–Israel 2007–08 2011–12 2015–16 2019–20 2023–24
conflict poses a significant risk to energy commodity and financial markets.
Volumes Values
1.3 Export values Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
Industry, Science and Resources (2023)
Australia’s export values are forecast to be $408 billion in 2023–24
Figure 1.2: Annual growth in Australia’s resources and energy export
The world economic slowdown and fewer supply disruptions generally values, contributions from prices and volumes
reduced commodity prices over the past quarter. The Resources and
45
Energy Export Values Index fell 20% from the September quarter 2022: a
small rise in volumes partly offset the impact of a sharp fall in prices.
30
There is only modest change in the aggregate forecasts since September.
Resource and energy exports are forecast to be $408 billion in 2023–24,
15

Per cent
down from a record $466 billion in 2022–23 (Figure 1.1). Weak demand
and improved global commodity supply imply a fall prices, more than
0
offsetting the impact of a forecast small rise in export volumes (Figure 1.2).
Export values are forecast to fall by 15% to $348 billion in 2024–25: prices
will fall but volumes will be flat. -15

Within the totals, energy export earnings are set to fall sharply. LNG
-30
earnings are forecast to fall by $20 billion to $73 billion in 2023–24, as 2007–08 2011–12 2015–16 2019–20 2023–24
prices settle well below 2022 levels. A further fall of $8 billion is forecast in
Prices Volumes Values
2024–25. Thermal coal exports are forecast to fall even more sharply, from Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
$66 billion in 2022–23 to $36 billion in 2023–24 and $28 billion in 2024–25. Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 7

Among resource commodities, iron ore remains the largest earner by far, In Australian dollar terms, the Resources and Energy Commodity Price
forecast to earn about $131 billion in 2023–24, but fall to $102 billion in Index fell by 3% (preliminary estimate) in the December quarter 2023, to
2024–25. The sharp retracement in lithium prices is expected to see be down 20% on a year ago. In US dollar terms, the index fell by 4% in the
lithium exports fall from $20 billion in 2022–23 to $14 billion in 2023–24. quarter, to be down 22% on a year ago. Resource export prices (in A$
Export values should stabilise at around $15 billion in 2024–25. terms) rose by 4% in the year to the December quarter 2023, while energy
prices fell by 36%.
1.4 Prices
Iron ore prices have lifted in recent months driven by improved market
Since the September 2023 Resources and Energy Quarterly, resource and sentiment following a series of Chinese government measures to support
energy prices have generally declined in US$ terms (Figure 1.3). Slower growth (Figure 1.4). Chinese stockpiles are on the low side. Metallurgical
world economic growth has overwhelmed the impact of new efforts by the coal prices have edged up due to concerns over tight supply. Prices
Chinese government to boost growth. Prices are likely to fall further but remain above pre-war levels, as some Russian supply remains stranded
remain above pre-pandemic levels as markets expect a recovery in from world markets.
demand — with inflation falling towards target levels overseas, central
banks (particularly the US) are expected to move away from their current Figure 1.4: Bulk commodity prices
restrictive monetary policy stance. 600

Figure 1.3: Resource and energy export prices, A$ terms 500

Index, June 2014 = 100

175
400
Index, December quarter 2023 = 100

150
300
125
200
100
100
75
0
50 Jun–14 Jun–16 Jun–18 Jun–20 Jun–22 Jun–24
Iron ore Metallurgical coal Thermal coal
25
Notes: Prices are in US dollars, and are the international benchmark prices
0 Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)
Jun–08 Jun–12 Jun–16 Jun–20 Jun–24
Resources Energy Total resources and energy Energy prices remain elevated in historical terms but are continuing to
Notes: The export price index is based on Australian dollar export unit values (EUVs, export ease. Thermal coal prices have experienced some recent weakness due
values divided by volumes); the export price index is a Fisher price Index, which weights to high inventory levels in China and Europe but are still holding well
each commodity’s EUV by its share of total export values.
above pre-pandemic levels. LNG prices are expected to lift slightly as the
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
Industry, Science and Resources (2023) Northern Hemisphere winter peaks. Prices should subsequently edge

Resources and Energy Quarterly | December 2023 8

back, with a more rapid decline when new supply from the US and Qatar Since the last REQ, lithium prices (spodumene and lithium hydroxide)
comes online in 2025. Gas/LNG markets remain more vulnerable to supply have given up some more of the sharp gains of recent years. Lithium is
shocks following the stranding of significant quantities of Russian output, entering a period of market surplus, and some producers have announced
but strong European inventories should provide a degree of insulation. production cuts in response to the weakness in the market and prices.
Finally, the gold price has risen since the last REQ on the back of rising
Oil prices have declined substantially after peaking at US$98 a barrel in
geopolitical tensions in the Middle East. In the short term, worries over the
late September. Strong supply from the US, Brazil and Iran is offsetting
Chinese property market could boost Chinese demand for gold.
output cuts by Saudi Arabia. Chinese imports of industrial fuels have been
strong but this has been offset by falls in OECD demand. Lower prices 1.5 Export volumes
have prompted the US Administration to make plans to refill Strategic
December quarter export volumes rose
Reserves in early 2024.
The Resources and Energy Export Volumes Index (preliminary estimate)
Base metal prices remain relatively soft, due to a poor near term outlook rose 5% in the December quarter 2023 from the September quarter, to be
for construction and manufacturing in major markets such as Europe and up 5% on a year ago. Resource commodity volumes rose by 5% in the
Advanced Asia (Figure 1.5). Nickel has been particularly weak as year to the December quarter 2023 and energy export volumes recorded
Indonesian production continues to surge. Prices are expected to be similar gains (Figure 1.6). Better weather conditions and easing workforce
relatively soft over 2024, though low inventories of most metals and problems have driven the improvement. In volume terms, most resource
increased infrastructure-related (particular for energy) demand are exports are likely to show only modest growth in 2024 but pick up with
expected to constrain price falls. Prices may pick up if signs of a rebound improved world economic growth in 2025. High prices and the global
in the world economy become evident. energy transition may hurt energy production and exports.
Figure 1.5: Base metal prices Figure 1.6: Resource and energy export volumes
200 120
180

Index, December 2023 = 100

160 100
Index, June 2014 = 100

140
120 80
100
80 60
60
40
40
20 20
0
Jun–14 Jun–16 Jun–18 Jun–20 Jun–22 Jun–24 0
Aluminium Copper Nickel Zinc Jun–14 Jun–16 Jun–18 Jun–20 Jun–22 Jun–24
Notes: Prices are in US dollars, and are the international benchmark prices Resources Energy
Source: Bloomberg (2023); Department of Industry, Science and Resources (2023) Source: Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 9

Energy exports will level out in 2024, as the sharp price falls of the past Mining investment is picking up year-on-year
year temper production and encourage delayed maintenance to occur. An The latest ABS Private New Capital Expenditure and Expected
El Niño climate episode is under way, and the Indian Ocean Dipole is Expenditure survey shows that Australia’s resources industry invested
strongly positive. Both phenomena dramatically lower the chances of the $12.9 billion in the September quarter 2023, up 22% from the September
type of wet weather disruptions that hampered the production and quarter 2022. In quarterly terms, investment grew for oil & gas mining and
transportation of Australian mining products in the two years before 2023. ‘other mining’, which includes lithium and some other critical minerals
(Figure 1.8).
1.6 Contribution to growth and investment
In real terms, mining output fell while the overall economy grew modestly Figure 1.8: Mining capex by commodity, not seasonally adjusted
Australia’s real GDP rose by 0.2% in the September quarter 2023, to be 18
up 2.1% from a year before. Mining value-added fell by 1.0% in the
September quarter but was still 0.5% higher than in June 2022 (Figure 15
1.7). The quarterly fall was driven by weaker Iron Ore Mining (down by
1.6% (partly due to maintenance issues), Oil and Gas Extraction (down 12

A$ billion
1.5%) and Other Mining (down by 1.2%). Coal Mining (down by 0.2%)
continues to recover from the impact on production of the La Niña weather 9
episode. Exploration rose by 3.5% to be up 11.8% over the year.
6
Figure 1.7: Contribution to quarterly growth, by sector
6 3
5
0
4 2013 2015 2017 2019 2021 2023
3 Oil and gas extraction Metal ore mining
Percentage points

2 Coal mining Other mining

Notes: Other mining includes non-metallic mineral mining and quarrying and exploration and
1
other mining support services; chart data is in nominal, original terms
0 Source: ABS (2023) Private New Capital Expenditure and Expected Expenditure, 5625.0
-1
Expenditure for buildings and structures rose by 6% in the September
-2 quarter, while investment in equipment, plant and machinery rose by 5%,
-3 capping off two years of strong growth (Figure 1.9).
Jun–14 Jun–16 Jun–18 Jun–20 Jun–22
Coal mining Iron ore mining Spending on plant and machinery has accounted for a steadily rising share
Oil and gas extraction Other mining of total investment spending since 2017, but spending on buildings and
Mining total
structures is now growing steadily.
Source: ABS (2023) Australian National Accounts, 5206.0

Resources and Energy Quarterly | December 2023 10

Figure 1.9: Mining industry capital expenditure by type, quarterly Figure 1.10: Mining industry capital expenditure, fiscal year
25 5 100

20 4 80

A$ billion
A$ billion

15 3 60

$ billion
10 2 40

5 1 20

0 0 0
2005 2008 2011 2014 2017 2020 2023 2013–14 2015–16 2017–18 2019–20 2021–22 2023–24
Buildings & structures Equipment plant & machinery (rhs) Actual Expected
Notes: Chart data is in nominal terms, seasonally adjusted. Notes: Chart data is in nominal terms
Source: ABS (2023) Private New Capital Expenditure and Expected Expenditure, 5625.0 Source: ABS (2023) Private New Capital Expenditure and Expected Expenditure, 5625.0

Forward expectations suggest that total mining industry investment in Exploration expenditure (adjusted for inflation) rose by 6% to $1.04 billion
2023–24 is set to rise in the near-term (Figure 1.10). The fourth estimate in the September quarter 2023. In trend terms, exploration is rising,
for 2023–24 suggests the mining industry will invest $51 billion during the encouraged by relatively high commodity prices and the need for minerals
financial year. This is around 9% higher than the third estimate in the vital to the global energy transition (Figure 1.11).
survey and more than 15% higher than the second estimate for 2023–24. Industries recording significant growth in exploration expenditure include
The latest data on investment among individual commodities shows ‘other petroleum (up by 42% in the September quarter), coal (up by 45%), and
mining’ (including lithium) has been sustained at relatively high levels, and iron ore (up by 24%). ‘Other minerals’, which includes lithium, grew at a
this may be driving the recent upward revisions to future spending slower rate in the quarter (up by 9%). However, this follows several
estimates across the mining sector. quarters of very strong growth. Exploration overall rose solidly in the
September quarter, with growth across a wide range of commodities
(Figure 1.12).
Exploration spending is a leading indicator of broader capital investment,
and recent growth suggests interest is rising in base metals and critical
minerals following recent strong price outcomes. Given the typical lags
involved, we could expect capital spending by resource and energy
companies to continue to lift over the next few years.

Resources and Energy Quarterly | December 2023 11

Figure 1.11: Mining capital expenditure vs exploration (real, quarterly) 1.7 Revisions to the outlook
30 2.5 The forecast for Australia’s resources and energy exports in 2023–24 is
$8 billion higher than the forecast contained in the September 2023
24 2.0 Resources and Energy Quarterly. The forecast for 2024–25 (nominal
prices) is $5 billion lower than the same report (Figure 1.13). The 2023–24
revisions have largely been driven by an upward revision to the iron ore
18 1.5
price and the impact of a weaker than expected exchange rate against the

A$ billion
A$ bilion

US dollar (AUD/USD). The 2024–25 revisions have been driven by the

12 1.0 impact of a stronger forecast exchange rate.

Figure 1.13: Resource and energy exports, by forecast publication

6 0.5

475 475
0 0.0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 450 450
Mining capex, chain volume measures Exploration (rhs) 425 425
Source: ABS (2023) Private Capital Expenditure Survey, Chain Volume measure, 5625.0

A$ billion
400 400
Figure 1.12: Shares of exploration expenditure by commodity type
375 375
80%
350 350
70%
60% 325 325
Shares of total

50% 300 300

2020–21 2021–22 2022–23 2023–24 2024–25
40%
Actual Jun–23 forecast
30% Sep–23 forecast Dec–23 forecast
20% Source: Department of Industry, Science and Resources (2023)

10%
0%
2003 2007 2011 2015 2019 2023
Petroleum Base and otber metals
Iron ore Coal
Gold
Source: ABS (2023) Private Mineral and Petroleum Exploration, 8412.0

Resources and Energy Quarterly | December 2023 12

 Figure 1.14: Australia’s major resources and energy commodity Annual per cent change
exports, nominal
2023–24 f 2024–25 f
volume EUV value volume EUV value

Iron ore
Iron ore A$124b
A$131b
     
A$102b 2 4 6 2 -24 -22

LNG A$73b
LNG
A$92b      
A$64b -2 -19 -21 -1 -10 -12

Thermal coal A$36b

A$66b Thermal coal      
A$29b 11 -50 -45 0 -21 -20

Metallurgical coal
A$62b
A$52b
Metallurgical coal      
A$41b 6 -22 -17 5 -25 -21

Gold
A$24b
A$26b
Gold      
A$21b 15 -6 8 -5 -15 -19
     
$A billion

A$20b Lithium
Lithium A$14b
A$15b 3 -33 -31 18 -7 10

Crude oil
A$13b
A$14b
Crude oil      
A$11b 1 4 5 -6 -12 -17

Copper
A$12b
A$13b
Copper      
A$13b 3 1 4 8 -3 5

Alumina
A$8b
A$9b
Alumina      
A$9b 3 3 7 4 -2 2

Aluminium
A$5b
A$5b
Aluminium      
A$5b -1 -6 -6 1 -2 -1

Nickel
A$5b
A$4b
Nickel      
A$4b 7 -27 -22 14 -3 11

Zinc
A$4b
A$4b
Zinc      
A$4b 12 -18 -8 -2 0 -1
0 20 40 60 80 100 120 140
2022–23 2023–24 f 2024–25 f
Notes: f forecast; s estimate. EUV is export unit value.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 13

Table 1.1: Outlook for Australia’s resources and energy exports in nominal and real terms
Percentage change

Exports (A$m) 2021–22 2022–23 2023–24f 2024–25f 2021–22 2022–23 2023–24f 2024–25f
Resources and energy 421,691 466,310 408,380 347,717 36.7 10.6 –12.4 –14.9
– realb 471,246 486,898 408,380 336,112 30.9 3.3 –16.1 –17.7
Energy 204,056 238,727 180,336 151,092 151.2 17.0 –24.5 –16.2
– realb 228,035 249,267 180,336 146,049 140.5 9.3 –27.7 –19.0
Resources 217,635 227,583 228,044 196,625 –4.2 4.6 0.2 –13.8
– realb 243,211 237,631 228,044 190,063 –8.3 –2.3 –4.0 –16.7
Notes: b In 2023–24 Australian dollars; f forecast; g growth rate on 2022-23 levels.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Table 1.2: Australia's resource and energy exports, selected commodities

Prices Export volumes Export values, A$b
f f f f
Unit 2022–23 2023–24 2024–25 Unit 2022–23 2023–24 2024–25 2022–23 2023–24f 2024–25f
Iron ore US$/t 95 99 80 Mt 895 910 931 124 131 102
LNG A$/GJ 21.4 17.3 15.5 Mt 82 80 78 92 73 64
Thermal coal US$/t 302 143 126 Mt 182 202 203 66 36 29
Metallurgical US$/t 277 259 210 Mt 156 166 174 62 52 41
Gold US$/oz 1,831 1,933 1,851 t 228 263 250 24 26 21
Lithium US$/t 5,174 2,535 2,250 Kt 3,311 3,408 4,031 20 14 15
Crude oil a US$/bbl 87 86 79 Kb/d 282 284 267 13 14 11
Copper US$/t 8,289 8,144 8,227 Kt 854 882 951 12 13 13
Alumina US$/t 343 343 345 Kt 16,566 17,094 17,788 8.3 8.9 9.0
Aluminium US$/t 2,333 2,248 2,381 Kt 1,440 1,429 1,444 5.3 4.9 4.9
Nickel US$/t 23,911 18,217 18,375 Kt 161 172 195 5.0 3.9 4.3
Zinc US$/t 2,981 2,511 2,622 Kt 1,247 1,392 1,370 4.3 4.0 3.9
Uranium US$/lb 51 77 87 t 4,809 5,441 6,167 0.8 1.2 1.5
Notes: a Export data covers both crude oil and condensate; f forecast. Price information: Iron ore fob (free-on-board) at 62 per cent iron content estimated netback from Western Australia to
Qingdao China; Metallurgical coal premium hard coking coal fob East Coast Australia; Thermal coal fob Newcastle 6000 kc (calorific content); LNG fob Australia's export unit values; Gold LBMA PM;
Alumina fob Australia; Copper LME cash; Crude oil Brent; Aluminum LME cash; Zinc LME cash; Nickel LME cash; Lithium spodumene ore.
Source: ABS (2023) International Trade in Goods and Services, Australia, Cat. No. 5368.0; LME; London Bullion Market Association; The Ux Consulting Company; US Department of Energy; Metal
Bulletin; Japan Ministry of Economy, Trade and Industry; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 14

Resources and Energy Quarterly | December 2023 15
2.1 Summary growth in the September quarter 2023 and recent policy announcements,
the IMF issued a 0.4 percentage point upgrade to China’s growth outlook
 Global industrial production and manufacturing activity have continued
in November to 4.6% in 2024.
to soften in H2 2023, due to falling goods demand in major economies.
 The core outlook for global growth in 2024 has weakened slightly, with While global growth forecasts were only revised marginally from the July
the balance of risks surrounding the outlook remaining tilted to the update, the IMF stated the balance of risks is less negative than it was in
downside. As inflation returns to target levels, central banks will be able April, however it is still tilted to the downside.
to adopt less restrictive stances, allowing growth to pick up in 2025. Headline and core inflation measures have continued to moderate in most
 Despite better-than-expected growth in the September quarter 2023, economies in recent months, but they remain above central bank targets,
key downside risks challenge China’s growth outlook, including ongoing as do near-term inflation expectations. There is a risk that ongoing labour
issues in the real estate sector. market tightness and further drawdown of excess savings in some nations
could see inflation fail to return to central bank targets, or even rebound.
2.2 World economic outlook This would lead to monetary policy staying restrictive, constraining
Tighter fiscal and monetary conditions weighing on global growth economic growth.
The International Monetary Fund (IMF) forecasts the world economy to An additional risk to global growth the IMF has emphasised is the potential
grow by 3.0% in 2023 and 2.9% in 2024, with growth then rising to 3.2% in for China’s economic recovery to disappoint, or its financial stability to
2025 (Figure 2.1). Compared to the July 2023 World Economic Outlook, worsen if the property downturn continues.
this represents a downgrade of 0.1 percentage points for 2024 but no
change for 2023 and 2025. Figure 2.1: GDP growth forecasts
6
Over the next couple of years, the IMF continues to expect a notable
divergence to emerge between the performance of Advanced and 5
Emerging economies. The US economy has surprised on the upside with

Annual per cent change

resilient consumption and investment this year, however European 4
economies appear to have slowed substantially in 2023 under the weight
of tighter monetary policy. 3

Weaker consumer demand for goods relative to services over the past 2
year in the US and Europe has weighed on the economic growth of
manufacturing exporters — including China, Japan and Korea. Demand 1
for services now also looks to be also weakening, with manufacturing in a
prolonged slowdown, suggesting a slowing of global growth over the 0
remainder of the year and into 2024. World China United States Euro Area
2022 2023 2024 2025
After recording growth below the global average in 2022, the IMF expects
Source: IMF (2023)
China’s economy to grow by 5.4% in 2023. Due to stronger-than-expected

Resources and Energy Quarterly | December 2023 16

Additional sources of global economic vulnerability include possible Forward indicators of manufacturing activity continue to indicate a
escalations of the wars in Ukraine and the Middle East, geopolitical prolonged contraction. The JP Morgan Global Manufacturing Purchasing
fragmentation and increasing trade restrictions. Managers Index (PMI) was 48.8 in October 2023, and has remained in
contractionary territory (less than 50) since September 2022.
Global industrial production and trade weaken as demand remains low
Global industrial production (IP) increased in the September quarter 2023 Global manufacturing activity has continued to decline through H2 2023
by 0.4% year-on-year (Figure 2.2). Positive annual growth largely reflects due to weakening activity in Asia and a sharp downturn in the European
China’s economic rebound following COVID-related declines through the manufacturing sector. Global manufacturing orders declined in October,
middle of 2022. Growth remained weak overall due to continued signalling a further deterioration in the demand for goods — linked to
contraction in the industrial sectors of Europe and Advanced Asia. High pressures from inflation and monetary policy — as well as a post-
energy prices and tighter monetary policy contributed here. pandemic preference for services consumption. Optimism among
manufacturers dropped to an 11-month low in October, with weak demand
Global merchandise trade volumes declined in the September quarter leading to cutbacks in employment, purchasing and inventory indices.
2023 to be 3.6% lower year-on-year (Figure 2.2). Weaker demand for
goods in advanced economies, especially electronic equipment, has Inflation pressures gradually easing while new risks emerge
driven exports from Japan, Republic of Korea and emerging Asia lower Headline inflation measures have continued to decline over recent months
year-on-year. in many major economies; however, progress to return inflation to target
levels has been slowed by persistence in core inflation measures and
Figure 2.2: World industrial production, trade and PMI
recent strength in energy commodity prices.
30% 57.5
US headline inflation measured 3.2% in October 2023, falling from a
recent spike of 3.7% due to lower energy prices and slowing growth in
food and services (Figure 2.3). US core inflation — which excludes food
Annual percent change

20% 55.0
and energy — declined to a 2-year low of 4.0% in October 2023, with
monthly price growth of only 0.2% supporting hopes of further disinflation.

Index
10% 52.5 Eurozone inflation declined notably in October 2023 to 2.9%, its lowest
since July 2021. Headline inflation has declined consistently throughout
2023 due largely to falling energy prices, with energy price deflation
0% 50.0 reaching 11% in October 2023. Recent decreases in headline inflation
have also come from slowing core inflation. Eurozone core inflation
declined to 4.2% in October 2023, having persistently held above 5% from
-10% 47.5
Oct-20 Apr-21 Oct-21 Apr-22 Oct-22 Apr-23 Oct-23
October 2022 to August 2023.
Industrial production Merchandise trade The Israel‒Hamas conflict and the potential for escalated geopolitical
Manufacturing PMI (rhs)
tensions in the Middle East present future upside risks to inflation through
Notes: PMI data is up to October 2023; IP and trade data only available to September 2023.
energy commodity prices. Disruption to shipping routes in the region (such
Source: Bloomberg (2023); CPB Netherlands Bureau for Economic Policy Analysis (2023)

Resources and Energy Quarterly | December 2023 17

Figure 2.3: Consumer Price Indices — US, Europe and OECD 2.3 Major trading partners’ economic outlook
12 The outlook for Australia’s major trading partners remains weak, with their
GDP growth in 2024 and 2025 forecast by the RBA to be around 3.1%,
10 well below its pre-pandemic decade average and lower than the August
Annual percentage change

2023 forecast. Slower growth in Australia’s major trading partners is

8 expected to reduce demand for Australia’s exports. With that said, the IMF
expects a recovery in China’s economy and ongoing development in India
6
to contribute about half of global economic growth this year. Growth from
4
these key markets should support growth in their trade partners’
economies, underpinning Australian resource and energy export earnings
2 over the outlook period.

China’s recent growth exceeded expectations, but risks remain

0
China’s economy grew by 1.3% in the September quarter 2023, with GDP
-2 4.9% higher year-on-year (Figure 2.4). Strong consumption growth was
Oct 19 Oct 20 Oct 21 Oct 22 Oct 23 the key driver of China’s economic growth over the quarter, supported to a
US Energy US Food lesser extent by continued investment in infrastructure and manufacturing.
US Goods (Ex Food & Energy) US Services (Ex Food & Energy)
Euro Area (Headline) OECD (Headline)
While the rebound in consumption demand appeared to fade through the
middle of 2023, recent indicators point to a strengthening in consumption,
Source: Bloomberg (2023); Board of Governors of the Federal Reserve System (2023); U.S.
Bureau of Economic Analysis (2023); OECD (2023) particularly in services. The official index of services production increased
by 7.7% year-on-year in October 2023, led by growth in accommodation
as the Suez canal) also presents a risk to global shipping prices and by and food services (21%), transport (13%) and wholesale or retail trade
extension, global goods price inflation. This would compound current (10%). Retail sales rose in October 2023 by 7.6% year-on-year, exceeding
backlogs building up around the Panama Canal, where shipping market expectations.
throughput is being reduced by low water levels.
China’s consumer price inflation once again fell below zero in October
In October 2023, the IMF forecast global inflation would fall from 8.7% in 2023, with year-on-year declines in energy and food prices, outweighing
2022 to 6.9% in 2023 and 5.8% in 2024. Compared to the July 2023 price growth in services, where consumer demand has been directed.
outlook, the forecast for 2023 was revised up marginally, while the forecast China’s core inflation — which excludes food and energy prices — was
for 2024 was revised up by 0.6 percentage points, higher-than-expected still below policy targets at 0.6% year-on-year in October.
core inflation.
Year-to-date fixed asset investment increased by 2.9% year-on-year in
Inflation is expected to decline more quickly in advanced economies due October 2023, underpinned by 5.9% growth in infrastructure and 6.2%
to tighter monetary policy and the lower exposure of these economies to growth in manufacturing investment. Particularly strong growth was
commodity price and exchange rate shocks. reported for investment in high-tech manufacturing (such as aerospace)

Resources and Energy Quarterly | December 2023 18

Figure 2.4: China – contributions to quarterly real GDP driven by reduced foreign demand and falling growth in overall sales.
20 Business sentiment fell to its lowest since September 2022, due to
concerns about the global outlook.

15 The property sector downturn has continued to act as a drag on China’s

Annual percent change

economic activity, with conditions remaining weak through H2 2023. New

property starts (by floor space) were on average 25% lower year-on-year
10
from July-October 2023. Sales in large cities have recovered slightly — in
line with monetary and fiscal policy easing — however this has not passed
5 through to investment in smaller cities where most new home sales occur.
Continued weakness in the property sector is compounded by ongoing
0 financial stability concerns. According to the RBA 1, more than half of large
private developers in China have defaulted and many others are likely to
-5 find it difficult to meet upcoming debt repayments, given stringent financial
Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 conditions. Country Garden — one of the largest private property
Consumption Investment Net exports GDP developers in China — is seeking debt restructuring after defaulting on a
US dollar bond in October.
Notes: Consumption is made up of both household and government sectors.
Source: Bloomberg (2023); National Bureau of Statistics of China (2023) Chinese authorities have further loosened policy to stabilise the property
sector and support the announced 2023 GDP growth target of 5%. In
and high-tech services (such as science and technology R&D). Overall addition to continued monetary easing (such as reductions in mortgage
investment growth continues to be weighed down by weakness in the lending rates and reserve requirement ratios), the People’s Bank of China
property sector, with year-to-date residential investment declining by 9.3% (PBoC) introduced lower mortgage down payment requirements in August.
year-on-year. Targeted interest rate reductions on outstanding first-home mortgages
China’s industrial production increased by 4.6% year-on-year in October (estimated to account for half of all housing loans) are likely supporting
2023, the strongest rate since April 2023. Growth was driven by year-on- household consumption.
year increases in manufacturing output (5.1%), mining output (2.9%) and In October, authorities announced CNY1 trillion in central government
utility output (1.5%) such as energy and water. Output growth was bond issuance to be transferred to local governments and spent in 2023
significant for key strategic products such as solar cells (63%), service and 2024 —likely targeted towards infrastructure. Concerns have also
robots (59%) and integrated circuits (35%). been raised regarding local government debt levels, with financing limits
The Caixin Manufacturing Purchasing Managers’ Index (PMI) fell to 49.5 in and refinancing quotas allocated by authorities to aid repayments of local
October, signalling the sector’s return to contraction following two months government financing vehicles.
of expansion. Weak conditions were reported, with declining output being

1
RBA Statement on Monetary Policy November 2023

Resources and Energy Quarterly | December 2023 19

The IMF released updated projections for the Chinese economy in Figure 2.5: Japan industrial production and vehicle exports
November, revising up their growth forecasts by 0.4 percentage points on 500 130
account of recent policy announcements and stronger-than-expected GDP
growth in the September quarter. The IMF forecasts Chinese GDP growth
400 120

Thousand vehicles
of 5.4% in 2023, reflecting rebounding consumption compared with
COVID-related disruptions in 2022, as well as continued investment in
300 110
infrastructure and manufacturing. The IMF forecasts growth to decline to

Index
4.6% in 2024 due to continued weakness in the property sector and weak
external demand. Growth is then forecast to slow further to 4.1% in 2025, 200 100
in line with a long-term trend towards structurally lower growth.
100 90
Japan and Republic of Korea slowing due to weaker external demand
Japan’s GDP fell by 0.5% in the September quarter 2023, although it was
0 80
still 1.4% higher year-on-year due to base effects in the September quarter 2013 2015 2017 2019 2021 2023
2022. Depreciation of the Yen in the September quarter 2023 contributed Vehicle exports Industrial production (rhs)
to a 10% quarter-on-quarter decrease in net exports.
Source: Bloomberg (2023)
Private consumption — which accounts for 53% of GDP — fell year-on-
year and tracked flat on the previous quarter, as cost of living pressures continues to target the 10-year Japanese Government Bond yield at 0%.
have weakened consumers’ real wages and consumer confidence has The IMF expects Japan’s economic growth to rise to 2.0% in 2023, a 0.6
weakened over the second half of the year. percentage point upgrade from July, driven by pent-up demand, a surge in
Slowing growth in Japan’s major trading partners is a key issue for its inbound tourism, and accommodative fiscal and monetary policy. Japan’s
economy, particularly its industrial sector. Japanese industrial production growth in 2023 has also been supported by a strong rebound in vehicle
was down by 3.4% year-on-year in September 2023 (Figure 2.5). exports as supply chain issues have eased (Figure 2.5). As the effects of
Machinery orders have, on average, decreased at an annual rate of 6.4% past stimulus efforts fade, Japan’s economic growth is expected to slow to
since October 2022. The Jibun Bank Japanese Manufacturing PMI 1.0% in 2024, before slowing further to 0.7% in 2025.
improved, but remained in contraction at 48.7 in October, marking The Republic of Korea’s GDP grew by 1.2% year-on-year in the
9 months of contraction so far in 2023. Weakening demand both September quarter 2023. Annual growth was primarily driven by
domestically and externally also led to declines in new orders and output. 3.1% year-on-year growth in exports which, combined with imports
Japan’s core inflation — which excludes fresh food but includes fuel costs tracking flat, led to a 26% expansion in the country’s trade balance.
— was 2.8% in September 2023, still exceeding the Bank of Japan (BoJ) Korea’s industrial production increased in September 2023 to be
inflation target of 2%, but down sharply from 4.2% in January. Supporting 3.0% higher year-on-year, the first annual growth recorded since
expectations for cost pressures to ease further, Japan’s wholesale inflation September 2022 (Figure 2.6). Monthly growth of 1.8% exceeded market
fell to 0.8% in October 2023, having peaked at around 11% in December expectations (of a 0.9% decline) and was driven by an unexpected
2022. The BoJ has maintained its accommodative monetary policy and

Resources and Energy Quarterly | December 2023 20

turnaround in semiconductor output. Exports of semiconductors declined Figure 2.6: Republic of Korea industrial activity and exports
by only 3.1% year-on-year in October 2023, following a prolonged decline 50% 55.0
which commenced in August 2022 (Figure 2.6).
Korea’s manufacturing PMI declined slightly in October to 49.8, remaining

Annual percent change

25% 52.5
in contraction territory for a 16th consecutive month. The negative result
was due to small declines in output and new orders, continuing to be

Index
driven by subdued economic conditions (domestically and internationally). 0% 50.0
Input price inflation increased to its strongest since December 2022 due to
raw material prices and currency weakness. Despite this, expectations for
the year-ahead production outlook improved over the month due to -25% 47.5
slowing declines in output and new orders.
In October, the IMF forecast the Republic of Korea’s economic growth to -50% 45.0
weaken from 2.6% in 2022 to 1.4% in 2023, driven by muted external Sep-21 Mar-22 Sep-22 Mar-23 Sep-23
goods demand, particularly for semiconductors. Beyond this, growth is IP Exports Semiconductor exports Manufacturing PMI (rhs)
forecast to increase to 2.2% in 2024 and 2.3% in 2025. The IMF noted that
Source: Bloomberg (2023)
the downturn in the technology cycle and global goods demand is
expected to act as a drag on Korea’s growth momentum in the short-term.
of about 258,000 over the past 12 months. Wage growth has also eased
Resilient US labour market and strong investment supporting growth further, down from 7.1% in June 2023 to 2.3% in September 2023.
The US economy grew by 2.9% year-on-year in the September quarter Combined with declining US inflation (both headline and core) and a sharp
2023, driven by stronger-than-expected quarterly growth of 1.2%. This rebound in US labour productivity growth in the September quarter 2023 to
growth was driven by personal consumption of goods and services. While 2.2% year-on-year, this has reduced expectations that further monetary
goods consumption growth has remained weak in real terms since early tightening will be necessary. This recently resulted in lower US Treasury
2022 (countered by strong growth in services activity), it began to yields and a weaker US dollar, from elevated levels in October 2023.
strengthen again in the September quarter 2023 (Figure 2.7).
US industrial production rose by 0.1% year-on-year in September 2023,
US labour market resilience and remaining savings buffers 2 have driven by a 0.4% year-on-year rise in manufacturing output. The US
continued to support strong consumption. However, signs have emerged Manufacturing PMI stayed in contractionary territory at 46.7 in October,
that the labour market is softening. The unemployment rate rose to 3.9% marking a year of continuous contraction for the sector. The continued
in October 2023, the highest (albeit still low) rate since January 2022. deterioration in manufacturers’ operating conditions reflects increasingly
Employment growth has slowed further over H2 2023, with nonfarm payroll sharp falls in new orders as both domestic and external demand weaken.
employment rising by 150,000 in October 2023 — below the average rise

2
Barbiero & Patki 2023, “Have US households depleted all the excess savings they accumulated during the pandemic?”, Federal Reserve Bank of Boston, November 2023.

Resources and Energy Quarterly | December 2023 21

Figure 2.7: Real US consumption of goods and services Eurozone economies face slower growth, manufacturing downturn
6000 10500 Eurozone GDP growth was -0.1% over the September quarter 2023,
bringing annual GDP growth to 0.1% year-on-year. This was the

US$ billion, 2012 prices

Eurozone’s first quarterly contraction since the 2020–21 recession. Among
5000 9500
US$ billion, 2012 prices

the larger economies Spain grew by 0.3% over the quarter, France grew
by 0.1%, while Italy’s quarterly growth was approximately zero. Germany’s
4000 8500 economy contracted over the quarter, to be down 0.3% year-on-year.
In August 2023, the Eurozone Composite PMI Index decreased to 46.5,
3000 7500 signifying the worst slump in private sector activity since November 2020
(Figure 2.8). The fifth consecutive month of decline reflected a further
deterioration in manufacturing conditions and the contraction of the
2000 6500
2013 2015 2017 2019 2021 2023 services sector for the second time in three months.
Goods consumption Services consumption (rhs) Industrial production in the Eurozone declined by 5.1% year-on-year in
Notes: Consumption data is monthly, reported in annualised terms. August 2023, led by a 4.9% year-on-year decline in manufacturing
Source: Bloomberg (2023) production. Industrial production in major producer Germany was down in
September by 3.7% year-on-year. This resulted from a 1.4% decline
A notable source of growth has been private non-residential investment,
month-on-month, the fourth contraction in as many months. Significant
which rose by 3.7% year-on-year in the September quarter 2023 in real
monthly output declines were reported for Germany’s auto sector (-5%)
terms. US private investment in manufacturing structures rose in real
and electrical equipment (-4.4%). The Eurozone manufacturing PMI
terms by 66% year-on-year in the same period, driven by sharp growth in
recorded a reading of 43.1 in October 2023, with declines in output, new
computers, electronics and electrical manufacturing. Policies such as the
orders, employment and purchasing activity. The PMI survey reported the
Inflation Reduction Act and the CHIPS & Science Act have provided strong
fastest reduction in factory employment levels since August 2020.
incentives for investment into clean energy and semiconductor
manufacturing in the US since their inception in August 2022. Germany’s manufacturing sector continued its deep contraction with a PMI
reading of 40.8 in October. This reflected a continued deterioration in
In October 2023, the IMF upgraded its forecast for US economic growth in
demand, with customers reportedly destocking and holding back on
2023 by 0.3 percentage points to 2.1% due to resilient consumption and
investments against a backdrop of uncertainty and high interest rates.
ongoing labour market tightness. Growth is then forecast to ease to 1.5%
in 2024 — a 0.5 percentage point upgrade — as tight monetary policy and In its October update, the IMF forecast Euro Area growth to be lower than
the elimination of excess savings slow private consumption. This is previously expected: at 0.7% in 2023 and 1.2% in 2024. With the IMF now
expected to reduce labour market tightness and moderate wage growth. projecting a near-completion in the recovery of the region’s services
The IMF expects the US unemployment rate to reach a peak of 4.0% in sector, growth forecasts in services- and tourism-driven economies (such
the December quarter 2024 — a 1.2 percentage point downgrade from as France and Spain) were kept steady or revised a touch lower. The
April — consistent with a softer landing than previously expected. weak outlook for manufacturing resulted in a downgrade to growth in
Germany (now -0.5% in 2023).

Resources and Energy Quarterly | December 2023 22

Figure 2.8: Eurozone composite and manufacturing PMIs Exchange rate assumption revised lower
70 Over the past quarter, the Australian dollar fell both relative to the US
dollar and in trade-weighted terms (Figure 2.9). In the December quarter,
60
the Australian dollar has been supported by expectations the US-
50 Australian interest rate spread could narrow, as well as market optimism
over Chinese government efforts to stabilise the country’s property sector.
40
Index

The AUD/USD exchange rate assumption has been revised marginally

30
lower; by US$0.03 in 2024 and by US$0.01 in 2025 compared with the
20 September 2023 Resources and Energy Quarterly. Assumption
adjustments were made in line with changes in market consensus
10
(surveyed by Bloomberg) on the exchange rate outlook. The Australian
0 dollar is expected by markets to appreciate against further the US dollar
Sep-20 Mar-21 Sep-21 Mar-22 Sep-22 Mar-23 Sep-23 over the outlook period as interest rates increase further in Australia and
Europe Composite PMI Europe manufacturing PMI interest rate cuts commence in the United States. The median consensus
Germany manufacturing PMI on 5 November 2023 for the AUD/USD exchange rate was an average of
Source: Bloomberg (2023) US$0.64 during the December quarter 2023, US$0.67 in the first nine
months of 2024 and US$0.73 in 2025.
India’s GDP growth to be relatively resilient
India’s GDP growth was 7.6% year-on-year in the September quarter Figure 2.9: Australian trade-weighted index and AUD/USD
2023, a slight decrease from 7.8% in the June quarter. This annual growth 70 0.9
figure was above market expectations, driven by continued strength in
fixed capital formation, as well as private consumption expenditure. India’s

Index (May 1970 = 100)

manufacturing PMI remained expansionary in October 2023, but 2 points 65 0.8
lower month-on-month at 55.5. Slower growth was reported in output and
new orders, with manufacturers reporting the lowest new order growth in

US$
60 0.7
over a year. Combined with an acceleration in input price growth, surveyed
firms’ sentiment fell to a five-month low.
The IMF forecasts India’s economic growth to slow to 6.3% in 2023, 55 0.6
revised up from 6.1% in July due to stronger-than-expected consumption
in the June quarter 2023. Growth is expected to remain steady at 6.3% in
2024. From 2024 onwards, household spending is expected to pick up as 50 0.5
2018 2019 2020 2021 2022 2023
pressures from inflation and monetary policy ease.
AUDUSD (rhs) AUSTWI
Source: RBA (2023)

Resources and Energy Quarterly | December 2023 23

Table 2.1: IMF annual GDP growth projections for major trading partners
2022 2023a 2024a 2025a

World b 3.5 3.0 2.9 3.2

China c 3.0 5.4 4.6 4.1

Japan 1.0 2.0 1.0 0.7

Republic of Korea 2.6 1.4 2.2 2.3

Indiad 7.2 6.3 6.3 6.3

ASEAN-5e 5.3 4.9 5.3 5.2

Eurozone 3.6 0.7 1.5 2.1

United States 2.1 2.1 1.5 1.8

Notes: a Assumption. b Calculated by the IMF using purchasing power parity (PPP) weights for nominal country gross domestic product. c Excludes Hong Kong. d Based on fiscal years, starting in
April; e Indonesia, Malaysia, Philippines, Thailand and Vietnam.
Sources: IMF (2023); Bloomberg (2023)

Table 2.2: Exchange rate and inflation assumptions

2022 2023a 2024a 2025a

AUD/USD exchange rate 0.69 0.66 0.68 0.72
Inflation rateb
United States 8.0 4.1 2.8 2.4
2021–22 2022–23 2023–24 a
2024–25a
Australia 4.4 7.0 4.4 3.5
Notes: a Assumption; b Average CPI growth over the specified year (fiscal or calendar).
Sources: ABS (2023) Consumer Price Index, 6401.0; Bloomberg (2023); Department of Industry, Science and Resources; RBA (2023); IMF (2023)

Resources and Energy Quarterly | December 2023 24

Resources and Energy Quarterly | December 2023 25
Resources and Energy Quarterly | December 2023 26
3.1 Summary Figure 3.1: Global monthly steel production
 Global steel demand remains weak, driven by lower demand from 180
manufacturing and construction in developed economies and ongoing
weakness in China’s property sector.
160
 World steel production fell 4.6% (quarter-on-quarter) in the September

Million tonnes
quarter 2023. An expected stabilisation and gradual pickup in global
industrial production, combined with further stimulus-related 140
infrastructure projects, should support stronger growth in steel demand
in 2024.
120
 World steel production is projected to reach just under 2 billion tonnes
by the end of the outlook to 2025. Growth will be supported by new
capacity — either underway or planned — with projects in the pipeline 100
in Asia, North America, Europe and the Middle East. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2017-2021 range 2022 2023
3.2 World production and consumption Source: World Steel Association (2023); DISR (2023)
Global steel production falls again in the September quarter
Subdued demand resulting from monetary policy tightening by major
In the September quarter 2023, global steel output reached 461 million Western central banks over the past year is acting to dampen economic
tonnes. This represented a decline of 4.6% (22 million tonnes) from the growth, and consequently demand for steel, across most major economies
June quarter 2023 but was around the middle of the range tracked in the (ex China). An expected stabilisation and gradual pickup in growth in
2017-2021 period, and above the September quarter 2022 (Figure 3.1). global industrial production next year, combined with further stimulus-
Despite weaker steel production in recent months, world steel output is related infrastructure projects, is expected to support stronger growth in
expected to record year-on-year growth of 1.6% in 2023. Global steel steel demand over the rest of the outlook period.
production was particularly weak in the second half of 2022. Chinese World steel production is projected to grow by 1.6% in 2024 and 1.4% in
production last year was heavily affected by outbreaks of the COVID-19 2025, to reach just under 2 billion tonnes by the end of the outlook period.
pandemic and ongoing weakness in the nation’s residential property Growth in world steel production over the period to 2025 will be supported
sector. Higher energy prices also forced output cuts amongst large steel by growth in new capacity — either underway or planned — with projects
makers, such as the EU, US, and Japan. in the pipeline in Asia, North America, Europe and the Middle East.
Demand from exporters of manufactured products as well as some
Global industrial production expected to recover in 2024 and 2025
infrastructure investment, has helped offset the impact on steel of
Growth in global industrial production — a key driver of steel consumption
protracted weakness in Chinese property demand. While weak profitability
— is expected to see a mild recovery after a weak 2023. Global industrial
amongst the majority of Chinese steel mills continues to weigh on the
production growth was 0.4% year-on-year in August, down from over 3%
sector, the lack of strict enforcement of government steel production caps
in the second half of last year (Figure 3.2). This will likely further dampen
so far this year is supporting iron ore prices.

Resources and Energy Quarterly | December 2023 27

global steel demand for the remainder of 2023. Global steel consumption Figure 3.2: World manufacturing PMI, IP and steel output
is projected to grow by 1.7% in 2023, following a fall of 2.6% last year. 25% 75

Global construction activity continues to register modest growth although 20% 70

there are substantial regional disparities. With private sector residential

Annual percentage change

15% 65
and commercial activity dampened by tighter credit conditions, global
10% 60

PMI reading
construction continues to be driven primarily by infrastructure. The Middle
East and African regions registered the strongest conditions in the 5% 55
September quarter, followed by the Americas and India. Meanwhile activity 0% 50
continued to deteriorate in a Europe. -5% 45
Global manufacturing activity remained weak over H2 2023, with the JP -10% 40
Morgan Global Manufacturing PMI reading at 49.3 in November. This was -15% 35
the 15th successive reading in ‘contractionary’ territory. 2019 2020 2021 2022 2023
Global automotive sales are expected to remain modest in 2024. The World steel production World IP Manufacturing PMI (rhs)
Economist Intelligence Unit forecasts a 3.0% increase (year-on-year) in Notes: JPMorgan Global Manufacturing Index; a reading above 50 indicating an overall
new vehicle sales in 2024, with a return to pre-pandemic production levels increase compared to the previous month, and below 50 an overall decrease
not expected until 2025. A number of factors are expected to constrain Source: World Steel Association (2023); S&P Global (2023); Bloomberg (2023)
sales, including weak global economic growth, elevated living costs and
Figure 3.3: China’s residential property sector pipeline
relatively high interest rates. S&P Global Mobility notes that the 40 80
semiconductor supply chain crisis, which severely hampered automotive
30 60

Annual percentage change

Annual percentage change
production in 2022, now appears to have largely passed.
20 40
China’s property sector headwinds continue
10 20
After protracted weakness over the past two years, China’s property sector
is yet to stabilise. Following a pickup in early 2023, new home sales were 0 0
down 20% year-on-year in September, and floor space under construction -10 -20
was down 7.6% (Figure 3.3). Fixed asset investment was down 3.9% year-
-20 -40
on-year in October, a halving in the fall registered in September and a rare
positive sign amidst China’s multi-year property decline. -30 -60
2019 2020 2021 2022 2023
So far, property sector stresses have been contained, but potential for spill
New home sales (rhs)
over to other areas of China’s financial system remains. Property sector Fixed Asset Investment (real estate)
instability has triggered concern from potential home buyers about the Under construction
possibility that other developers could default. Confidence among Notes: * Floor space reported on a cumulative calendar year basis in million squares metres.
homebuyers will take time to stabilise and remains a key downside risk China’s property data combines January and February monthly data (reported in February)
which could undermine government efforts to stimulate property demand. Source: NBS (2023); Bloomberg (2023)

Resources and Energy Quarterly | December 2023 28

China’s steel output fell in the September quarter, though remained above Over the rest of the outlook period to 2025, China is projected to see a
2022 lockdown-affected levels (Figure 3.4). Average Chinese steel mills’ mild fall in steel production, with zero growth projected in 2024 and a fall of
profit margins turned negative again in September due to weak steel 0.6% in 2025.
prices and high raw material and energy prices. In November, about 75%
Chinese government introduces new fiscal stimulus to support growth
of Chinese steel mills were estimated to be operating at a loss, raising the
possibility of mills having to cut output in coming months. Infrastructure spending is expected to provide some support to China’s
economy over the outlook period. At the end of October, the government
Figure 3.4: China monthly steel production approved the issuance of an extra 1 trillion yuan worth of sovereign bonds
110 in 2023. Legislators also renewed authorisations to frontload some local
government bond issuance in 2024. In November, reports indicated a
100
further 1 trillion yuan of low-cost financing will be made available to
90
China’s urban village renovation and affordable housing programs.
Million tonnes

Despite monetary policy easing over 2023, there is yet to be a meaningful

80
pick up of credit growth in the broader economy. Bloomberg’s China’s
70 Credit Impulse (measuring new loans compared with broader GDP)
remained in negative territory in September for the fifth consecutive month
60 (Figure 3.5). Nevertheless, the lags involved in some of the policy changes
may help underpin Chinese commodity demand in 2024.
50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Figure 3.5: China credit impulse
2017-2021 range 2022 2023
25
Source: World Steel Association (2023); Department of Industry, Science and Resources
(2023) 20

Annual percentage change

China’s steel sector has been supported by strong growth in exports, 15
partly offsetting the effects of property sector weakness. Chinese steel
exports were up 53% year-on-year in October, down from 62% in 10
September. Chinese infrastructure investment is also supporting steel 5
demand, up 6.1% in the September quarter 2023. Overall, China’s steel
production in 2023 is expected to be 1.1% higher than in 2022. 0

The extent to which the Chinese Government enforces restrictions on steel -5

production levels over the final weeks of 2023 remains uncertain. To date,
-10
production cuts have not been strictly enforced as the government
prioritises economic growth. However, some slowing in Chinese steel -15
output is expected as 2023 ends, to comply with emission controls and to 2009 2011 2013 2015 2017 2019 2021 2023
match a seasonal drop in demand. Source: NBS (2023); Bloomberg (2023)

Resources and Energy Quarterly | December 2023 29

Falls in ex-China steelmaking due to high energy costs and weak demand have picked up slightly in recent months following the large falls over
Global steel production (excluding China) was around 205 million tonnes 2023. The substantial price differential between US rebar prices and other
in the September quarter 2023. This represented a fall of 3.7% from the markets widened in October (Figure 3.8).
previous quarter but was 2.2% higher than the comparable period in 2022. European construction sector weakens in the December quarter
Over the first ten months of 2023, total steel output reached around 693
Weakening demand amid the European Central Bank’s aggressive
million tonnes, a 1.8% fall in year-on-year terms (Figure 3.6).
monetary policy tightening cycle saw the Eurozone construction sector
Figure 3.6: Monthly steel production – ex-China global slide deeper into contraction in the December quarter 2023. The HCOB
80 Eurozone Construction PMI fell for an 18th consecutive month in October,
to reach 42.7. This fall was also the sharpest in 2023.
Downturns were evident in all three construction subsectors (housing,
75
commercial and infrastructure). Residential construction recorded the
biggest fall, but commercial and infrastructure construction also declined.
Million tonnes

While new orders declined at a softer pace than in previous months the
70
ongoing downward trend points to further weakness in business conditions
extending well into 2024. Input prices picked up in October but remain well
below those seen earlier in the year, reflecting reduced demand for inputs
65 and greater material availability.
Slowdowns in construction activity were steepest in Germany and France,
60 with German construction firms recording the largest fall in activity since
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec early 2020. Italy, by contrast, recorded growth in output fuelled by growth
2016-2019 range 2022 2023 in housing, commercial building and civil engineering.

Notes: Monthly production reporting provides data on 61 countries (excluding China) and While the European economy has shown surprising resilience to date in
accounted for approximately 98% of total world crude steel production in 2022. the face of the energy crisis created by the Russian invasion of Ukraine,
Source: World Steel Association (2023); DISR (2023) high energy costs and interest rates continue to take their toll on
manufacturing activities. Germany has been hit particularly hard, facing
Higher energy and input costs, as well as moderating global demand,
both a manufacturing recession and a housing crisis.
continue to impact manufacturing activity across major economies.
Industrial production has been particularly weak in the EU and Japan EU steel output fell by 9% year-on-year in the first nine months of 2023
during 2023. However, South Korea’s industrial production has begun to (and remained 16% below pre-COVID 2019 levels). EU steel production is
recover after substantial falls last year (Figure 3.7). forecast to see a modest rate of growth over the outlook period to 2025,
though production levels are forecast to remain below their pre-pandemic
Global steel prices remained weak in the December quarter, particularly in
peak. Most of the EU’s current or planned steel capacity developments are
China and Southern Europe, for both reinforcing bar (‘rebar’) and flat steel
aimed at replacement (rather than additional) supply, with a focus on the
products such as hot-rolled coil (HRC). US prices for HRC, by contrast,
shift toward EAF-based, lower-emissions facilities.

Resources and Energy Quarterly | December 2023 30

India’s steel demand expected to continue growing strongly A considerable increase in total steel output is also expected in South-East
Indian steel output reached 116 million tonnes in the ten months to Asia, with annual growth of around 10% expected over the outlook period
September 2023, a rise of 12% year-on-year (Figure 3.9). Total production to 2025. New steel production capacity expected includes sizeable
is forecast to grow 9.6% in 2023 (to 137 million tonnes). projects in Vietnam, Philippines, and Malaysia.

India’s economic outlook remains stable in the face of a high interest rate Figure 3.8: Rebar steel prices
environment, with demand for steel expected to maintain its high growth 1,200
momentum driven by the manufacturing and construction sectors. India’s
manufacturing PMI fell in October, but remained strongly positive, with 1,000
steady growth reported in output, new orders and foreign sales.
800

US$ per tonne

India is projected to see some of the strongest growth in steel output
globally over the outlook period (Table 3.1). Substantial new steel 600
production capacity is expected to be added over the next few years, with
the Government targeting a doubling in capacity by the end of the decade. 400

Figure 3.7: Industrial production — EU, US, Japan and S Korea 200

10% 0
2019 2020 2021 2022 2023
US China Southern Europe
Annual percentage change

5%
Source: Bloomberg (2023)

Japan and South Korean steel output remains subdued

0%
Japanese steel output was about 22 million tonnes in the September
quarter 2023, down 1.2% year-on-year. Rising costs and labour shortages
-5% are dampening growth in construction activities, but manufacturing steel
demand is expected to show moderate growth in both 2023 and 2024,
-10% helped by the recovery of automotive production. Over the outlook period
to 2025, Japan’s steel production is expected to be flat (Table 3.1).
South Korea’s economy remains subdued, with GDP growth of just 0.6%
-15%
Dec-2021 Jun-2022 Dec-2022 Jun-2023 year-on-year in the September quarter. However, domestic industrial
production increased in September for the first time in a year. Ongoing
EU US Japan South Korea
recovery from flood damage in 2022 and modest growth in construction
Source: Bloomberg (2023) after years of contraction is expected to support steel demand into 2024.
After remaining flat over 2023, South Korean steel output is forecast to
grow modestly over the outlook period (Table 3.1).

Resources and Energy Quarterly | December 2023 31

US commercial building counteracts weak residential construction The outlook for US steel demand in 2024 contains downside risks. The
US steel production has been relatively weak so far this year. In the first lagged effect of tight monetary policy and higher land and material costs
ten months of 2023, production was down 0.8% compared with the point to headwinds for residential construction in 2024. The outlook for
corresponding period in 2022. This result reflects slowing industrial manufacturing is flat, with the US Manufacturing PMI recording a neutral
production, which has steadily deteriorated: from growth rates of 3-4% in level of 50 in October. While new orders increased for the first time in six
2022 to only 0.1% year-on-year in September 2023. Tightening monetary months, work backlogs shrank and employment levels fell for the first time
conditions have also weighed on US construction, particularly residential in over 3 years.
property. But the commercial building sector has recorded robust growth in US steel production is projected to record moderate growth over the
part due to reshoring activities. outlook period to 2025 (Table 3.1).

Figure 3.9: Steel production – other major producers

140

120

100
Million tonnes

80

60

40

20

0
European Union India Japan United States Russia South Korea Brazil

2022 2023f October year-to-date actual

Source: World Steel Association (2023); DISR (2023)

Resources and Energy Quarterly | December 2023 32

Table 3.1: World steel consumption and production
Million tonnes Annual percentage change
Crude steel consumption 2022 2023 s 2024 f 2025 f 2023 f 2024 f 2025 f
China 965 984 983 978 2.0 0.0 -0.6
European Union 159 153 158 162 -4.0 3.8 2.0
India 118 126 136 146 7.6 7.4 7.3
United States 102 102 103 107 -0.8 1.6 3.3
Other Asiaa 114 119 125 127 4.3 5.2 2.2
Japan 62 61 61 62 -1.6 0.7 1.4
Middle East 56 56 57 59 -1.3 2.7 3.2
South Korea 54 55 56 57 3.5 1.1 1.4
Russia 43 45 45 45 4.9 -0.2 1.0
World steel consumption 1,895 1,927 1,962 1,990 1.7 1.8 1.4
Crude steel production 2022 2023 s 2024 f 2025 f 2023 f 2024 f 2025 f
China 1,018 1,030 1,022 1,016 1.1 -0.7 -0.6
European Union 136 127 133 133 -6.4 4.0 0.7
India 125 137 145 154 9.6 6.0 6.2
Japan 89 89 90 89 -0.6 1.6 -0.8
United States 81 80 82 84 -0.2 2.0 2.6
Russia 71 74 75 75 3.7 0.9 0.1
South Korea 66 65 67 68 -0.6 3.1 1.4
Other Asia a
66 68 76 85 2.4 11.9 12.0
World steel production 1,885 1,916 1,947 1,974 1.6 1.6 1.4

Notes: a Asia ex. China, India, Japan, South Korea and Taiwan; f Forecast; r Annual percentage change
Source: World Steel Association (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 33

Resources and Energy Quarterly | December 2023 34
Resources and Energy Quarterly | December 2023 35
4.1 Summary Figure 4.1: Iron ore price, monthly
 Spot iron ore prices strengthened in the December quarter driven by 250
positive sentiment associated with the ongoing policy stimulus provided
to the Chinese economy. Prices are likely to drift lower over the outlook 200
period.

US$ a tonne
 Australian export volumes over H2 2023 have remained healthy, 150
reflecting an ongoing ramp up in new operations from established and
emerging producers. Export volumes should rise steadily over the 100
outlook period.
 Australia's iron ore export earnings are expected to rise from $124 billion 50
in 2022–23 to $131 billion in 2023–24, before falling to $102 billion in
2024–25 — driven by lower prices over the outlook period.
0
2016 2017 2018 2019 2020 2021 2022 2023
4.2 Prices
Notes: China import Iron ore fines 62% Fe spot (CFR Tianjin port)
Iron ore prices further strengthened in the December quarter Source: Bloomberg (2023) China import prices
Iron ore prices have lifted in recent months driven by improved market
Figure 4.2: China’s iron ore imports, monthly
sentiment following a series of Chinese government measures to support
120
China’s economy. After falling to around US$108 a tonne in August 2023
the benchmark iron ore spot price (basis 62% Fe fines CFR Qingdao) rose
100
to average over US$120 a tonne in November 2023 (Figure 4.1). The spot
price for 62% Fe iron ore fines (FOB) for calendar 2023 is estimated to
80

Million tonnes
average around US$105 per tonne (Figure 4.5).
The rally in iron ore prices through the December quarter 2023 contrasts 60
with seasonal trends seen over the two previous years: in both 2021 and
2022, prices fell sharply late in the calendar year as Chinese steel mills cut 40
output to meet government production caps. Production cuts have not
been strictly enforced in 2023 as the Chinese government prioritises 20
economic growth over other considerations (see Steel chapter).
0
China’s stronger than expected steel production has seen China’s total 2020 2021 2022 2023
iron ore imports continue to rise, increasing by 4.8% year-on-year in the Other Brazil Australia 12 month moving average (Total)
September quarter 2023, up 7.7% on June quarter 2023 imports
Source: Bloomberg (2023)
(Figure 4.2).

Resources and Energy Quarterly | December 2023 36

However, China’s monthly steel demand has been gradually losing Figure 4.3: China’s weekly iron ore port stocks
momentum over the second half of 2023, resulting in rising steel 180
inventories across China. The weakness in steel demand builds on the 160
large falls in Chinese steel consumption observed in 2022. 140
New infrastructure investment in China — resulting from substantial levels 120

Million tonnes
of funding allocated over the past year — as well as new measures by the 100
Chinese government to alleviate weakness in the domestic property 80
sector, should provide support for construction activity, and hence Chinese 60
steel and iron ore demand into 2024 and 2025 (see Steel chapter). 40
Iron ore demand should also receive some support from restocking of iron 20
ore inventories in China in coming months. In mid-November, China’s 0
portside iron ore inventories fell to around 20% below historic averages, 2016 2017 2018 2019 2020 2021 2022 2023
the lowest level since 2016 (Figure 4.3). Reported iron ore inventories at Weekly port stocks 5 year average
Chinese steel mills have also remained low compared with previous years. Source: Bloomberg (2023)
This reflects negative margins in a majority of Chinese steel mills, due to
Prices to moderate over outlook period as supply rises and demand eases
low steel prices in recent months. This likely contributed to a continuation
of the decline in the spread for premium 65% pellet, as well as maintaining China is projected to see modest falls in steel output over the outlook
downward pressure on premiums for high-grade iron ore fines — as mills period to 2025. This is expected to soften the rate of growth in global iron
seek to reduce operating costs (Figure 4.4). ore demand in the coming years, driving iron ore prices down.

Following last year’s production falls, ex-China steelmaking has made a China’s stated aim to shift its economy away from investment-led (and
modest recovery over H2 2023, with output in the September quarter up toward consumption led) growth is expected to be a key driver of this
around 2.2% year-on-year. The outlook period should see a modest rise in downward trend in prices. Lower demand for new residential and
iron ore imports by major purchasers in Europe and North America, as well infrastructure-related construction is expected, due to China’s declining
as East and South-East Asia and the Middle East. This pickup should population (and workforce) and the tapering in China’s rate of urbanisation
provide support for iron ore demand and prices. in recent years (see box 2.1 Resources and Energy Quarterly September
2023). These structural trends are likely to add to the current over-supply
While risks to the global iron ore demand outlook remain, they have eased and financing problems in the real estate sector, further weakening steel
slightly in recent months. Inflation is moderating back towards target levels demand over the outlook period.
in the major Western nations, potentially allowing central banks to remove
their restrictive monetary policy stance. The IMF’s November upgrades to Rising steel demand and production capacity in regions such as emerging
the Chinese GDP growth forecasts for 2023 and 2024 point to the potential Asia and the Middle East will see ex-China iron ore demand increase over
for stronger underlying demand for steel. However, this is contingent on the outlook period. This includes over 100 million tonnes of integrated
improved economic growth translating into improved confidence among (Blast Furnace-Basic Oxygen Furnace) steelmaking capacity, expected to
homebuyers, a key uncertainty at present. come online in the next few years in Asia alone.

Resources and Energy Quarterly | December 2023 37

Turning to global iron ore supply, the world’s two largest producers — Figure 4.4: Iron ore price spreads between grades
Australia and Brazil — are expected to continue to collectively grow export 180
volumes by 2.3% per annum over the outlook period to 2025. This follows a
ramp up of greenfield projects for major Australian miners, and major
135
expansions planned by Brazilian producers including Vale and CSN. New

Per cent difference*

supply from emerging producers in Africa will also contribute to the growth
in global trade of iron ore (see World trade section). 90

From an estimated average price of around US$105 a tonne (FOB) in

45
2023, the benchmark iron ore price is projected to steadily fall to an
average of about US$77 a tonne by 2025 (Figure 4.5).
0
4.3 World trade
Global iron ore exports rose in the September quarter 2023 -45
2017 2018 2019 2020 2021 2022 2023
Combined shipments for Australia, Brazil, South Africa and Canada —
Discount 58% fine ores Premium 65% pellet
representing more than 80% of global seaborne supply — were estimated Premium 62% Lump ores
at around 364 million tonnes in the September quarter 2023. This was a
Notes: *Difference to 62% benchmark iron fines CFR; all grades reflect Chinese import prices
5.0% rise quarter-on-quarter. In the year to September 2023, total Source: Bloomberg (2023)
shipments for the four major exporting-countries were around 1,028 million
tonnes, a rise of 3.6% compared with the same period in 2022. Figure 4.5: Iron ore price outlook, quarterly
200
Over the outlook period to 2025, global trade is expected to grow by 1.9%
annually, with new supply coming online in Australia, Brazil and Africa.
Australia is projected to see continued ramp up of greenfield projects from 150
established producers Rio Tinto, BHP and Fortescue, as well as emerging

US$/tonne
producers such as Mineral Resources Limited and Atlas Iron. Over the
outlook period, Australia’s iron ore exports are projected to reach 100
947 million tonnes by 2025 (see Australia section for more detail).
Total iron ore shipments from Brazil increased by 19 million tonnes in the 50
year to September 2023. A conveyor belt failure at Vale’s Northern System
operations and a temporary stoppage to maintain a tailings pipeline at its
Southern System operation, saw production fall in the September quarter. 0
2017 2018 2019 2020 2021 2022 2023 2024 2025
However, iron ore exports rose 6.6% year-on-year as miners drew on
stockpiles built up in the first half of 2023. Notes: China import iron ore fines 62% Fe spot (FOB)
Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 38

Vale has stated it remains on track to meet its 2023 production guidance In August, Rio Tinto announced it had reached agreement with the
of 310–320 million tonnes (compared with 310 for 2022). Guinean Government and Winning Consortium Simandou to develop the
600 kilometre rail line required to transport the iron ore to the port. The
Brazil is expected to grow iron ore exports by around 6.0% annually over
Simandou mine is divided into 4 blocks, with 2 blocks controlled by Rio
the outlook period to 2025. This will include Vale’s S11D expansion, as
and Aluminum Corp of China, and the remaining 2 blocks owned by the
well as new and expanded output by a number of other producers,
Winning Consortium Simandou, backed by Chinese and Singaporean
including CSN’s Casa de Pedra mine, and IndoSino’s Amapa high grade
companies.
concentrate.
In October, Rio Tinto loaned US$100 million to the Chinese and
Outside of Australian and Brazil, iron ore exports are projected to
Singaporean companies backing the Winning Consortium, with the loan to
be bolstered by additional supply from Canada and India and new projects
fund ongoing studies until a final feasibility study and funding agreement
coming out of Africa, including the 150 million tonne per annum plus
for the rail and port can be struck with the Guinean government and the
Simandou mine which is targeting first production in 2025–26.
rival mining consortium. The Guinean Government is targeting completion
CMRG begins annual talks with major iron ore producers of infrastructure by 2024, and commercial production in either late 2025 or
It has been reported that China’s state-owned company China Minerals early 2026.
Resources Group (CMRG) has commenced talks with the world’s four India’s iron ore and pellet exports increased strongly in 2023
largest iron ore mining companies — Rio Tinto, BHP, Vale and Fortescue.
There remains considerable uncertainty about the likely trajectory of
Reports indicated that CMRG is seeking preferential terms on transport,
India’s iron ore exports and imports over the next few years. Much will
grades and delivery arrangements, as well as price. This follows a
depend on the rate iron ore production capacity, and associated rail and
November statement by the President of CMRG that iron ore prices had
other infrastructure, can be brought online.
reached ‘unreasonable’ levels and that the elevated input costs were
squeezing steel makers' margins. India's iron ore and pellet exports reached an estimated 31 million tonnes
in the year to September 2023, more than doubling year-on year.
Over the outlook period, CMRG is expected to play an increasing role in
However, as India’s steelmaking capacity continues to grow in the year
contract negotiations and price setting in the global iron ore market.
ahead, this is likely to reduce the quantity of iron ore available for export.
CMRG started negotiations in 2023 on iron ore supply on behalf of a
number of China’s major steelmakers. The Group was established in July In November 2022, the Indian government cut the tax rate (from 50% to
2022 and was widely seen as an effort by the Chinese government to 30%) for iron ore concentrates and scrapped the 50% export tax on low
guarantee the supply of important mineral resources — including the grade iron ore it introduced in early 2022. The higher tax rates were seen
establishment of a single, central purchasing platform for iron ore. at the time as an effort by the government to manage input prices and
retain iron ore for India’s domestic industry. However, as India has
Primary tender awarded for Guinea’s Simandou mine
historically been seen as a price-sensitive iron ore exporter — with
Progress on Guinea’s Simandou 150-200 million tonne mine continued in domestic miners incentivised to export in times of high seaborne prices —
the December quarter, with TAKRAF Group securing the primary tender the lower export tariffs are not expected to lead to a significant boost in
for crushing and conveying systems at Rio Tinto’s Simandou operations. India’s iron ore exports over the outlook period.

Resources and Energy Quarterly | December 2023 39

4.4 Australia Figure 4.6: Australian monthly iron ore export volumes
Export volumes and values increased in September quarter 90
Australia’s iron ore export earnings were $33.1 billion in the September
quarter 2023, a 15% (or $4.3 billion) increase year-on-year. The increase
80
reflected stronger iron ore prices and a weaker AUD/USD, with the unit
export price in the September quarter averaging around $146 per tonne —

Million tonnes
12% higher compared with the same period in 2022.
70
Australia exported 227 million tonnes of iron ore in the September quarter,
up 2.3% year-on-year. The September quarter results lifted exports for the
first nine months of 2023 to 667 million tonnes (Figure 4.6). The result 60
reflected the ongoing ramp up of BHP’s South Flank, Fortescue’s Eliwana
and Rio Tinto’s Gudai-Darri operations.
Rio Tinto shipped 83.9 million tonnes of iron ore in the September quarter, 50
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
up 6% quarter-on-quarter and 1% year-on-year. The result reflected
2016-2021 range 2022 2023
productivity improvements across the Pilbara system and ramp up of the
Gudai-Darri mine. Rio Tinto’s 2023 guidance remains at the upper half of Source: ABS (2023) International Trade, Australia, 5368.0; Department of Industry, Science
and Resources (2023)
the 320–335 million tonne range. This includes a 5 million tonne benefit
from the implementation of the Safe Production System, which focuses on Fortescue's total iron ore shipments were 45.9 million tonnes in the
improving safety, employee engagement and operational performance. September quarter 2023, a 6% decrease quarter-on-quarter. Fortescue’s
Rio Tinto announced it is seeking to increase production capacity of the production guidance for the 2023–24 fiscal year remains at 192–197
newly opened Gudai-Darri mine to 50 million tonnes a year, at a cost of million tonnes, which includes approximately 5 million tonnes of production
around US$70 million. The planned capacity increase will be achieved from Iron Bridge. Iron Bridge transitioned to operational production in
through upgrades within the plant, including chutes and conveyor belts, as August 2023 when it achieved its first shipment of high grade magnetite
well as utilising an existing incremental crushing and screening facility concentrate.
already on site. Mineral Resources’ iron ore production was 4.8 million tonnes in the
BHP’s iron ore output was 63.2 million tonnes in the September quarter, September quarter 2023, an 8% increase quarter-on-quarter. Exports in
up 2% year-on-year. Production guidance for 2023–24 is unchanged at the September quarter were 3.9 million tonnes and were impacted by
254–264.5 million tonnes (equating to 299–311 million tonnes on a 100% temporary haulage and port constraints. Progress continues on the
basis). This includes the further ramp up of South Flank, which BHP 30 million tonnes per annum Onslow Iron project. Drill and blast operations
expects to reach nameplate capacity (of 80 million tonnes per annum) by have commenced at the mine site, in addition to the commencement of
the end of the June quarter 2024, as well as its port debottlenecking earthworks on the private haul road. Port construction is also well
project (PDP1) due for completion in 2024. progressed, with the first ore-on-ship delivery expected in June 2024.

Resources and Energy Quarterly | December 2023 40

Export values to ease over outlook on moderating prices Figure 4.8: Australian iron ore exploration expenditure
Australia’s iron ore export earnings are estimated to reach $131 billion in 400
2023–24, up from $124 billion in 2022–23. The increase reflects higher
350
production volumes, a weaker exchange rate and a slightly higher average
price. Moderating prices and a higher AUD/USD over the outlook period 300
are forecast to lead to lower iron ore earnings, with exports of $102 billion
250

$ millions
in 2024–25 (Figure 4.7).
200
Figure 4.7: Australia’s iron ore export volumes and values
150
1,000 160
100

50
750 120
Million tonnes

A$ billion
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
500 80
Source: ABS (2023) Catalogue 8412.0

Revisions
250 40
Export earnings in 2023–24 have been revised up from the September
2023 Resources and Energy Quarterly reflecting higher forecast prices
0 0 and a lower-than-expected exchange rate; we now expect earnings of
2012–13 2015–16 2018–19 2021–22 2024–25 $131 billion rather than $120 billion. Earnings in 2024–25 are $2 billion
Volume Values (rhs) higher than forecast in the September 2023 Resources and Energy
Source: ABS (2023) International Trade, Australia, 5368.0; Department of Industry, Science Quarterly.
and Resources (2023)

Exploration rose in September quarter 2023

A total of $196 million was spent on iron ore exploration in the September
quarter 2023 (Figure 4.8). This was 2.4% higher compared with the
previous quarter, and 1.8% lower than the same period in 2022.
Exploration has fallen from near decade highs last year. However, the
latest results continue the broad upward trend in iron ore exploration which
was triggered by the historical high iron ore prices of above US$200 a
tonne reached in the first half of 2021.

Resources and Energy Quarterly | December 2023 41

Table 4.1: World trade in iron ore
Million tonnes Annual percentage change
2022 2023 s 2024 f 2025 f 2023 f 2024 f 2025 f
World trade 1,574 1,609 1,635 1,665 2.2 1.6 1.8
Iron ore imports
China 1,108 1,152 1,122 1,094 4.0 -2.6 -2.6
Japan 104 106 108 107 1.7 1.6 -0.8
European Union 114 99 113 114 -13.3 13.5 1.4
South Korea 66 71 73 74 7.4 3.0 1.3
Rest of Asia a
58 62 74 95 6.2 19.5 27.7
India 2 4 12 20 94.2 202.6 69.5
Iron ore exports
Australia 884 902 917 947 2.1 1.7 3.3
Brazil 346 367 390 413 6.1 6.3 5.9
South Africa 58 59 60 61 1.7 1.7 1.7
Canada 54 56 58 60 3.7 3.6 3.5
India 16 35 32 27 118.5 -8.5 -15.6

Notes: a Excludes China, Japan, South Korea, Taiwan and India; s Estimate; f Forecast; r Annual percentage change
Source: World Steel Association (2023); International Trade Centre (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 42

Table 4.2: Iron ore outlook
Million tonnes Annual percentage change
World Unit 2022 2023 s 2024 f 2025 f 2023r 2024 f 2025 f
Prices a

– nominal US$/t 103 105 87 77 1.9 -16.8 -12.0

– real b
US$/t 107 105 85 73 -2.3 -19.1 -14.1
Australia Unit 2021–22 2022–23 2023–24 f 2024–25 f 2022–23 2023–24 f 2024–25 f
Production
– Steel c
Mt 5.8 5.6 5.7 5.8 -2.6 1.4 1.2
– Iron ore g Mt 929 957 971 1,012 3.0 1.5 4.3
Exports
Steel c Mt 0.81 1.21 1.04 1.13 50.1 -14.2 8.2
– nominal value A$m 1,047 1,355 1,165 1,181 29.5 -14.0 1.4
– real value i
A$m 1,170 1,415 1,165 1,142 21.0 -17.7 -2.0
Iron ore h
Mt 874 895 910 931 2.4 1.7 2.2
– nominal value A$m 132,489 124,101 130,958 101,599 -6.3 5.5 -22.4
– real value i
A$m 148,058 129,580 130,958 98,209 -12.5 1.1 -25.0

Notes: a Spot price, 62% iron content, fob Australian basis; b In 2023 US dollars; c Crude steel equivalent; Crude steel is defined as the first solid state of production after melting. In ABS Australian
Harmonized Export Commodity Classification, crude steel equivalent includes most items from 7206 to 7307, excluding ferrous waste and scrap and ferroalloys; f forecast; g In wet metric tonnes;
h In dry metric tonnes; i In 2023–24 Australian dollars; r Annual percentage change; s Estimate
Source: ABS (2023) International Trade in Goods and Services, Australia, 5368.0; Bloomberg (2023); World Steel Association (2023); company reports; Department of Industry, Science and
Resources (2023)

Resources and Energy Quarterly | December 2023 43

Resources and Energy Quarterly | December 2023 44
Resources and Energy Quarterly | December 2023 45
5.1 Summary projects that will come online over the outlook period, leading to a jump in
metallurgical coal imports (Figure 5.1).
• Metallurgical coal prices remain well above pre-2019 levels and have
spiked further in recent months on the back of supply concerns. Steelmaking in Europe remained soft in December quarter with overall
• The Australian premium hard coking coal price is expected to average steel output in the European Union falling by 9% in the first nine months of
US$293 a tonne in 2023, easing to around US$203 a tonne by 2025. 2023 compared with the equivalent period in 2022. High interest rates
contributed to the softening in construction with residential, commercial,
 Australia’s exports are forecast to lift from 156 Mt in 2022–23 to 174 Mt
and infrastructure construction all seeing declines.
in 2024–25, as several new mines open (see Australia section).
 As prices decline, the value of Australia’s metallurgical coal exports is 5.3 World imports
forecast to fall from $61 billion in 2022–23 to $41 billion in 2024–25.
A significant theme in the outlook period will be the ongoing switch to India
5.2 World trade from China as the largest importer of metallurgical coal, particularly as
India’s steel making capacity continues to rise.
Demand for metallurgical coal has remained strong, increasing by 18% in
the first 8 months of 2023 compared to the equivalent months in 2022. The Figure 5.1: Metallurgical coal imports
largest increase came from China, whose January to August 2023 imports
90
rose by 61% compared with the same period of 2022. This increase is off
a relatively low base since China’s 2022 steel production was affected by 80
COVID-19 lockdowns and a slowdown in the residential property sector. 70
Prices for metallurgical coal have been relatively stable compared to the 60

Million tonnes
spikes immediately following Russia’s invasion of Ukraine. The price of
Australian prime hard coking coal is estimated to average US$293 a tonne 50
in 2023, although prices have started rising in the last couple of months, 40
averaging US$338 a tonne over October and November. This recent
30
growth is attributable to increased demand from China and India and tight
supply from Australia. 20

World metallurgical coal trade is forecast to increase from 312 Mt in 2022 10

to 318 Mt by 2025, led by rising demand in India. The supply gap
0
experienced in the first half of the year has started closing with improved China Japan South Taiwan India EU27
weather conditions. Chinese imports are expected to fall back from record Korea
levels in 2024 before increasing slightly in 2025.
2019 2020 2021 2022 2023f 2024f 2025f
India is expected to overtake China as the primary growth market for steel
Notes: f forecast s estimate
production and will become the biggest driver for long term growth in
Source: McCloskey (2023); Department of Industry, Science and Resources (2023)
demand for metallurgical coal. India’s steelmaking pipeline includes

Resources and Energy Quarterly | December 2023 46

Chinese metallurgical coal imports likely to ease The removal of Chinese restrictions on imports of Australian coal saw
Demand for metallurgical coal from China is influenced by the expected Australian thermal coal resume their pre-2020 levels. Comparatively,
outlook for steel, and Chinese government policy. China’s steel output fell imports of Australian metallurgical coal have not recovered in the same
in the September quarter 2023. Although China’s property sector way. In 2019–20, China imported large amounts of its metallurgical coal
continues to slow, demand for Chinese manufacturing and infrastructure from Australia (41% share) and Mongolia (45% share), with Russia only
investment has assisted in maintaining metallurgical coal imports. making up 7%. The primary source markets to fill the loss of Australian
imports were Russia and Mongolia, with the share of Russian imports
China’s policy settings heavily influence the Chinese steel industry which jumping even higher following the Ukraine invasion. From January to
has faced government mandated production cuts for the third year in a row August 2023, Russia supplied 28% of China’s metallurgical coal, Mongolia
to reduce carbon emissions. China is also looking to increase its use of supplied 52%, and Australia supplied just 2%. Imports of Mongolian coal
scrap steel in its production of recycled nonferrous metals which could rose as rail links to China were substantially upgraded.
further reduce demand for metallurgical coal.
India’s metallurgical coal imports are growing on structural factors
Despite the downturn in China’s steel output, imports of seaborne
Indian metallurgical coal imports were strong in 2023, with a 13% rise in
metallurgical coal rose in 2023 (Figure 5.2). One of the factors contributing
the first 8 months of 2023 compared with the equivalent period in 2022.
to this increase is safety concerns around China’s coal mines. In early
This comes despite a general softening in the global steel outlook and
2023, reports began to emerge of a number of accidents in coal mines.
reflects years of investment intended to build up India’s steel production.
Local authorities carried out safety inspections resulting in the stoppage of
operations and an overall strengthening of mining and safety regulations. Australia continues to be the primary supplier of metallurgical coal to India
These stoppages have led to greater demand for seaborne imports. however has lost market share over the last couple of years. In 2019,
Australia supplied India with two thirds of its metallurgical coal. In the first
Figure 5.2: Chinese metallurgical coal imports, monthly
8 months of 2023, this dropped to 49%. Discounted coal from Russia has
12 been the primary driver of this change, with Russian metallurgical coal
making up 19% of total Indian metallurgical coal imports, compared to 6%
10 in 2019. As the discount for Russian coal diminishes further, Australia will
likely regain some of this share.
Million tonnes

8
India’s demand for steel is expected to continue to grow, driven by the
6
manufacturing and construction sectors. India’s steel output rose 12% in
4
the first nine months of the year compared to the equivalent period in
2022. India is rapidly expanding its domestic steel production capacity and
2 aims to double crude steel production capacity by 2030.

0 Some of the projects in India’s steelmaking pipeline are expected to come

2017 2018 2019 2020 2021 2022 2023 online over the outlook period, leading to a corresponding jump in
Australia Canada Mongolia Russia United States Others metallurgical coal imports to 73 million tonnes in 2024 and 2025. This is
Source: McCloskey (2023) 26% higher compared to the 2022 total of 58 million tonnes.

Resources and Energy Quarterly | December 2023 47

5.4 World exports Figure 5.3: Metallurgical coal exports
Structural shortfalls in metallurgical coal markets have mostly eased, but a 200
small shortfall is likely to persist for at least another year. Inventories are
low in some countries and some Russian supply remains stranded from 160
world markets. Any further downturn in global steelmaking (or tightening

Million tonnes
policy from China) could result in a surplus of metallurgical coal supply,
120
potentially lowering prices.

US coal exports remain strong but potential disruptions signalled 80

US suppliers are benefitting from infrastructure and transport upgrades,
and from the removal of some competing Russian supply due to sanctions
40
by many western nations.
Coal exports remain strong and have been supported recently by the 0
resolution of several infrastructure faults. However, lack of access to Australia US Canada Mongolia Russia Mozamb.
capital has hampered investment opportunities. US mines are also facing 2019 2020 2021 2022 2023s 2024f 2025f
labour force shortages which pose risks to US supply over the outlook
Notes: f forecast s estimate
period. Despite these disruptions Rameco has hit its long-term goals early Source: IEA (2023); Department of Industry, Science and Resources (2023)
in 2023, reaching 3.6 Mt by September.
Canadian mines expected to maintain output
US metallurgical coal exports are generally high-cost but remain profitable
Canadian output is expected to remain largely steady through the outlook
for the time being. Over the outlook period, US exports are expected to
period, with falling output at ageing mines offset by ramp-ups at Canada
experience minimal growth as prices fall and marginal or cost-sensitive
Coal’s re-opened Grand Cache mine. The mine previously produced
exporters withdraw from the seaborne market.
around 2 Mt annually and is expected to match this level again by 2024.
Safety concerns may hamper Mongolian coal exports in the short term
Canada has also experienced some mine safety issues which will impact
Mongolian exports are expected to steadily rise to 19 Mt by 2025, supply. A stop work order was issued after a roof fall at the Donkin Mine in
recovering from a drop off due to COVID-19 restrictions and reduced Nova Scotia. The mine has since been given approval to move towards
worldwide demand. Despite the easing of disruptions, supply is unlikely to restart, but the operator has indicated there may be further delays.
reach the pre COVID-19 highs of 27 Mtpa in either year of the outlook
period (Figure 5.3). Exports out of Mozambique are growing, supported by improved transport
In the early stages of the COVID-19 pandemic, Mozambique’s exports fell
Short term supply from Mongolian mines could be affected by safety
temporarily as low prices forced much of the nation’s high-cost production
inspections following an accident involving multiple fatalities in October.
out of the market.
Whilst the accident occurred in a thermal coal mine, the sweeping safety
checks could disrupt supplying metallurgical coal mines. Neighbouring nations use Mozambique’s ports to export their metallurgical
coal. Exports from the Majhado project in South Africa are expected to

Resources and Energy Quarterly | December 2023 48

commence from mid-2025. The mine has potential to produce up to 4 Mt steelmaking capacity may also add upward pressure to metallurgical coal
of metallurgical coal per annum. prices over the long term.

Russian mines reapproaching capacity but tariffs may hurt production Figure 5.4: Metallurgical coal prices — Australian vs US, FOB
Russia’s invasion of Ukraine has resulted in a dramatic decline in thermal 700
coal exports – and initially a more modest easing in metallurgical coal
600
output from the region. The war has recently escalated around the Black
Sea where significant quantities of seaborne coal are traditionally loaded
500
and shipped.

US$ a tonne
Despite the ongoing sanctions, raw coking coal output partially recovered 400
in September, with the Kuzbass mine set to return to normal operations.
300
Output at the mine rose by 2% in September but remains 3% lower
through the year. 200
The Russian Government is imposing export duties on exports outside of
100
the Eurasian Economic Union from 1 October 2023 until the end of 2024.
This could result in a duty of up to 7% on metallurgical coal. The duty is 0
dependent on the Ruble-US dollar exchange rate. This duty will squeeze 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
the already tight margins of coal miners from US$5-15 a tonne to US$0-8 Australian prime hard coking US Low Vol
a tonne, resulting in the potential curtailing of output if prices don’t rise. Notes: ‘Low Vol’ is low volatility coking coal.
Source: McCloskey (2023); Department of Industry, Science and Resources (2023)
5.4 Prices
Supply constraints experienced during the La Niña cycle have eased, with
Metallurgical coal prices set to decline further
demand for metallurgical coal likely to follow the softening outlook for
Metallurgical coal prices experienced further increases in the December growth in global steelmaking. Chinese steelmaking still carries downside
quarter as supply tightened in Australia. Australian premium hard coking risks as overall policy settings are unfavourable to the carbon intensive
coal prices averaged US$320 a tonne in November 2023 — the highest sector. The removal of China’s informal import restrictions on Australian
level observed in any month this year (Figure 5.4). coal have allowed trade to resume but shifts in trade patterns away from
Australian coal supply was disrupted in September when operations at Australian imports (that occurred after 2020) appear likely to persist.
BMA’s Peak Downs mine in central Queensland were suspended after two
Over the outlook period, more stable supply and weaker demand should
truck sliding incidents. Although the suspension applied to only parts of the
result in a moderate decline in prices, though weather events and conflict
mine’s operations, they were enough to place upward pressure on prices.
around the Black Sea region add to upside risks. The price of Australian
The weak monsoon season and government spending in India supported metallurgical coal is forecast to decrease from US$293 a tonne in 2023 to
steel production in August, with additional construction activity leading to a around US$203 a tonne by 2025.
drawdown of coal supplies. The long-term expansion of India’s

Resources and Energy Quarterly | December 2023 49

5.5 Australia Mines that could expand commercial operations in the next couple of
Metallurgical coal export volumes are growing, offsetting lower prices years include the Hillalong, Wilton and Fairhill projects in Queensland
(depending on approvals). Sojitz Blue has also received approval for its
Australia remains the world’s largest metallurgical coal producer,
Gregory Crinum open cut coal extension, which could now potentially run
accounting for 53% of the worlds exported volume. Australian metallurgical
for another 20 years. The extension of the Mandalong and Vickery mines
coal output steadied in 2023 and then began to rise as persistent
in NSW will also boost output.
disruptions from La Niña finally eased (Figure 5.5). The current El Niño
episode is likely to bring about sustained dry conditions over the rest of Figure 5.5: Australia’s metallurgical coal export volumes, monthly
2023–24, though summer storms remain a risk factor for ports/shipping.
20
Labour force shortages continue to impact metallurgical coal production
across mine sites. According to ABS labour force data, total employment
in the coal mining sector has dropped 14% from pre-pandemic levels. The 15
average number of persons employed in coal mining in 2019 was 53,000,

Million tonnes
compared to 46,400 in 2021 and 45,900 in 2023. Some of this may reflect
10
capital deepening and other structural changes, but labour shortages are
also believed to be acting as a constraint.
Demand for Australian metallurgical coal could be propped up by growing 5
thermal coal prices. Metallurgical coal can be substituted for thermal coal
for the purpose of power generation; however, the reverse is not possible.
Therefore, sales of metallurgical coal into thermal markets remains a 0
Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
possibility, especially when the price per calorific value of metallurgical
Japan China South Korea Taiwan India Vietnam Rest of world
coal falls below that of thermal coal. There is a risk that an unusually harsh
Source: ABS (2023) International Trade, Australia (trade tables subscription)
winter or summer could result in metallurgical coal becoming more
competitive than thermal coal, and the pivot of 2022 (when substantial
Higher production in New South Wales and (especially) Queensland is
quantities of metallurgical coal were dumped into thermal markets) could
expected to lift Australia’s exports from a weather-affected 156 Mt in
recur.
2022–23 to 174 Mt by 2024–25. Metallurgical coal export earnings are
Growth in production is still expected over the outlook period. Mine expected to ease from $61 billion in 2022–23 to $41 billion by 2024–25
expansions and openings are expected to exceed closures (depending on (Figure 5.6), with higher volumes partly offsetting falling prices.
approvals), with metallurgical coal exports expected to experience
Revisions to the outlook for Australian metallurgical coal exports
stronger growth than thermal coal. Over the outlook period, this will
position Australia to meet the demand of emerging steel markets in the The earnings forecast for 2023–24 has been revised up by around
region. $5 billion from the September 2023 REQ, based on an upward revision to
prices. The forecast for 2024–25 is largely unchanged.

Resources and Energy Quarterly | December 2023 50

Figure 5.6: Australia’s metallurgical coal exports
210 84

180 72

150 60
Million tonnes

A$ billion
120 48

90 36

60 24

30 12

0 0
2018–19 2020–21 2022–23 2024–25
Volumes Values (rhs)

Source: ABS (2023) International Trade, Australia 5454.0; Department of Industry, Science
and Resources (2023)

Resources and Energy Quarterly | December 2023 51

Table 5.1: World trade in metallurgical coal
Annual percentage change
Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

World trade Mt 312 313 311 318 0.2 -0.6 2.1

Metallurgical coal imports

China Mt 64 78 54 55 22.6 -31.4 2.2

India Mt 58 70 73 73 20.1 4.7 0.0
Japan Mt 43 41 41 41 -4.0 0.2 0.5

European Union 28 Mt 36 36 36 36 -0.2 0.0 0.0

South Korea Mt 34 34 34 34 1.2 0.1 -1.8
Metallurgical coal exports

Australia Mt 161 159 173 176 -1.1 8.9 1.5

United States Mt 42 43 42 43 1.5 -1.2 2.3
Canada Mt 28 28 26 26 -0.7 -6.0 -0.2
Russia Mt 42 41 41 41 -2.8 0.0 0.0
Mongolia Mt 14 16 18 19 14.0 13.8 6.1
Mozambique Mt 4 4 4 4 6.7 0.0 0.0

Notes: f Forecast; s Estimate.

Source: IEA (2023) Coal Information; IHS (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 52

Table 5.2: Metallurgical coal outlook
Annual percentage change

World Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

Contract pricese

– nominal US$/t 372 289 229 204 -22.2 -21.0 -10.7

– reald US$/t 389 289 224 195 -25.7 -22.7 -12.6

Spot pricesg

– nominal US$/t 364 293 219 203 -19.6 -25.1 -7.4

– reald US$/t 382 293 214 194 -23.4 -26.8 -9.3

Australia Unit 2021–22 2022–23 2023–24f 2024–25f 2022–23 2023–24f 2024–25f

Production Mt 168 167 173 178 -0.5 3.6 2.8
Export volume Mt 163 156 169 174 -4.3 8.3 3.0
– nominal value A$m 67,588 61,252 52,113 40,575 -9.4 -14.9 -22.1
– real valuei A$m 71,972 61,301 49,969 37,697 -14.8 -18.5 -24.6

Notes: d In 2023 US dollars. e Contract price assessment for high-quality hard coking coal. i In 2023–24 Australian dollars. s Estimate f Forecast. g Hard coking coal fob Australia East Coast ports.
s Estimate.
Source: ABS (2023) International Trade in Goods and Services, Australia, 5368.0; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 53

Resources and Energy Quarterly | December 2023 54
Resources and Energy Quarterly | December 2023 55
6.1 Summary Figure 6.1: Chinese coal inventory

 As prices fall, Australian thermal coal exports are forecast to fall from a 600
peak above $65 billion in 2022–23 to about $29 billion by 2024–25.
 Prices for Newcastle 6,000kcal thermal coal dropped to US$122 a tonne 500
in November 2023, compared with US$159 a tonne in September 2023.
The price weakness largely reflects high stockpiles in China and fewer 400

Million tonnes
supply disruptions. Prices are expected to drift lower as supply rises and
demand moderates over the outlook period. 300
 A return to more favourable production conditions is expected to see
Australian thermal coal exports rise from 182 million tonnes (Mt) in 200
2022–23 to 203 Mt by 2024–25 (see Australia section).
100
6.2 World trade
Global demand for coal held up in 2023 (year to date), increasing by 2% 0
Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
compared with the same period in 2022. The most notable lift in demand
came from China, where coal imports almost doubled in 2023, in response Source: Bloomberg (2023)

to increased demand for cooling, and significant stockpiling of coal.

6.3 World imports
Imports to the European Union and United Kingdom fell to 52 Mt over the
year to August. This compares with 69 Mt over same period a year ago as Global imports of thermal coal are expected to increase by about 0.4% in
European nations scrambled to obtain substitutes for Russian coal. 2023 as a result of high demand for seaborne coal from China, Vietnam,
Europe accumulated ample stocks of coal and gas in 2022, reducing its and Turkey (Figure 6.2). In 2024 and 2025, world imports are expected to
2023 import needs considerably. drop by 2.1% in 2024 to allow high inventory levels to normalise, before
Thermal coal trade in Asia in 2023 is set to outpace 2022 by 17%, with the resuming in 2025 with a 1.5% increase.
biggest driver of this rise being China’s stockpiling of coal (Figure 6.1). China’s inventory levels steadily increased to record levels
Vietnam more than doubled imports in the first 8 months of 2023, and is
Energy security concerns borne of geopolitical tensions have prompted
expected to continue to lift imports in the outlook period. The most notable
China to stockpile coal inventories to record levels in 2023. China’s coal
fall in imports in 2023 was in Japan where two nuclear reactors restarted.
inventories have more than tripled over the last couple of years. Import
Energy security concerns — which were already high from the Russia- volumes have been up every month in 2023, resulting in a total increase of
Ukraine war — have been exacerbated by the Hamas-Israel conflict. While 77% of coal imports in the first nine months of 2023 compared with 2022
the Gulf region does not export material volumes of thermal coal, it does (Figure 6.3).
export LNG, which is one of the primary substitutes used in power
Indonesia, Australia and Russia are the primary exporters meeting this
generation. Further escalation of the Hamas-Israel conflict could result in
additional demand.
increased gas and oil prices, leading to additional thermal coal demand.

Resources and Energy Quarterly | December 2023 56

Figure 6.2: Thermal coal imports China’s coal-fired power output rose in 2023 despite its announced target
320 of reducing output. China also loosened the rules governing its carbon
market to make it easier for power generators, helping to mitigate the risk
280
of electricity shortages. China’s Emissions Trading Scheme allocates
240 carbon permits based on a power plant’s output, with different benchmarks
Million tonnes

200 for each fuel and technology. Reports suggest coal-fired power plants that
160 need to buy permits to meet emissions targets by the end of the year have
been allowed to borrow from future allowances.
120
80 China aims to lower its carbon intensity by over 65% by 2030 compared to
2005 levels, and to reach 1,200 GW of installed wind and solar power.
40
0 Hong Kong continues to transition its energy use ahead of mainland
China Japan South Taiwan India Other EU27 China, with imports declining a further 9% in 2023 compared to the same
Korea Asia period in 2022. Imports to Hong Kong fell sharply in 2020 following the
2019 2020 2021 2022 2023s 2024f 2025f pandemic, reducing from 10 Mt in 2019 to just 5.5 Mt in 2020. Hong Kong
also bucked the trend of returning to historical import levels in 2021 (6.5
Note: e Estimate f Forecast Mt) during the post pandemic surge in economic activity, and in 2022 (6.2
Source: McCloskey (2023); IEA (2023) Coal Market Report; Department of Industry, Science
and Resources (2023)
Mt) following Russia’s invasion of Ukraine. These reduced imports of coal
had been planned for some time with Hong Kong having ceased building
Figure 6.3: China’s thermal coal imports, monthly coal-fired generation units and phasing out existing units. Hong Kong
40 plans to phase out coal for use in power generation by 2035.
35 India’s coal imports will increase as industrial and consumer use rises
30 More favourable weather conditions and the resulting increase in domestic
Million tonnes

25 production led to a slight drop in India’s seaborne thermal coal imports –

dropping to 150 Mt in 2023 compared to 153 Mt in 2022. India is expected
20
to increase thermal coal imports over the outlook period, remaining the
15 most significant growth market. This growth will be supported by rising
10 industrial use and higher electricity requirements in the consumer sector.

5 India’s demand for thermal coal has remained high over the last few
months due to the monsoon season. Insufficient rainfall contributed to
0
increased temperature and humidity levels and drought conditions in parts
2017 2018 2019 2020 2021 2022 2023
of the country, leading to increased cooling and irrigation requirements.
Australia Indonesia Mongolia Russia Others
These same conditions also helped India’s domestic coal mining, with
Source: McCloskey (2023)
production from Coal India – India’s largest domestic coal producer –

Resources and Energy Quarterly | December 2023 57

increasing by 13% in August 2023 compared with August 2022. India’s equivalent period in 2022 (Figure 6.5). The most significant fall was in
demand for thermal coal is expected to remain elevated as the December imports from Russia, which the Japanese Government has been seeking
quarter brings India’s festivities season, and higher winter demand. to cut following Russia’s invasion of Ukraine. In 2021, before the Russia
invaded Ukraine, Russian imports accounted for 12% of thermal coal
India’s Power Ministry asked utility companies to import at least 6% of their
imports to Japan. In 2023, that has dropped to just 3%. The US and South
coal needs until September 2023. This mandate has now been extended
Africa have helped to fill this gap.
to March next year at 4% to meet demand.
With domestic coal production expected to steadily increase, India is Figure 6.5: Japan, South Korea and Taiwan's thermal coal imports
planning to lift the efficiency of coal transportation to consumption centres. 14
India has set a target to nearly treble the volume of coal transport via
coastal route or Rail-Sea-Rail method. Measures being considered could 12
lift seaborne transport from 40 Mt per year, to 112 Mt by 2030. 10

Milloin tonnes
Figure 6.4: India’s thermal coal imports, monthly 8
20
6
18
16 4
14
2
Million tonnes

12
10 0
8 Jun-20 Jun-21 Jun-22 Jun-23
Japan South Korea Taiwan
6 Source: McCloskey (2023)
4
2 Taiwan’s imports are falling as policy measures ramp up
0 Taiwan’s thermal coal imports fell by 18% in the first 9 months of 2023
2018 2019 2020 2021 2022 2023 compared to the equivalent period in 2022 due to muted domestic power
Indonesia South Africa United States Australia Russia Other demand, and Taiwan’s continued plans to transition away from thermal
Source: McCloskey (2023) coal. Imports have steadily declined over the last few years, except for
2021 during the post pandemic surge in economic activity.
Japan’s coal imports are expected to remain strong in the short-term
Demand picked up over the summer due to the lack of rainfall and dry
Mild weather during much of 2023 has reduced Japanese electricity use,
weather, which led to a decline in hydropower output. This resulted in a
and the restart of two nuclear reactors in August and September also
moderate uptick in thermal coal imports in June, July, and August, which
reduced the need for thermal coal imports. Japan’s imports of thermal coal
offset some of the decline in other months. A typhoon hit Taiwan in
dropped by 11% over the first 9 months of 2023 compared to the
October, with heavy rain and winds which affecting port operations.

Resources and Energy Quarterly | December 2023 58

South Korean power generation companies to reduce Russian coal The biggest contributor to this growth is Vietnam. Vietnam’s energy plan
calls for an increase of 40% in coal-fired power generation capacity by
South Korea’s imports of thermal coal dropped by a moderate 6% over the
2030. Vietnam still aims to eliminate coal from its energy mix by 2050,
first 9 months of 2023 compared to the equivalent period in 2022. Demand
however a material drop in coal fired capacity is not expected before 2045.
peaked over the summer months and remained high (at 9.6 Mt) in August,
before dropping off in September (7.9 Mt). A number of other nations in the region are expected to experience minor
growth in thermal coal imports over the outlook period, including Malaysia,
The South Korean government has asked state owned power generation
the Philippines, Thailand and Pakistan. But, with coal-fired power plant
companies to reduce coal imports from Russia, in protest to its invasion of
constructions becoming increasingly stalled, it is likely that a larger share
Ukraine. This appears to have contributed to a 16% drop in thermal coal
of growth in electricity generation will be driven by gas and renewables.
imports from Russia in September compared with August, though the end
of the Northern Hemisphere summer could also have contributed. 6.4 World exports
South and South-East Asian coal imports World seaborne exports are estimated to increase this year by 0.4%, going
from 1,043 Mt in 2022 to 1,047 Mt in 2023. Exports are then expected to
South and South-East Asia is one of the few regions that is expected to
decline to 1,026 Mt by 2024 before climbing back up to 1,041 by 2025.
see a rise in demand over the forecast period (Figure 6.7). This region
imported 150 Mt in 2023, an increase of 5% from 2022. Imports are Figure 6.7: Thermal coal exports
expected to rise to 165 Mt by 2025 due to the number of coal-fired power
500
plants under construction.
450
Figure 6.6: South and South-East Asia thermal coal imports 400
200 350

Million tonnes
300
150 250
Million tonnes

200
100 150
100
50 50
0
0 Indonesia Australia Russia Colombia South US
Africa
2013 2015 2017 2019 2021 2023 2025
2019 2020 2021 2022 2023f 2024f 2025f
Vietnam Philippines Malaysia Thailand Notes: e Estimate f Forecast.
Source: McCloskey (2023); IEA (2023) Coal Information; ABS (2023); Department of
Bangladesh Pakistan Other Industry, Science and Resources (2023)
Source: IEA (2023) Coal Information; Department of Industry, Science and Resources
(2023); McCloskey (2023)

Resources and Energy Quarterly | December 2023 59

In September 2023, the Australian Bureau of Meteorology declared that an the first eight months of 2023. After the discount began to ebb, a 30% drop
El Nino weather episode was underway. Moreover, the Indian Ocean in imports of Russian coal was observable from mid-2023. This is likely
Dipole is strongly positive. Both suggest drier than normal weather in due to a combination of factors including seasonality, increased risk from
Australia and Indonesia over the near term. These dryer weather Russian ports being declared a war zone (and large subsequent increases
conditions could be more favourable for Australian coal exports than over to insurance costs), and reduced discounts for Russian coal compared to
the past three years. However, an El Niño raises the likelihood that river other competitors in the region.
levels will drop in Indonesia, making barging more difficult.
US exports remain hampered by weather conditions and high costs
Indonesia’s exports are facing a new cycle of weather disruptions US exports of thermal coal have been particularly strong recently, with
Indonesian exports remained strong in 2023, with the nation easily exports in almost every month surpassing their equivalent in 2022. Indian
maintaining its position as the world’s top exporter of thermal coal. In demand for US thermal coal was especially high. US thermal coal exports
2022, Indonesia went from shipping just over a third of the world’s thermal also helped filled the supply gap faced by Europe following sanctions on
coal, to shipping almost half, replacing most of the supply gap left by Russian coal. Sanctions went into full effect in August 2022, and US
Russia. But the El Niño-driven drought in Indonesia is now lowering river exports to the EU the UK more than doubled between 2021 and 2022.
levels, and this threatens to make thermal coal more difficult to barge to
Columbian thermal coal exports unlikely to recover to pre pandemic levels
deepwater ports — potentially impacting a large volume of exports.
Exports from Columbia are on track to exceed 2022 levels this year, with
Indonesian exports to China face growing competition from Australia and weather conditions easing following the end of La Niña. Although
Russia, with both providing a higher share of China’s imports as it seeks Colombian thermal coal exports had faced a gradual decline over the
coal with a higher calorific value to blend with lower calorific coal. years, they fell sharply during the COVID pandemic, falling to 52 Mt in
Indonesia introduced a new tariff collection system in October for ship-to- 2020 from 76 Mt in 2019. With some mines now permanently closed and
ship services at the Muara Berau port in east Kalimantan. Mine companies others disrupted, it is not expected that Colombia will reach its pre-COVID
and floating crane operators are holding protests, with some loading export levels.
operations ceasing. Muara Berau is one of the largest anchorages in The Cerrejon mine continues to experience sporadic disruptions to
Indonesia. If the issue escalates, it could add to supply pressures. operations from local indigenous communities protests and potential union
Russia coal exports are continuing to face challenges strikes. Cerrejon will be able to continue with expansion into the La Puente
pit following a court decision.
Russian coal was sold at a heavy discount following the invasion of
Ukraine, with discounts of up to 73% on spot markets, and 58% to buyers South African exports are facing cost pressures
who did not impose sanctions such as Türkiye and India. However, these South African exports have been relatively stable in 2023, despite an early
discounts reduced around mid-2023 as Russian thermal coal prices began dip linked to heavy rain and flooding caused by the La Niña weather
converging with other price indexes in the region. episode. But lower prices have begun to affect higher-cost coal producers
in South Africa, resulting in less usage of the more expensive forms of
The most notable shift post invasion occurred in India, where buyers are
transportation. Coal truck volumes to South African ports were down by
typically highly sensitive to price changes. Imports of Russian thermal coal
over 30% in July relative to January 2023. Rail transport is largely
jumped from about 1,500 tonnes in 2021, to almost 19,000 tonnes in just

Resources and Energy Quarterly | December 2023 60

unaffected, but use of rail is generally dominated by the nation’s Most factors point to a decline in prices over the outlook period. Supply
larger/wealthier coal mining companies. has not yet fully recovered from La Niña disruptions, and there is capacity
to bring additional supply into markets over coming months. The end of the
The monsoon season in India — which usually runs from June to
Northern Hemisphere winter will place downward pressure on thermal coal
September — led to a temporary decline in the Indian market with exports
demand in early 2024. Global gas supplies are expected to increase in
sharply dropping in June and slowly recovering in the following months.
2025 and 2026 with the US and Qatar bringing extra supply online. Lower
High demand in South Korea over summer helped mitigate the loss.
gas/LNG prices should reduce pressure on thermal coal markets.
6.5 Prices Prices are not expected to decline to 2019 levels. A range of structural
Prices have stabilised following a sustained decline price pressures have manifested in thermal coal markets over the last few
The price of Newcastle 6,000kc NAR thermal coal has recently settled in a years. Supply is likely to remain constrained by low capital availability,
relatively narrow band (between US$120 and US$160 a tonne) after falling labour shortages, loss of Russian output following the invasion of Ukraine,
sharply in the March quarter 2023. The price differential between high and and rising global freight costs.
low-grade thermal coal contracted in 2023 (Figure 6.8). Australian metallurgical coals have retained their premium to thermal coal,
Figure 6.8: Thermal coal prices — Australian vs Indonesian after dipping below the price for benchmark Newcastle 6,000kc NAR in H2
2022 and Q1 2023 (Figure 6.9). This premium encouraged some
450
metallurgical coal producers to dump (low grade) product into thermal coal
400
markets, eventually depleting metallurgical coal inventories to low levels.
350
300
Figure 6.9: Prices for thermal and low-grade coking coals
250 800

200
150 600

US$ a tonne
100
50 400
0
2013 2015 2017 2019 2021 2023
Indonesia 4,700 NAR Newcastle 5,500kc NAR 200
Newcastle 6,000kc NAR
Source: McCloskey (2023). NAR = Net as received. 0
Feb-21 Aug-21 Feb-22 Aug-22 Feb-23 Aug-23
Firmer prices are possible as the year turns, with the recent lift in gas/LNG Newcastle basis 6,000kc NAR Newcastle 5,500kc NAR
prices improving the competitiveness of thermal coal, especially in Asia. A Australian semi-soft cc Australian LV PCI
MCC2 Australian mid-vol PHCC
colder than normal Northern Hemisphere winter could also add to thermal
coal demand, though stocks are high (especially in China and Europe). Source: McCloskey (2023)

Resources and Energy Quarterly | December 2023 61

Chinese demand pivoted towards lower grade Indonesian coal following Mine expansions and closures are expected to largely balance out over
the commencement of trade restrictions targeting Australia. However, the outlook period. Whitehaven’s Vickery project commenced construction
Chinese buyers are shifting back towards traditional mixes as trade in June 2023. The company is investing $150 million to start up a small-
resumes between the nations. scale version of the mine with first coal expected around mid-2024.
Whitehaven coal is seeking to extend the existing Narrabri underground
Price risks remain somewhat balanced. Thermal coal demand faces mine. The project has been approved by the NSW Independent Planning
downside risks, with a weak Chinese recovery, a mild Northern commission but still needs approval under the Federal Environment
Hemisphere winter, and increased stockpiles potentially constraining coal Protection and Biodiversity Conservation Act to start. If the project
use. However, shocks to supply — such as the El Niño weather pattern proceeds it would extend the life of the mine from 2031 to 2044.
impacting Indonesian exports — could again lead to price increases.
On balance, it is expected that export volumes will experience minor
Profit margins may become narrower in some countries over the outlook growth over the outlook period (Figure 6.9) with better weather conditions
period, as prices decline and cost of production pushes up. If costs and increased production from several mines. Thermal coal exports are
continue to rise significantly over coming years, this could place another forecast to rise from 182 Mt in 2022–23 to 203 Mt by 2024–25. Ebbing
floor under coal prices. prices are expected to lead to a decline in export values from $65 billion in
The 6,000 kcal Newcastle coal price is expected to decline from just under 2022–23 to $29 billion by 2024–25.
US$173 a tonne over 2023 to around $US115 a tonne by 2025. This is still
Figure 6.10: Australia’s thermal coal exports
well above the 2019 average of US$76 a tonne, and prices retain
250 75
significant potential to vary in either direction given the likely ongoing
stranding of some Russian coal production.
200 60
6.6 Australia

Million tonnes
150 45

A$ billion
Australian thermal coal export volumes have recovered
Demand for Australian thermal coal exports remained high in 2023, and 100 30
supply to the export market improved following two years of wet weather
and labour force disruptions. The former was associated with the La Niña 50 15
weather episode, while the COVID pandemic and mine labour shortages
drove workforce problems. Exports were especially high over June and 0 0
July 2023 to meet summer demand in Asia. 2018–19 2020–21 2022–23 2024–25
Volumes Export values
Australian thermal coal exports to China rose steadily over H1 2023, Source: ABS (2023); Department of Industry, Science and Resources (2023)
reaching a peak in June 2023 during China’s peak summer demand. In
value terms, thermal coal exports to China total $5.3 billion in the first 9 Revisions to the outlook for Australian thermal coal exports
months of the year. Japan — usually the largest market for Australian The forecast for export earnings experienced little changed for 2023–24
thermal coal — was pushed to second place in the June quarter. and have been revised up by $329 million for 2024–25 from the
September REQ.

Resources and Energy Quarterly | December 2023 62

Table 6.1: World trade in thermal coal
Annual percentage change
Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

World trade Mt 1,043 1,047 1,026 1,041 0.4 -2.1 1.5

Thermal coal imports

Asia Mt 796 898 858 878 12.7 -4.4 2.3

China Mt 231 302 221 231 30.7 -26.7 4.4

India Mt 153 150 186 193 -2.4 23.9 3.8

Japan Mt 138 138 137 136 0.0 -0.9 -0.8

South Korea Mt 91 91 91 90 0.0 -0.5 -0.5

Taiwan Mt 61 61 60 59 0.0 -1.1 -2.5

Thermal coal exports

Indonesia Mt 465 462 459 457 -0.7 -0.5 -0.4

Australia Mt 179 197 202 203 10.0 3.0 0.4

Russia Mt 151 133 130 128 -12.0 -1.7 -1.5

Colombia Mt 54 56 59 59 2.7 5.4 0.0

South Africa Mt 67 68 68 69 1.5 -0.6 1.3

United States Mt 35 36 36 36 4.6 0.1 -0.6

Notes: f Forecast s Estimate

Source: International Energy Agency (2023); IHS Markit (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 63

Table 6.2: Thermal coal outlook

Annual percentage change

World Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

Contract pricesb

– nominal US$/t 324 249 163 131 -23.2 -34.6 -19.2

– realc US$/t 326 245 156 123 -24.9 -36.2 -20.9

Spot pricesd

– nominal US$/t 359 173 138 115 -51.7 -20.5 -16.6

– reale US$/t 374 174 135 110 -53.6 -22.5 -18.3

Australia Unit 2021–22 2022–23 2023–24f 2024–25f 2022–23 2023–24f 2024–25f

Production Mt 236 216 252 253 -8.5 16.8 0.4

Export volume Mt 196 182 202 203 -7.2 11.2 0.3

– nominal value A$m 46,258 65,592 36,193 28,792 41.8 -44.8 -20.4

– real valueh A$m 49,266 65,803 34,710 26,759 33.6 -47.3 -22.9

Notes: b refers to benchmark Japanese Fiscal Year 6322kcal GAR thermal coal contract reference price; c In current JFY US dollars; d fob Newcastle 6000 kcal net as received; e In 2023 US
dollars; f Forecast; h In 2023–24 Australian dollars; s estimate
Source: ABS (2023) International Trade in Goods and Services, Australia, Cat. No. 5368.0; IHS (2023); NSW Coal Services (2023); Queensland Department of Natural Resources and Mines
(2023); Company Reports; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 64

Resources and Energy Quarterly | December 2023 65
7.1 Summary Figure 7.1: Global LNG demand growth forecasts, 2020–25
• Australia’s LNG export revenues held at $17 billion in the September 50
quarter. In annual terms, earnings are expected to ease from A$92 40
billion in 2022–23 to A$64 billion by 2024–25, as global energy prices 30
soften and some supply disruptions resolve.

Million tonnes
20
• Geopolitical risks have worsened with the outbreak of conflict in Gaza.
10
However, seasonal risks have abated as European countries
successfully filled inventories ahead of the northern winter. The price 0
outlook is largely unchanged, with winter demand expected to lift prices -10
from US$12/MMBtu in the September quarter to around US$17/MMBtu -20
by the March quarter 2024, with gradual declines to follow.
-30
• Longer-term structural pressures should ease after 2025 as the US and 2020 2021 2022 2023 2024 2025
Qatar bring new supply sources online. Japan South Korea China ASEAN
Europe South Asia Rest of world
7.2 World trade Notes: 2020, 2021 and 2022 figures based on historical data.
Source: Department of Industry, Science and Resources (2023), Nexant ECA (2023)
Markets remain tight, though signs of easing are evident
Figure 7.2: Global LNG supply growth forecasts, 2021–25
Gas markets remain relatively tight, though countervailing pressures are
evident. European gas storage has been virtually filled following 40
successful efforts to pivot off Russian pipeline gas. Weather conditions
across much of Europe have been warm and mild in recent months, and 30
high reserves have reduced demand pressure (Figure 7.1), leaving most
20
countries well prepared for falling winter temperatures. However, imports

Million tonnes
from the Ukraine and Turk stream routes remain well below the pre-
10
invasion level of imports from Russia, and the resulting dependency on
shipborne LNG reduces the flexibility of European buyers over the outlook
0
period.
Asian countries have a mixed demand outlook and significant unfilled -10
storage capacity. After a weak start to 2023, LNG demand across Asia
surged in the second half of the year, driven by China and India. Demand -20
2020 2021 2022 2023 2024 2025
in Taiwan and South Korea remains more constrained, and nuclear
restarts have reduced LNG demand in Japan. However, growth among United States Russia Australia Africa
Qatar Malaysia Indonesia Rest of world
ASEAN nations including Singapore, Indonesia, Thailand and Malaysia
Notes: 2020, 2021 and 2022 figures based on historical data.
has picked up, with more growth appears likely in the final quarter of 2023. Source: Department of Industry, Science and Resources (2023); Nexant ECA (2023)

Resources and Energy Quarterly | December 2023 66

The baseline outlook for supply is broadly in line with demand over the appears to have levelled out. However, another rise in imports remains
near-term (Figure 7.2), but risks have risen as a result of recent possible if weather conditions deteriorate or relatively weak industrial
geopolitical conflicts. The destruction of the Nord Stream pipeline has shut demand rebounds more quickly than expected.
down a significant channel for gas supply, and the outbreak of conflict in
European countries have sought to mitigate the risks of shortages by
the Gaza Strip could add further complications and disruptions. Forward
building inventories — which reached virtually 100% of capacity by early
prices rose rapidly in October as markets priced in additional risks, and
November (Figure 7.3). European inventory movements have gained
held much of the price gain even after it became clear that Europe had
additional importance given the loss of access to a traditional source of
managed to insulate itself from potential winter gas shortages.
gas and the consequent loss of flexibility in gas supply chains.
Gas supply appears likely to have grown in net terms in 2023. A number of
gas plants previously out of operation began producing again, though Figure 7.3: European storage inventories, 2021–23
progress has stalled at some newer projects. 100
Exports are expected to grow from various sources in the US, the Middle 90
East and Africa. In the US, exports from the Freeport terminal have 80
recommenced and are expected to add around 11 Bcm to global export 70
capacity in 2023–24. Supply from Africa is also expected to grow, with 60

Per cent
7 Mt of annual gas output expected to come online in Nigeria. This will be
50
supported by output from the new Coral FLNG facility in Mozambique, and
40
by additional feedgas from Algeria and Trinidad. The Greater Tortue plant
30
in Senegal is expected to start supplying additional gas from 2024–25.
20
On balance, global LNG trade is expected to increase by 52 million tonnes
10
(Mt) over the next two years to reach around 455 Mt by 2024–25.
0
Gas markets are expected to remain in broad equilibrium over the outlook Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
period, albeit with relatively high prices and supply risks. This pattern will 2021 2022 2023 Five-year average
likely persist until late 2025 or 2026 when substantial investments in new
Note: Five-year average calculated between 2016 and 2020. Dotted blue line is a forecast.
supply sources in Qatar and the US start to pay off. Source: Bloomberg (2023); Eurostat (2023).

7.3 World imports European demand is expected to grow further over the outlook period,
capturing the largest share of global LNG supply by 2025. European
European imports edged back, but remain strong
imports are forecast to grow from 112 Mt in 2022 to 140 Mt by 2025 as
European LNG imports edged back to 23 Mt in the September quarter Germany, Belgium, Italy, and Greece commission new LNG import
2023, to be down by 2% from the September quarter 2022. The recent facilities to offset the loss of Russian pipeline gas supply. European
surge in European imports (which reflected the rapid build-out of imports of LNG are markedly higher than they were prior to Russia’s
regassification terminals following Russia’s invasion of Ukraine) now invasion of Ukraine (Figure 7.4).

Resources and Energy Quarterly | December 2023 67

Figure 7.4: European LNG imports, 2020–23 capacity, and investment is likely to increase the flow further, though the
12 exact timeframes are vague. China has large gas reserves and significant
potential to bring more domestic supply online. Large pipelines to Russia
10 and Central Asia have also provided a measure of security to China, which
has significant buying power given its control over much of the global gas
Million tonnes

8
infrastructure.
6
Figure 7.5: China’s monthly LNG imports, 2020–2023
4 9
8
2
7

Million tonnes
0 6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5
2023 2022 2021 2020 4
Source: Kpler (2023) 3
2
China’s imports are expected to be steady through the outlook period 1
Chinese LNG demand edged up to 18 Mt in the September quarter 2023 0
as global LNG prices remained well below their peaks of 2022. Higher spot Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
prices over the previous financial year had weighed on China’s gas use 2023 2022 2021 2020
and created strong incentives to on-sell surplus contracted volumes to Source: Kpler (2023)
European buyers (Figure 7.5). This trend persisted until early 2023, but
eased as prices edged down in the middle of the year. Japan’s LNG imports have been contained by growth in nuclear power
Japanese LNG imports fell 9% year-on-year in the September 2023
Australia exported 23 Mt of LNG to China in 2022–23. This was down by
quarter to 17 Mt (Figure 7.6). This represented a recovery in quarterly
nearly 25% on the total for 2021–22. However, relatively strong prices
terms from the 14 Mt recorded in the June quarter — Japan’s lowest
helped to offset the impact, with Australia’s China earnings holding at
quarterly LNG imports in over 15 years. The progressive restart of Japan’s
A$20 billion, only marginally below 2021–22 earnings of A$21 billion.
nuclear fleet is expected to result in more downward pressure on LNG
Despite the fall, China remains the second largest destination for
imports over the next decade (see Uranium chapter). Japan remains the
Australian LNG (by volume and value) in 2023, and Australia remains
largest destination for Australian LNG, importing 29 Mt of LNG (worth
China’s largest source of LNG.
about A$16 billion) in 2022–23.
China’s LNG demand is forecast to remain flat at 70 Mt out to 2025, albeit
with a larger share of demand being serviced by pipeline imports from
Russia. Pipeline capacity between the nations is now operating at full

Resources and Energy Quarterly | December 2023 68

Figure 7.6: Japan’s monthly LNG imports, 2020-2023 represents a significant departure from the previous government’s nuclear
9 phase-down policy and is accompanied by a proposal to also lift hydrogen
8 targets, though the latter will continue to require co-fired gas power
7 generation. The latest gas supply plan includes a downward revision in
forecasts for domestic gas needs by 2030, but a slight upward revision in
Million tonnes

6
expected use of gas storage. This creates a potential upside risk for gas
5
imports to South Korea over the next few years.
4
3 Figure 7.7: South Korea’s monthly LNG imports, 2020-2023
2 6

1 5
0

Million tonnes
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 4
2023 2022 2021 2020
Source: Kpler (2023) 3

Japan’s total LNG imports are expected to fall to 73 Mt in 2023 and then 2
remain steady till 2025. Nuclear power is likely to be the only part of
1
Japan’s electricity sector to grow significantly over the next few years.
Japan’s Ministry of Energy, Trade and Industry expects the share of total 0
electricity generation supplied by gas to fall from 38% in 2022 to 27% by Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2030, with the share of nuclear power rising from 6% to 22%. It is not clear 2023 2022 2021 2020
that the new targets will ultimately be met, but the change could be Source: Kpler (2023)
indicative of shifting priorities from the Japanese Government.
Taiwan’s imports are growing as other energy sources wind back
South Korean imports are likely to have peaked Taiwan’s LNG imports held largely steady at 5 Mt in the September
South Korea’s LNG imports dropped by 17% year-on-year in the quarter 2023. Australia remains the largest supplier of LNG to Taiwan,
September quarter 2023 (Figure 7.7). Imports were roughly steady (at accounting for around 40% of Taiwan’s LNG supply. The majority of LNG
9 Mt) in quarterly terms. Australia accounts for about 25% of South Korean is used for power generation, and usage is forecast to rise modestly to
LNG imports and has become a more important supplier in recent years. 23 Mt in 2025 as new gas-fired generation capacity replaces nuclear
LNG is likely to come under additional pressure in South Korea, with power under Taiwan’s long-term decommissioning plan.
demand forecast to be relatively flat at 41 Mt annually out to 2025. The LNG use is rising elsewhere in Asia, with investment plans emerging
Ministry of Trade, Industry and Energy’s 10th Basic Plan aims to lift
ASEAN imports have risen since August (Figure 7.8) and are forecast to
nuclear energy’s share of total power generation from 27% to 30% by grow further: from 19 Mt in 2023 to 30 Mt in 2025. This growth is likely to
building additional plants and extending the lifespan of existing plants. This
accelerate beyond the outlook period, creating strong incentives for new

Resources and Energy Quarterly | December 2023 69

investment in gas production. Efforts to lift gas output are already Table 7.1: Average LNG Shipping Duration, by LNG region
underway in a range of member nations, with some large regional energy
Days China Japan Korea India
companies, including Petronas (Malaysia), the Philippines’ Department of (Shanghai) (Tokyo) (Incheon) (Gujarat)
Energy and PTTEP (Thailand) announcing plans to drill new wells.
Western Australia 8 7 8 9
Figure 7.8: ASEAN monthly LNG imports, 2020-2023 Queensland (Australia) 8 9 9 14
1.6 US Gulf Coast (via
20 22 21 21
Panama Canal)
1.4
US Gulf Coast (via
1.2 36 34 35 24
Cape of Good Hope)
Million tonnes

1 American West Coast 10 9 9 19

0.8 Qatar (Ras Laffan) 14 12 13 2
0.6 Notes: Days shipping is based on a vessel at maximum speeds of 19.5 knots.
Source: WA Department of Jobs, Tourism, Science and Innovation based on information from
0.4
Shipscene and the International Group of LNG Importers (GIIGNL). US Gulf Coast (via Cape
0.2 of Good Hope) and North American West Coast estimated from S&P and Shell reports.

0 7.4 World exports

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2023 2022 2021 2020 The US is becoming an increasingly dominant global exporter
Source: Kpler (2023) The long boom in US gas production continues, with dry natural gas output
rising by about 5% in the first nine months of 2023 compared with the
South Asia looking to broaden its import channels
same period of 2022. This was driven by expansion from shale sources
South Asia’s LNG is largely imported from the Gulf region, with strong including the Permian Basin, where output rose almost 10% in H1 2023.
infrastructure links allowing rapid transfer between zones: it takes
approximately two days to ship a cargo of LNG from Ras Laffan in Qatar to Supply growth has been sufficient to support higher domestic use as well
Gujarat in India (see Table 7.1). South Asia’s LNG demand is forecast to as higher exports (Figure 7.9). US LNG exports remained strong through
rise by 14% to 43 Mt by 2025, driven by gas-fired power generation needs. 2023, with substantial redirection to Europe occurring after LNG flows
between Russia and Europe were stopped. Over 80% of US LNG was
LNG demand growth is outpacing contracted positions across the region, exported to Europe in 2022–23, and the trend is expected to largely hold
forcing greater reliance on spot markets. This is partly a correction from as Europe continues to seek reliable alternatives to Russian pipeline gas.
earlier quarters, when price-sensitive buyers in the region yielded to higher
bids from Europe. However, some growth is also structural and relates to Growth in US LNG exports has been facilitated by a return to normal
rising population and industrialization. shipping at the Freeport export facility, where cargo loading halted for
almost 9 months before resuming in the March quarter 2023. Exports have
LNG demand is expected to grow particularly rapidly in Thailand, been further supported by a ramp-up at Calcasieu Pass, which has been
Bangladesh and Pakistan. producing for around 18 months.

Resources and Energy Quarterly | December 2023 70

Figure 7.9: US LNG exports, 2020–2023 Qatar’s new volumes has been high, with Qatar’s Energy Minister,
9 predicting that all the new volumes will be contracted out by end 2023.
8 Qatar’s regional dominance as an LNG supplier grew further in recent
7 weeks with the brief suspension of production at the Tamar field in Israel.
6 Output from Tamar is directed to Egypt for refining, but the field was shut
Million tonnes

as a precaution after the outbreak of conflict in Israel and the Gaza Strip.
5
At the time of writing output from Tamar has resumed, but any further
4 shutdowns would present a risk to the outlook for gas/LNG.
3
Russian gas exports have fallen, and face further downside risks
2
Russian natural gas output dropped sharply following the invasion of
1
Ukraine and the subsequent severing of trade links to Europe. Output is
0 expected to reach its lowest level for 14 years in 2023, having fallen more
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
than 20% since 2021. Russian exports of refined LNG have been
2023 2022 2021 2020 marginally more resilient (Figure 7.10), falling by 8% (to 7 mt) through the
Source: Kpler (2023) year to the September quarter 2023. However, large quantities remain
stranded, causing issues across parts of the Russian supply chain.
North America is expected to become an even larger supplier over the
outlook period. New supply sources include the Canada and Saguaro Figure 7.10 Russian monthly LNG exports, 2020-2023
Energía (Mexico Pacific) LNG projects (both with nameplate capacity of 3.5
28 Mt) which are scheduled for completion by 2025. The US became the
world’s biggest exporter in 2023, and further growth in output will likely lift 3.0
its share of global LNG supply from about 20% in 2022 to over 25% by 2.5

Million tonnes
2026. Export flows are expected to remain strong given rising geopolitical
2.0
tensions and an expected softening in domestic buying in late 2023.
1.5
Qatar is expected to bring sizable new capacity online from 2025
Over the last decade, Qatari export volumes have been relatively stable at 1.0
about 80 Mt per annum. Consistent with this trend, Qatari exports were 0.5
stable at 20 Mt in the September quarter 2023, with the Qatar Government
noting that the nation’s export capacity is currently fully utilised. 0.0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
More capacity is expected to come online soon, with 6 LNG trains under 2023 2022 2021 2020
construction at Ras Laffan. On completion, the trains are projected to raise
Notes: Russia has two LNG facilities: Yamal in Europe and Sakhalin in Asia. Russia can only
Qatar’s LNG exports from 79 Mt in 2023 to 105 Mt by 2026. Demand for economically redirect European imports to Asia during the Northern Hemisphere winter.
Source: Kpler (2023)

Resources and Energy Quarterly | December 2023 71

Russian LNG exports are forecast to rise from 31 Mt in 2023 to 39 Mt in Figure 7.11: LNG spot and contract prices, 2019–25
2025 (Figure 7.10). Russia currently has two LNG terminals: Yamal LNG, 60 120
which supplies Europe, and Sakhalin LNG, which supplies Asia from
Russia’s far east. A third large scale LNG facility, Arctic LNG-2, is under
construction, and is forecast to start producing from the end of 2023. 45 90

US$ a barrel
US$ a mmBtu
Russia is also expected to commence construction of the Power of
Siberia 2 pipeline in 2024. When the pipeline is completed after 2029, it 30 60
will allow some stranded Russian gas from Western Siberia to be sold into
the Chinese market.
15 30
However, Russia’s ongoing invasion of Ukraine presents supply and price
risks. Russia’s pipeline and shipping infrastructure is vast and exposed,
and earnings from gas continue to play a significant role in financing the 0 0
Russian military campaign. Ukraine has yet to mount any attacks on this 2019 2020 2021 2022 2023 2024 2025
infrastructure, but risks of such an attack could grow under some ANEA LNG spot price Indicative oil-linked contract price
scenarios. Brent crude oil (rhs)
Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)
7.5 Prices
Prices are expected to pick up in the short term, but should ease with time Recent high gas prices have disrupted a decade-long cycle of strong
growth in gas production and use. Gas has lost competitiveness against
Gas markets have been steadily rebalancing following the cessation of other energy sources, and its position as a price-setting fuel has come
Russian gas exports to Europe. The surge in prices during 2022 has under greater scrutiny. European countries have legislated a price cap to
gradually unwound. Prices have become less volatile in recent months, but contain costs, and caps have also been implemented in Australia’s eastern
are expected to remain vulnerable to future shocks as a result of the loss states. European governments are accelerating renewable construction
of Russian supply and the greater reliance by many nations on seaborne timetables, and Asian governments pivoting towards renewable power and
product. nuclear energy. While gas is still growing (strongly in ASEAN countries),
Prices declined steadily through early 2023 and settled at around this recent pivot other sources may reduce the ultimate extent of growth in
US$10/MMBtu by mid-year. Prices averaged around US$12/MMBtu in the gas demand. Long-term demand for gas will also be influenced by
September quarter, but are expected to lift to US$17/MMBtu by the March emissions reduction policies of different countries.
quarter 2024 as winter demand adds to pressure on gas supplies. As The full effect of emerging policies — in conjunction with the re-
markets continue to adjust to the war in Ukraine and the loss of Russian organisation of gas markets following the invasion of Ukraine — is not fully
output, prices are expected ease back down to US$12/MMBtu by the end apparent yet. The price outlook thus remains subject to significant risks,
of 2025. weighted to the upside.

Resources and Energy Quarterly | December 2023 72

Prices should settle somewhat beyond the outlook period. with new supply expected over the outlook period. Price caps on domestic gas contracts in
sources coming online in Qatar and the USA during 2025 and 2026. the eastern Australian market are not expected to affect exports directly.

High oil prices continue to support LNG contract earnings Among individual facilities, exports from Woodside’s Pluto facility rose after
The price of oil directly affects Australia’s LNG earnings. Around 80% of Woodside installed new infrastructure at Pluto LNG to enable the facility to
Australian LNG exports are sold under long-term contracts that link the process gas from the Scarborough Field. Santos’s East Coast facility,
price of LNG to the Japanese Customs-Cleared Crude (JCCC) oil price Gladstone LNG, also underwent maintenance in June, and the company is
(with a 3-6 month lag, depending on contractual arrangements). Oil-linked reported to have reduced its output to ensure greater volumes of natural
LNG contract prices are forecast to average US$13/MMBtu in the 2023 to gas were available to the domestic market.
2025 period, based on an oil price of US$83 per barrel (Figure 7.11). Quarterly production from Prelude FLNG is estimated to have reached its
Since 2021, oil-linked contract prices have been selling at a discount to highest level since the facility commenced operations in 2019, with output
spot prices. However, in May 2023 this trend was reversed, with the OCE’s estimated at just under 1 Mt of LNG in the June quarter 2023. Chevron
indicative oil-linked contract price achieving parity to LNG spot prices. commenced production from Gorgon Stage 2 in the June quarter 2023.
Between 2021 and 2022, higher relative spot prices incentivised buyers The project involved the installation of 11 additional wells in the Gorgon
holding contracts with Australian facilities to increase LNG volumes bought and Jansz-lo fields off the coast of West Australia.
under their agreements; both to limit their exposure to spot markets and Ichthys LNG is expected to ship a record 132 LNG cargoes in 2023, up
arbitrage the differential between the two prices. 18% from 112 cargoes in 2022, as it starts working on debottlenecking the
facility to boost production. The project aims to build a framework capable
7.6 Australia
of a stable supply of 9.3 Mtpa in 2023, by upgrading cooling systems for
Australia’s LNG export volumes should hold up through the outlook period liquification and taking measures against vibration.
Australia exported 20 Mt of LNG in the September quarter 2023, largely
Australia is forecast to export 80 Mt of LNG in 2023–24, slightly lower
maintaining the same level as the September quarter 2022. Exports have
compared to 2021–22 (83 Mt). Volumes are forecast to edge down to
faced headwinds due to maintenance at several different terminals, with
78 Mt in 2024–25, on lower North West Shelf output (Figure 7.12).
disruptions persisting into the September quarter at the North West Shelf
terminal. The Prelude terminal has also faced maintenance-related falls in Australia LNG earnings are expected to ease from their recent record
output since August, though this is expected to wind down in November. In Australian LNG export earnings are forecast to fall to A$73 billion in
the Northern Territory, the Darwin LNG facility faces temporary closure 2023–24, easing to A$64 billion in 2024–25 (Figure 7.12). Key risks to the
due to insufficient feedgas as from its main source, Bayu-Undan, forecast include a regional escalation of the Hamas-Israel conflict, as well
approaches end of field life. as seasonal demand fluctuations that could raise earnings from spot sales.
In response to potential domestic shortfalls after 2023, the West Australian Exploration expenditure has rebounded
Government has announced a ban on exports which applies to most
Exploration expenditure grew strongly in the September quarter 2023,
onshore gas generated in the State. Western Australia already reserves
rising by 42% to $329 million. This was 45% higher through the year, and
15 per cent of its production for domestic usage, and tight enforcement is
the strongest quarterly result since the December quarter 2021.

Resources and Energy Quarterly | December 2023 73

Figure 7.12: Australia’s LNG exports by value and volume Solid quarterly growth was recorded for both onshore exploration (up by
100 100 31% to $190 million) and offshore exploration (up 61% to $139 million).
In annual terms, exploration has fallen over recent years (Figure 7.13).
80 80 However, the latest result suggests that price surges in 2022 may be
having an effect, with investors showing new confidence about the
Million tonnes

60 60 prospects for Australian gas production and exports.

A$ billion
Revisions to the outlook
40 40
Australian LNG export earnings forecasts have been revised up by just
20 20 over $1 billion for 2023–24 and for 2024–25. This reflects recent
geopolitical events which added to risk and lifted prices slightly relative to
0 0 expectations from the September Resources and Energy Quarterly.
2016–17 2018–19 2020–21 2022–23 2024-25
Volume Value (rhs)
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
Industry, Science and Resources (2023)

Figure 7.13: Petroleum expenditure, extraction and exploration

60 6

50 5

40 4
A$ billion

A$ billion
30 3

20 2

10 1

0 0
2010–11 2012–13 2014–15 2016–17 2018–19 2020–21 2022–23
Extraction Exploration (rhs)
Notes: Extraction expenditure consists of all expenditure on buildings and structures, plant
and machinery equipment associated with Oil and Gas extraction.
Source: Australian Bureau of Statistics (2023) Private New Capital Expenditure and Expected
Expenditure, 5625.0; and Mineral and Petroleum Exploration, 8412.0

Resources and Energy Quarterly | December 2023 74

Table 7.2: Gas outlook

Annual Percentage Change

World Unit 2022 2023 g
2024 g
2025 g
2023 g
2024g 2025g
JCCC oil pricea
– nominal US$/bbl 102.7 86.7 86.3 79.3 -15.6 -0.4 -8.2
– reali US$/bbl 106.9 86.7 84.0 75.3 -18.9 -3.1 -10.3
Asian LNG spot price
– nominal US$/MMBtu 33.2 13.6 15.4 12.7 -59.2 13.6 -17.4
– realh,i
US$/MMBtu 34.6 13.6 15.0 12.1 -60.8 10.5 -19.4
LNG trade Mt e
385.3 403.2 425.5 455.6 4.7 5.5 7.1
Gas production Bcm 4,057 4,038 4,132 4,214 -0.5 2.3 2.0
Gas consumption Bcm 4,044 4,036 4,132 4,223 -0.2 2.4 2.2
Australia Unit 2021–22 2022–23 2023–24 g
2024–25 g
2022–23 g
2023–24 g
2024–25g
Productionb Bcm 162.0 164.5 164.0 158.4 1.5 -0.3 -3.4
– Eastern market Bcm 59.5 57.8 57.0 53.4 -2.9 -1.3 -6.4
– Western market Bcm 85.6 91.0 88.3 85.7 6.3 -2.9 -3.0
– Northern market d
Bcm 16.8 15.1 16.5 17.0 -10.3 9.0 3.2
LNG export volume Mte 83.2 81.5 79.7 78.5 -2.1 -2.3 -1.5

– nominal value A$m 70,571 92,238 72,617 64,196 30.7 -21.3 -11.6
– real value f
A$m 78,865 96,310 72,617 62,054 22.1 -24.6 -14.5
LNG export unit value h

– nominal value A$/GJ 16.1 21.4 17.3 15.5 33.4 -19.4 -10.3
– real value f
A$/GJ 17.9 22.4 17.3 15.0 24.7 -22.8 -13.3
– nominal value US$/MMBtu 12.3 15.2 12.0 11.5 23.8 -21.3 -4.3
– real value i
US$/MMBtu 13.7 15.9 12.0 11.1 15.7 -24.6 -7.5
Notes: a JCCC stands for Japan Customs-Cleared Crude; b Production includes both sales gas and gas used in the production process (i.e., plant use) and ethane; c Gas production from Bayu-
Undan Joint Production Development Area is not included in Australian production; d Browse basin production associated with the Ichthys project is classified as Northern market; e 1 Mt of LNG is
equivalent to approximately 1.36 bcm of gas; f In 2023–24 Australian dollars; g Forecast; h 1 MMBtu is equivalent to 1.055 GJ; i In 2023 US dollars; r Average annual growth between 2021 and
2027 or 2020–21 and 2026–27; s Estimate; z Projection.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023); Company reports; Nexant (2023) World Gas Model.

Resources and Energy Quarterly | December 2023 75

Resources and Energy Quarterly | December 2023 76
Resources and Energy Quarterly | December 2023 77
8.1 Summary Figure 8.1: Global oil consumption by refined petroleum product
 The Brent crude price is forecast to fall slightly to average US$83 in 120
2024, but then fall significantly further to US$76 a barrel by 2025. The
fall will be driven by weak demand and gains in non-OPEC production. 100

million barrels per day

 Australia’s crude and condensate production is expected to fall to about 80
280,000 barrels per day by 2024–25, as North-West Shelf output falls.
 Australia’s crude and condensate export earnings are expected to lift to 60
A$13.8 billion in 2023–24 due to a weaker AUD/USD, before falling to
A$11.4 billion in 2024–25 as prices fall and output declines. 40

8.2 World consumption 20

Global petrochemical production shifts towards China

0
Global oil consumption is largely driven by demand from the transport 2015 2016 2017 2018 2019 2020 2021 2022 2023
sector, with industrial use having a secondary, but still substantial, role
Petrol & diesel Jet fuel & kerosene Naptha, LPG & ethane Other
(Figure 8.1). Petrol and diesel, primarily used in road transport, accounts
Source: International Energy Agency (2023)
for most of global oil consumption, while jet fuel and kerosene — primarily
used for air travel — makes up a relatively small proportion of usage. LPG, Despite broader weakness in the Chinese economy, China’s industrial
ethane and naphtha are primarily used in industrial processes, including to demand for oil strengthened in the September quarter. Chinese
produce the chemicals used to make polymers. petrochemical plants have raised their capacity over the pandemic period,
Global oil consumption is estimated by the International Energy Agency allowing for production to ramp up following the removal of pandemic
(IEA) to have risen by 2.8% year-on-year in the September quarter 2023, restrictions.
as the short run effects of recovery from pandemic restrictions (particularly Increasing petrochemical production in China appears to be displacing
in China) offset a structural slowdown in demand. Chinese consumption industrial demand across OECD member countries. Total demand from
rose by 17% year-on-year, largely due to base effects from the pandemic OECD countries fell 0.3% year-on-year in the September quarter, while
restrictions in the September quarter 2022. Chinese consumption is also demand for naphtha fell 9.2% year-on-year. The fall in the demand for
strong when compared with the September quarter of 2021, rising by 12%. naphtha in the OECD was primarily from Western Europe and Asia, with
China’s post pandemic rebound unleashed strong pent-up demand for American demand showing resilience. Demand for petrol and diesel fell by
services, and the recovery in transport demand for oil has been robust. 2.8% year-on-year, driven partly by the rapid adoption of electric vehicles
Domestic aviation demand grew strongly, and China’s Civil Aviation (EVs). Air travel continued to recover from the pandemic. Jet fuel demand
Administration has released plans which include a 34% increase in across OECD countries continued to grow strongly in the September
domestic flights from 2019 levels by the March quarter 2024. However, the quarter 2023, rising by 10.0% year-on-year, with increased demand across
recovery in China’s international air travel volumes has been much most countries.
weaker, and remain well below pre-pandemic levels.

Resources and Energy Quarterly | December 2023 78

Industrial use to drive consumption growth, while transport demand slows Figure 8.2: Global passenger vehicle stocks
Global oil consumption is forecast to rise by an average of 1.2% per year 1,600
in 2024 and 2025. The growth is expected to be led by industrial fuels — 1,400
driven by polymer demand — while the growth in the consumption of
1,200
petrol, diesel and jet fuel is forecast to slow.
1,000
Global polymer demand is expected to rise steadily over the outlook

Million
800
period, driving industrial demand for oil. Aircraft and vehicles are
increasingly replacing metal components with plastics to reduce weight — 600
and thus improve fuel efficiency — while sensors and other electronic 400
components in EVs also use additional plastics to produce. Demand from
200
packaging is also expected to rise, driven by the ongoing growth of e-
commerce. The OECD’s Global Plastics Outlook: Policy Scenarios to 2060 0
2015 2017 2019 2021 2023 2025
published in mid-2022 projects that global plastics use by 2060 will be
Internal Combustion Engine Hybrid Zero Emission Vehicle
triple 2019 levels, with the largest growth by application being in vehicles.
Notes: Zero-emission vehicles includes battery electric vehicles (BEVs), plug-in hybrid
EVs are rapidly gaining market share in the global passenger vehicle electric vehicles (PHEVs) and fuel cell electric vehicles (FCEVs), while EVs refers to only
market (see Lithium chapter) as their prices fall. Price falls are flowing from BEVs and PHEVs.
Source: Wood Mackenzie (2023)
improvements in battery technologies, incentives from the US Inflation
Reduction Act, and the increasing export penetration of cheaper Chinese The International Air Transport Association reported that in August, global
models. Material cost pressures on batteries — including record lithium kilometres travelled by paying passengers reached 96% of pre-pandemic
prices in 2022 — acted to slow EV cost declines in 2021 and 2022 but are volumes, suggesting the rebound in demand from COVID restrictions is
now easing as lithium prices fall back. largely complete. Jet fuel consumption remains substantially below pre-
The share of EVs sold in the global passenger vehicle market is forecast pandemic levels due to improvements in aircraft fuel efficiency.
to exceed 25% by 2025, with strong adoption expected in China, Europe Growth in jet fuel consumption is expected to be slower than the pre-
and the US. The shift in the composition of the global vehicle fleet towards pandemic trend. Growth in recreational air travel heavily depends on rising
EVs will accelerate over time as EVs gain market share in new car sales incomes in middle income countries, and slower economic growth in China
and will result in an accelerating fall in demand for petrol and diesel. has weakened the outlook for jet fuel. Policies targeting aviation emissions
As a result of increased EV sales, the global ICE passenger vehicle fleet is in Europe will also reduce jet fuel demand, with the EU planning to phase
forecast to plateau over the next two years (Figure 8.2), having grown at out free allocations of carbon permits for domestic flights by 2026.
an average annual rate of 3.3% in the four years before the pandemic. Unlike road transport, low-carbon alternatives are unlikely to substitute
Improved fuel efficiency among the ICE vehicle stock will also contribute to substantial volumes of petroleum jet fuel over the outlook period, with
declining demand, as retiring ICE vehicles tend to be less fuel efficient current electric and hydrogen technologies not yet viable for air travel —
than newer models. For OECD countries, the consumption of petrol and long haul or short.
diesel likely peaked in 2019.

Resources and Energy Quarterly | December 2023 79

8.3 World production comes as the withdrawal of Western companies and bans on technology
North and Latin American supply rises faster than expected exports is resulting in delays for new projects. Russian production peaked
in 2019, at 11.6 million barrels a day.
The IEA estimates world oil production rose by 0.5% year-on-year in the
September quarter 2023. Production from North and Latin American Figure 8.2: OPEC spare crude oil capacity, as a percentage of total
producers is rising faster than expected, offsetting production cuts by 25%
OPEC+. Production in the US rose by 7.2% year-on-year (1.4 million
barrels a day) in the September quarter 2023, with the US Energy 20%
Information Agency (EIA) attributing the higher-than-expected lift to rising
well productivity, even though the number of active oil-directed rigs has 15%
declined. Production in Brazil rose by 15% year-on-year (by 0.5 million
barrels a day) in the September quarter 2023: new offshore facilities have 10%
been deployed and are ramping up production.
5%
Spare OPEC crude oil capacity is estimated to have risen to 17% in the
September quarter 2023 (Figure 8.3), which is close to levels seen during
0%
the pandemic. OPEC+ leaders reduced production targets by 1 million Sep-19 Sep-20 Sep-21 Sep-22 Sep-23
barrels a day in May 2023. Saudi Arabia has further reduced output from Saudi Arabia Iraq Iran UAE Kuwait Other OPEC
levels agreed by OPEC by 1 million barrels a day from July and have Notes: Spare capacity is the estimated capacity which can produce within 90 days.
pledged to do so until the June quarter of 2024. Saudi Arabian output fell Condensate excluded.
15% year-on-year (by 1.9 million barrels a day) in the September quarter Source: Wood Mackenzie (2023), International Energy Agency (2023), Department of
Industry, Science and Resources (2023)
2023, while output in most other OPEC members fell more modestly.
Despite ongoing sanctions on Iranian oil exports, Iranian production rose Russia circumvents Western sanctions on oil exports
18% year-on-year (by 0.7 million barrels a day) in the September quarter Since the invasion of Ukraine, Russian oil trade has diverted away from
2023. Iranian exports have helped supply the global market in a period OECD countries, and India had become the largest destination for Russian
when Saudi Arabia has cut back on production. However, this increase in crude oil exports (Figure 8.4). The G7, EU and Australia all imposed price
production — or much of it — may be at risk given the escalation in the caps on Russian crude and refined products from 5 December 2022 and 5
Hamas-Israel conflict. On 3 November, a bipartisan vote in the US House February 2023, respectively, by preventing the sale of insurance for
of Representatives passed a bill to strengthen sanctions on Iranian oil, Russian oil cargoes if they are sold at a price above the cap.
targeting foreign ports and refineries that process Iranian oil.
Price caps imposed on Russian oil are proving increasingly difficult to
Russia announced output cuts of 0.5 million barrels a day from levels enforce. Russian oil exports are now largely carried by a fleet of older
agreed at OPEC in August 2023, and then eased the cut — to last until tankers operating outside of the Western shipping system to circumvent
end 2023 — to 0.3 million barrels a day in September. Russian production the insurance bans and price caps. The Kyiv School of Economics
fell 2.4% year-on-year (by 0.3 million barrels a day) in the September estimates that only 31% of Russian seaborne crude oil exports are
quarter 2023 to 10.8 million barrels a day. The decline in Russian output shipped by tankers using insurance from G-7 and EU firms in September.

Resources and Energy Quarterly | December 2023 80

Figure 8.3: Russian seaborne crude oil and condensate exports November 2023 was delayed by a week over disagreement amongst
6,000 members on the level of production cuts.

5,000 The US EIA forecasts that US crude output will grow by about 1.9% (or
about 250 kb/d) in 2024. This growth is much lower than in the peak years
kilobarrels per day

4,000 of the shale oil revolution (2012-2019), when US crude oil output grew by
3,000 about 800 kb/d per year, with investors remaining cautious about potential
investment in new oil capacity.
2,000
Latin American nations are expected to add to global supply over the
1,000 outlook period. The IEA is expecting Brazil to add about 300 kb/d to global
0 crude supply in 2024, with Brazil’s state-owned oil company Petrobras
Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 expected to deploy additional offshore platforms over the period. Brazil is
China India expected to join OPEC+ in 2024 but has declared it does not intend to
Other Non-OECD OECD Europe (ex Turkey)
Other OECD Turkey accept production quotes from the organisation.
Notes: Export volumes are estimated using vessel tracking data and may deviate from
customs data.
New supply is also expected from Guyana. After a series of discoveries
Source: Kpler (2023) from 2008, offshore production in Guyana began in 2019, and projects
currently in the pipeline are expected to continue to bring additional
Discounts on Russian crude have narrowed substantially since the start of capacity online. The IEA forecasts Guyana output will rise by 210 kb/d to
the year. The IEA weighted average FOB price for seaborne Russian about 600 kb/d in 2024. About 66% of Guyana, including much of its oil
crude rose to US$82 a barrel in September, above the price caps imposed reserves, is territory disputed by Venezuela. Both Guyana and Venezuela,
by US, EU and Australia. The difference between the Brent crude oil price as well as Brazil, have lifted their military presence along the border after
and the IEA weighted average FOB price has fallen from US$30 a barrel in Venezuela raised rhetoric exerting its claim on the territory.
January to US$12 in September.
8.4 Prices
OPEC+ credibility in doubt; US and Latin America to drive supply growth
Oil market to tighten as OPEC+ cuts back supply and demand recovers
World oil output is forecast to grow by 1.9% in 2024, driven largely by
additional North and Latin American supply. An OPEC+ meeting on 30 Crude oil prices slid over H1 2023 (Figure 8.5), partly due to weak Chinese
November 2023 announced production cuts of an about 0.9 million barrels demand. China’s economy showed weaker than expected growth after
a day from the start of 2024. However, most of the cuts announced are pandemic restrictions were dropped in late 2022. The price fall was also
voluntary from smaller OPEC+ producers such as Iraq and Kuwait, and it driven by slower OECD economic growth as central banks continued to
is unclear to what extent these voluntary reductions would be tighten monetary policy. In the June quarter, output cuts by some OPEC+
implemented. Angola, Nigeria and Congo saw official cuts to their quotas. producers saw price declines slow. Prices rallied in the September quarter
The production quota cut was rejected by Angola, raising concerns over on concerns that OPEC+ output cuts would deplete inventories too much,
tensions within OPEC+, undermining its ability to credibly coordinate but most of those gains were lost in October as higher-than-expected non-
production cuts across its members. The OPEC+ meeting on 30 OPEC supply pushed up OECD oil inventories (Figure 8.6).

Resources and Energy Quarterly | December 2023 81

Since the Russian invasion of Ukraine, the US government has sold close Figure 8.4: Price outlook
to half the oil held in the Strategic Petroleum Reserve and has delayed 120
plans to restock in H2 2023 while OPEC+ cut back on supply. The US is
now seeking 3 million barrels of oil for early 2024 delivery. 100
The Brent crude price is forecast to fall slightly to average US$83, then to
80
decline to average US$78 a barrel by 2025. Higher than expected

US$ a barrel
production from North America and Latin America, combined with slowing
60
demand growth, is expected drive this price fall.
40
8.5 Australia
Delays over investment decision causing uncertainty over outlook 20
Australian crude oil and condensate export earnings fell 15% year-on-year
0
to $3.1 billion in the September quarter 2023, as prices fell back from
Dec-17 Dec-19 Dec-21 Dec-23 Dec-25
elevated levels triggered by the Russian invasion of Ukraine in 2022.
Brent West-Texas Intermediate
Export volumes were little changed, despite a fall in domestic production.
This is partly due to Australian refineries switching from domestically- Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)
sourced feedstock to imported feedstock. Also contributing is a larger than
Figure 8.5: Change in OECD Petroleum Stocks
normal discrepancy between available production, import/export and
inventory estimates. The top destinations for Australian exports over the 300
quarter were Singapore and China (Figure 8.7). 250

q/q change (million barrals)

Australian crude oil and condensate output fell 10% year-on-year to 255 200
kb/d. The fall was due to lower output in the Carnarvon Basin, which is 150
approaching end of life. This includes fields such as the North-West Shelf 100
and Greater Enfield. Output is forecast to fall further over the outlook
50
period to 280 kb/d in 2024–25, as Carnarvon Basin fields deplete further.
0
Export earnings are forecast to rise by 4.5% to $13.8 billion in 2023–24 -50
(Figure 8.8), as a weak AUD/USD lifts the average Australian dollar oil
-100
price compared to 2022–23. Export earnings are forecast to fall to
-150
$11.4 billion in 2024–25, with lower domestic production driving down
export volumes, and prices expected to fall as non-OPEC production rises. -200
Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Government Industry
Source: International Energy Agency (2023)

Resources and Energy Quarterly | December 2023 82

A final investment decision for the Dorado oil and gas field was expected Figure 8.7: Australian crude and condensate exports, by destination
in the second half of 2022, but the decision has been delayed to 2024, 1200
with Carnarvon Energy divesting a 10% stake in the project to Taiwan’s
CPC Corporation in February 2023. If the project proceeds, it could bring 1000
around 90 kb/d of additional production capacity online.
800

million AUD
Australian refineries to remain open with government support
In 2021, falling demand linked to COVID restrictions resulted in the closure 600
of two of Australia’s refineries. The remaining two refineries signed
400
contracts with the Australian Government to remain open until at least
2027, in exchange for a subsidy on each litre of refined product sold. 200
Australia’s two remaining refineries are expected to have their operational
0
life extended, with plans to extend the Lytton plant announced in April Singapore China Malaysia Thailand S. Korea Other
2022 and plans to extend the Geelong plant announced in January 2023.
Jun-23 Sep-23
Australian refined production is expected to remain at around 250 kb/d Source: Australian Bureau of Statistics (2023)
over the outlook period.
Figure 8.8: Australian crude oil and condensate exports
Australia’s consumption of refined oil products rose by 3.6% year-on-year
300 15
in the September quarter 2023. The gain was driven by a 32% lift in usage
of aviation turbine fuel and reflects the ongoing recovery in air travel since
the opening of Australia’s international borders in November 2021. 240 12
Consumption of automotive gasoline fell 2.5% year-on- year. Rising

kilobarrels per day

adoption of electric vehicles is expected to reduce demand for petrol. 180 9

A$ billion
Exploration
Australia’s petroleum exploration expenditure was $330 million in the June 120 6
quarter 2023, up 45% year-on-year (see Figure 7.16 in the Gas chapter).
Offshore exploration rose 112% year-on-year to $139 million, while 60 3
onshore exploration spending rose by 18% year-on-year to $190 million.

Revisions to forecasts 0 0
2016–17 2018–19 2020–21 2022–23 2024–25
Since the September 2023 Resources and Energy Quarterly, the forecast
Volumes Values
for Australia’s crude and condensate export earnings has been revised
Source: Australian Bureau of Statistics (2023); Department of Industry, Science and
down 5.4% (to $13.8 billion) in 2023–24 and down 4.3% (to $11.4 billion)
Resources (2023).
in 2024–25. The revisions are due to a weaker outlook for global oil prices
and a downward revision to forecasts of Australian production.

Resources and Energy Quarterly | December 2023 83

Table 8.1: Oil Outlook

Percentage changes
World Unit 2022 2023 s 2024f 2025f 2023f 2024f 2025f

Productiona mb/d 100 102 103 105 1.7 1.2 1.7

Consumptiona mb/d 100 102 103 104 2.4 0.9 1.5
WTI crude oil price
– nominal US$/bbl 95 80 78 72 -15.6 -1.9 -7.9
– realb
US$/bbl 98 80 76 69 -18.9 -4.6 -10.1
Brent crude oil price
– nominal US$/bbl 100 85 83 76 -15.0 -2.7 -8.0
– realb
US$/bbl 104 85 80 72 -18.3 -5.4 -10.1

Australia Unit 2021–22 2022–23 s 2023–24f 2024–25 f 2022–23 2023–24f 2024–25 f

Crude and condensate

Productionac kb/d 337 291 286 277 -13.4 -1.8 -3.3
Export volume a
kb/d 290 282 284 267 -2.9 1.0 -6.2
– Nominal value A$m 14,031 13,192 13,787 11,385 -6.0 4.5 -17.4
– Real value h
A$m 15,680 13,774 13,787 11,005 -12.2 0.1 -20.2
Importsa kb/d 180 169 182 188 -5.9 7.4 3.3
LPG productionacd kb/d 107 93 95 91 -13.5 2.1 -4.1
Refined products
– Refinery productiona kb/d 266 252 250 247 -5.3 -0.9 -1.4
– Export volume ae
kb/d 8 6 5 4 -34.1 -12.9 -18.5
– Import volumea kb/d 743 856 884 884 15.1 3.3 -0.1
– Consumptionag kb/d 934 1,021 1,036 1,038 9.3 1.5 0.2
Notes: a The number of days in a year is assumed to be 365, and a barrel of oil equals 158.987 litres; b In 2023 calendar year US dollars; c Historical production data was revised in the December
quarter 2021 to align with the Australian Petroleum Statistics; d Primary products sold as LPG; e Excludes LPG; f Forecast; g Domestic sales of marketable products, including imports; h In 2023-24
financial year Australian dollars; r Compound annual growth rate (per cent), for the period from 2022 to 2028 or for the equivalent financial years. s estimate.
Source: ABS (2023) International Trade in Goods and Services, Australia, Cat. No. 5368.0; International Energy Agency (2023); US Energy Information Administration (2023); Department of
Industry, Science and Resources (2023); Department of Climate Change, Energy and Environment (2023).

Resources and Energy Quarterly | December 2023 84

Resources and Energy Quarterly | December 2023 85
9.1 Summary Figure 9.1: Growth in world nuclear power generation

 Supply disruptions and renewed interest in nuclear power have resulted Electrical capacity added (gigawatts) actual and expected
in prices rising to US$81 a pound in the early part of the December
0 10 20 30 40
quarter, revising up the price and value forecast.
1960
 Prices are now forecast to climb to around US$92 a pound by 2025,
driven by a structural market deficit. Australian exports are forecast to 1965
increase from around 4800 tonnes in 2022–23 to around 5700 tonnes
by 2024–25. This growth reflects the expected opening and ramp-up of 1970
production at Boss Energy’s Honeymoon mine in South Australia.
 Price and volume growth are expected to lift uranium export values from 1975
A$812 million in 2022–23 to A$1,539 million by 2024–25.
1980
9.2 World Consumption
Global appetite for nuclear power is rising 1985
Global uranium demand is primarily driven by nuclear reactors utilising
uranium as fuel. Nuclear reactors require regular refuelling and have very 1990
long ramp up and ramp down procedures. Therefore, once built a nuclear
reactor’s consumption generally remains steady over time. Worldwide 1995
reactor demand is estimated to reach 88 kilotonnes (kt) in 2023, with the
US accounting for 21 kt and China using 14 kt (Figure 9.2). 2000
Total nuclear energy production capacity is rising as nuclear deployments
gather pace and countries look to utilise nuclear power to improve energy 2005
security and meet their net zero commitments (Figure 9.1). As part of this
increased appetite for nuclear power, small modular reactors (SMRs) and 2010
microreactors are receiving significant attention. These have advantages
over conventional reactor technology in the comparatively short 2015
construction timeline and lower absolute capital cost of a typical reactor.
Growth in their use could increase demand for uranium relatively quickly. 2020

Increased demand for uranium is underpinned by new reactors in North

2025
America, Asia, and Eastern Europe.
US EU countries Japan China Others
In the US, after a long period of low spending, multiple SMR and
microreactor projects have recently progressed, with deployment of Source: International Energy Agency (2023); World Nuclear Association (2023); Department
of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 86

Xe-100(60MW) reactors in Washington and Texas receiving approval. Figure 9.2: World uranium consumption and inventories (U3O8)
Three microreactor projects have also received approval. SMRs and 100
microreactors are being examined as a substitute for fossil fuel-based
generation in places where traditional reactors are impractical, would have 80
too much capacity or would be too expensive to build — such as in remote

Thousand tonnes
or rural communities. 60
India’s Kakrapar 3 reactor has entered commercial generation, with fuel
loading underway at Kakrapar 4 (700MW). Both reactors are Indian 40
designed, and their successful deployment represents a substantial
expansion of India’s nuclear capabilities. India plans to build a further 20
14 similar reactors.
0
China has a total of 27.3GWe of capacity under construction across
2013 2015 2017 2019 2021 2023 2025
24 projects. These include the Lianjiang 1 plant, which begun construction
China European Union Japan Russia
in October 2023 after gaining approval from the Chinese State Council. United States Others Inventories Total production
Successful completion of all 24 projects would increase China’s total Source: International Energy Agency (2023); World Nuclear Association (2023);
nuclear generation capacity from 53.2GWe to 80.5GWe. Some of these UxConsulting (2023)
projects are being commissioned or are expected to begin commissioning
Figure 9.3: World uranium output (U3O8)
in the coming months. 100
Belarus’ second reactor reached commercial production in November
2023. The two reactors, built by Rosatom, are expected to account for 80

Thousand tonnes
40% of the country’s electricity generation. Poland has also made
progress, with regional authorities backing the building of three plants in 60
the Pomerania region with a total capacity of 3750 MWe.
40
9.3 World production
Production is growing, but disruptions could affect short term supply 20

Kazakhstan is the single largest producer of uranium in the world,

0
producing 24.7kt, from a total of 62.7kt mined world-wide in 2023.
2013 2015 2017 2019 2021 2023 2025
Australia is on target to produce 5.3kt in 2023, or 8.5% of world mined
Kazakhstan Canada Australia
supply. Inventories and secondary sources (such as depleted uranium Africa Russia Others
reprocessors) provide additional supply to global markets and help to keep Secondary supply Total consumption
overall supply and demand in balance. Source: International Energy Agency (2023); World Nuclear Association (2023);
UxConsulting (2023)

Resources and Energy Quarterly | December 2023 87

World supply is growing slowly, but shortfalls through the middle of this Figure 9.4: Uranium price outlook
decade are still expected (Figure 9.3). Higher prices have encouraged 120
some large companies to lift production from existing assets. However,
equipment issues, lack of personal with appropriate skills and political 100
instability have also disrupted some potential supply.

US$ a pound
80
Higher prices have seen Kazatomprom (the world’s largest uranium
supplier) revise up its uranium production targets in Kazakhstan. In 2017, 60
Kazatomprom production was scaled down to 80% of the subsoil use 40
agreements. In 2022, Kazatomprom announced an increase in production
of up to 90% in 2024. Production targets for 2025 have also been revised 20
up to 100% of subsoil use agreements.
0
Cameco has revised down its 2023 production forecast after disruptions at 2011 2013 2015 2017 2019 2021 2023 2025
two of its Canadian facilities. Cigar Lake (the world’s highest-grade Spot Contract
uranium mine) experienced disruptions due to ‘equipment reliability Source: Cameco Corporation (2023) Uranium Spot Price; UxConsulting (2023) Uranium
Market Outlook
issues’. McArthur River/Key Lake facility (the world’s largest high-grade
uranium mine and mill) has also experienced issues in resuming World Production section), and an announcement by the World Nuclear
production after three years of care and maintenance. The lack of Association that uranium consumption would need to double by 2040 to
personnel with the appropriate skills and availability of materials has meet net zero commitments.
impacted the restart. Overall, these disruptions are forecast to reduce The reduction in supply from Cameco adds to pressure on global spot
production at the site from 10000 tonnes to 8800 tonnes. markets. Yellow Cake PLC — a publicly traded uranium holding fund —
In July 2023, a coup d'état in Niger added to the risk of potential also purchased 692 tonnes in October. Yellow Cake PLC is one of many
disruptions to uranium mining, which accounts for 4% of world output. financial institutions that have been operating in the uranium market since
Following the coup d'état, Global Atomic Corporation warned of a potential 2018.
6–12-month delay to the project. Niger’s new government has shown ‘full
Prices to remain high and will grow further, greater volatility also expected
government support’ for the Global Atomic Corporation’s Dasa uranium
Exploration and development of new mines is increasing to meet demand.
project. However logistical issues remain, and getting supplies to the site
However, new mining capacity typically takes years to come online, and is
has proven difficult.
not expected to close supply shortfalls over the outlook period.
9.4 Prices The commercial utilities stockpile is expected to deplete by half by 2024,
Prices rose sharply in H2 2023 and to halve again by 2025. Combined with the structural production
Uranium prices rose sharply in September-November 2023, from US$59 deficit, this is expected to put further upward pressure on prices over the
to US$81 a pound (Figure 9.4). The price rise occurred after two events in next two years. As inventories decline, price risks become weighted to the
September: the downward revision of Cameco’s output forecast (see

Resources and Energy Quarterly | December 2023 88

upside. Risks include the possibility of production shortages and supply Revisions to the outlook
constraints affecting large companies such as Kazatomprom. Export earnings forecasts for 2023–24 and 2024–25 have been revised up
Growing interest from financial institutions such as holding funds — who by $260 million and $584 million (respectively) since the September
buy uranium for speculative purposes — could add volatility to markets Resources and Energy Quarterly. This reflects the recent sharp
over coming years. However, uranium is traditionally contracted off-market strengthening in the price outlook.
many years in advance, with only 11% of total volume traded on the spot
market since 2004. Uranium markets thus have some insulation against
Figure 9.5: Australia's uranium exports
speculative bubbles.
9 1800
9.5 Australia
Higher prices and volumes will boost export earnings.
Australia’s uranium exports are currently generated from the Four Mile and
6 1200

Thousand tonnes
Olympic Dam mines. However, two additional mines are now under

A$ million
development. One of these is Boss Energy’s Honeymoon mine
(reactivation project). Boss Energy has announced that the mine will
re-commence production by the end of 2023, with work now close to
3 600
completion. All major wellfield preconditioning tasks are now complete,
and the mine is expected to produce 1,100 – 1,200 tonnes of uranium for 9
years after a ramp up period.
A mine at Mulga Rock is also under development, but commercial 0 0
production is not expected within the outlook period. Higher prices may 2012–13 2016–17 2020–21 2024–25
also expedite exploration and the development of new mines in Australia. Export volumes Export values (rhs)
However, given the typical mine development timeline any additional
capacity will come online outside the outlook period.
Source: Department of Industry, Science and Resources (2023)
Higher prices and an additional mine opening are expected to push
earnings to a decade high in the current financial year (Figure 9.5).
Exports are expected to be A$1,222 million in 2023–24, with further growth
in subsequent years as Honeymoon ramps up. The rise in the spot price is
expected to result in a total revenue of A$1,539 million by 2024–25.

Resources and Energy Quarterly | December 2023 89

Table 9.1: Uranium outlook
Annual percentage change
s f f s
World Unit 2022 2023 2024 2025 2023 2024 f 2025 f
Production kt 57.4 62.8 70.7 76.0 9.4 12.5 7.6
b
Africa kt 9.2 9.8 11.3 12.3 6.8 15.5 8.9
Canada kt 8.7 13.7 16.3 16.3 58.1 18.8 0.0
Kazakhstan kt 25.0 24.8 27.3 29.6 -0.9 10.2 8.5
Russia kt 3.0 3.1 3.1 3.1 3.7 0.0 0.0
Consumption kt 76.3 87.8 88.2 89.2 15.1 0.5 1.1
China kt 11.3 13.8 14.4 17.4 22.3 4.1 21.4
European Union 28 kt 17.8 20.1 20.6 18.9 12.7 2.4 -8.0
Japan kt 1.6 2.9 2.9 2.9 79.0 0.0 0.0
Russia kt 7.9 7.5 7.0 6.7 -4.6 -7.8 -3.4
United States kt 20.7 21.5 22.7 21.5 3.7 5.5 -5.3
– nominal US$/lb 49.8 61.7 84.4 89.7 23.9 36.8 6.4
c
– real US$/lb 51.8 61.7 82.1 85.2 19.0 33.0 3.9
Australia Unit 2021–22 2022–23 2023–24 f 2024–25 f 2022–23 2023–24 f 2024–25 f
Production t 4,485 5,409 5,588 6,167 20.6 3.3 10.4
Export volume t 4,933 4,809 5,441 6,167 -2.5 13.1 13.3
– nominal value A$m 564 812 1,222 1,539 43.8 50.5 26.0
d
– real value A$m 630 847 1,222 1,488 34.4 44.2 21.8
Average price A$/kg 114.4 168.7 224.5 249.5 47.5 33.1 11.1
– real d A$/kg 127.8 176.2 224.5 241.2 37.9 27.4 7.4
Notes: b Includes Niger, Namibia, South Africa, Malawi and Zambia; c In 2023 US dollars; d in 2022–23 Australian dollars; s estimate; f forecast; r Annual growth rate
Source: Department of Industry, Science and Resources (2023); Cameco Corporation (2023); Ux Consulting (2023) Uranium Market Outlook

Resources and Energy Quarterly | December 2023 90

Resources and Energy Quarterly | December 2023 91
Resources and Energy Quarterly | December 2023 92
10.1 Summary imports. Sales by central banks during the September quarter were
comparatively small, with Kazakhstan selling 4 tonnes from its reserves.
 After averaging US$1,930 an ounce in the September quarter 2023,
gold rose to above US$2,000 an ounce in November following the onset Gold purchases by non-government buyers in the September quarter 2023
of conflict in the Middle East. Prices are forecast to remain elevated but were slightly higher year-on-year, with weaker demand from consumers
soften gradually to average around US$1,830 an ounce in 2025. (jewellery, gold coins and bars) offset to some extent by lower outflows
 Australian gold production decreased to 72 tonnes in the September from gold-backed exchange-traded funds (ETFs).
quarter 2023 due to lower grades, planned maintenance and several ETF outflows reached 139 tonnes in the September quarter 2023, an
mines put in care and maintenance. Production is forecast to be steady improvement in gold demand compared to 244 tonnes of outflows a year
due to project delays. earlier. (ETF outflows are counted as reducing gold demand, while inflows
 Higher volumes will lift exports to $27 billion in 2023–24 from $24 billion are counted as additional.) Demand for ETF gold was particularly weak in
in 2022–23. Price falls will then cut exports to $21 billion in 2024–25. Western markets, due to rising bond yields and a strong US dollar.

10.2 World consumption Retail investment in gold bars and coins declined by 14% year-on-year in
the September quarter 2023. Year-on-year declines were partly driven by
World gold usage declined over the year to September quarter 2023
weaker demand in the West and by base effects — following strong
World gold demand decreased by 5.9% year-on-year to 1,147 tonnes in demand from Türkiye and the Middle East in 2022. Failing to offset these
the September quarter 2023. This was driven by a 27% decline year-on- declines, bar and coin investment demand was strong in the larger
year in central bank demand, following a record September quarter 2022. markets of China (up by 16% year-on-year) and India (up by 20%).
Official sector (central banks and other government financial institutions) Demand in China was supported by economic uncertainty and a weak
buying declined year-on-year to 337 tonnes in the September quarter. performance from other asset classes (such as property), with record
Despite the fall, official sector demand was well above the 10-year domestic prices supporting the case for gold as a store of wealth. Physical
average (143 tonnes) and year-to-date buying was a record 800 tonnes. investment in India was supported by a correction in domestic prices
Official sector demand has been strong since mid 2022, with purchases following a peak in the June quarter 2023, with buyers stocking up ahead
dominated by emerging market central banks eager to lift gold reserves. of the wedding and festive seasons in the December quarter.

According to World Gold Council (WGC) data for declared purchases, Gold jewellery demand declined marginally year-on-year in the September
buying in the September quarter 2023 was again dominated by China quarter 2023, driven by elevated — in some cases, record — gold prices
(78 tonnes). The National Bank of Poland (NBP) also purchased in many markets as the US dollar rose. Jewellery demand in China fell by
57 tonnes, bringing year-to-date purchases to 105 tonnes. The President 6% year-on-year to 154 tonnes in the September quarter 2023. The year-
of the NBP said this gold accumulation makes Poland a more credible on-year decline was partly due to high domestic prices, but also a result of
country, and stated the central bank intends to continue building its gold a strong September quarter 2022 base. According to the WGC,
reserves. Türkiye reported a return to net purchasing during the quarter consumers responded to elevated prices by purchasing jewellery with
(39 tonnes), following a brief period of selling gold domestically in H1 2023 lower average weight or gold content. Bucking the trend, Indian jewellery
— a result of strong domestic demand and a temporary ban on gold demand rose year-on-year in the September quarter 2023 as consumers
responded to a correction in prices from record highs.

Resources and Energy Quarterly | December 2023 93

Weak demand for consumer electronics in the September quarter 2023 improvement in consumer sentiment and rising incomes, particularly in the
also translated to weak demand for gold in electronics — such as in light- key markets of China and India. Lower gold prices and a weaker US dollar
emitting diodes (LEDs), memory chips and printed circuit boards. This are expected to drive a particularly strong recovery in jewellery demand
lowered demand from this sector by 3% year-on-year to 75 tonnes. after 2023, with an increase of 7.3% a year.

Lower investor demand has weakened gold consumption in 2023 Physical (bar and coin) demand is expected to remain strong, as ongoing
After a very strong 2022, world gold consumption in 2023 is estimated to economic uncertainty and forecast price declines support buying activity
decrease by 5.8% to about 4,400 tonnes. The decline is expected to be near — or above — recent elevated volumes.
mainly driven by lower investment demand, with official sector demand Official sector demand is forecast to soften to about 700 tonnes a year by
also easing from record levels in 2022 (Figure 10.1). 2025. Buying is expected to be driven by emerging market central banks,
Investment demand (gold-backed ETFs or bar/coin holdings) is expected who will continue their long term aim to diversify their reserves with gold.
to fall by 11% in 2023 as strong ETF outflows through the year outweigh According to World Gold Council data for declared gold purchases, Russia
resilient physical gold demand. Physical demand has been supported by added 31 tonnes to official reserves in 2022. Given ongoing sanctions on
ongoing geopolitical and economic uncertainty. foreign exchange and restricted access to its foreign reserves, it is likely
that Russian official sector demand will be strong over the outlook period.
Jewellery consumption in 2023 is estimated to be slightly below last year,
as high local gold prices constrain demand in key markets such as India. Figure 10.1: World gold demand by sector
Despite strong demand in China over H1 2023, recent price rises are 5,000
expected to weaken that growth leading into the next seasonal peak.
4,000
Gold consumption to grow over the medium-term
World gold consumption is forecast to stabilise below recent elevated
3,000

tonnes
levels, reaching about 4,450 tonnes by 2025. Demand growth over this
time is expected to be largely driven by rising jewellery consumption and a
2,000
recovery in demand for high tech manufacturing. Official sector demand is
forecast to ease from recent record levels but remain relatively high, while
1,000
investment demand is forecast to steady above 2023 levels (Figure 10.1).
Investment demand is forecast to average about 1,100 tonnes over the 0
forecast period. As inflation eases towards central bank targets, interest 2017 2018 2019 2020 2021 2022 2023 2024 2025
rates are assumed to decline over the medium-term. If interest rates are Jewellery fabrication Investment
cut faster than inflation declines over the medium-term, this will support Central banks & other institutions Technology
institutional investment and retail demand through lower real interest rates. Notes: Jewellery fabrication includes jewellery consumption and the change in jewellery
inventory. Investment includes ETFs, bars and coins. Technology includes gold used in the
Jewellery consumption is forecast to grow strongly from 2024 onwards to electronic, dentistry and other industrial sectors.
Source: World Gold Council (2023); Metals Focus (2023); Department of Industry, Science
reach 2,350 tonnes by 2025. Consumption will be supported by an
and Resources (2023)

Resources and Energy Quarterly | December 2023 94

10.3 World production World supply to stabilise as mine supply growth slows
World supply increased in the September quarter 2023 Global gold supply is forecast to stabilise above 4,800 tonnes in the period
World gold supply increased by 6.4% year-on-year to about 1,270 tonnes to 2025, with increasing world gold mine production offset by decreasing
in the September quarter 2023, driven by both higher mine production and supply from recycling activity (Figure 10.2).
increased recycling. World gold mine production is forecast to rise by 1.4% a year on average
Global mine production rose to a record 971 tonnes in the September by 2025 to 3,780 tonnes, led by gains in Canada, the US, Chile and Brazil.
quarter 2023. Growth was led by increased production from the major Canadian mine output is forecast to rise by 24% from 2023 to 2025, to
producers. reach 249 tonnes. Gains will include the 11 tonnes per year Côté project
Production in China — the world’s largest gold producing nation — fell and the 10 tonnes per year Blackwater project, both commencing
marginally year-on-year to 93 tonnes in the September quarter 2023. operations in the next two years.

Production in the United States rose by 13% year-on-year to about Continued environmental regulations and industry consolidation in China is
48 tonnes in the September quarter 2023, due to increased output from expected to see production fall over the medium-term, however China is
the Carlin, Cortez and Turquoise Ridge operations in Nevada. unlikely to lose its seat as the world’s largest producer.

Production in Canada fell by 6.8% year-on-year to about 45 tonnes in the Partially offsetting increases in mine production, gold recycling activity is
September quarter 2023. Lower production was reported across all forecast to decline on average by 5.4% a year by 2025, due to lower
provinces, for example production was down by 24% year-on-year at the forecast gold prices.
8.9 tonnes per year Brucejack project and by 13% year-on-year at the 21
Figure 10.2: World gold supply
tonnes per year Detour Lake project. The 7.6 tonnes per year Eléonore
5,000
project in Quebec ramped back up to full production during the quarter
following a temporary closure due to wildfires in June.
4,000
In Australia — the world’s third-largest gold producing nation — output
decreased by 2.5% year-on-year in the September quarter 2023, to 3,000

Tonnes
73 tonnes. Australian mine production fell due to lower mine grades,
planned maintenance and several mine closures (see Australia section). 2,000
Gold recycling in the September quarter 2023 rose year-on-year to
289 tonnes, largely due to stronger gold prices in China and India. 1,000
Recycling activity was weaker than expected (given high domestic prices)
in Egypt and Türkiye, as economic uncertainty and ongoing currency 0
weakness in those countries reduced consumers’ willingness to sell gold 2017 2018 2019 2020 2021 2022 2023 2024 2025
for recycling. Mine production Scrap
Source: Department of Industry, Science and Resources (2023); Metals Focus (2023); World
Gold Council (2023).

Resources and Energy Quarterly | December 2023 95

10.4 Prices Figure 10.3: Gold price and real US 10-Year Treasury yield
Gold prices surged in October on geopolitical concerns 2,100 -1.4
Rising bond yields tend to decrease gold’s appeal to institutional and retail 1,900 -0.9
investors as a secure asset to hedge against inflation or other risks. This is 1,700 -0.4

US$ a troy ounce

because increases in the yield of a US Treasury (or other credible 1,500 0.1
government bonds) increases the so-called market “risk-free rate”, and 1,300 0.6

%
hence the opportunity cost of holding gold (pushing prices down). 1,100 1.1
900 1.6
However, the relationship between real bond yields and gold prices
weakened sharply following the Russian invasion of Ukraine — as prices 700 2.1
were lifted by heightened safe-haven demand for gold (Figure 10.3). This 500 2.6
has persisted as a driver since, muting the effect of rising interest rates. 300 3.1
100 3.6
The London Bullion Market Association (LBMA) gold price is estimated to Dec–07 Dec–11 Dec–15 Dec–19 Dec–23
have averaged about US$1950 an ounce over the second half of 2023 — US$ gold price Real US 10 Year Treasury bond yield (inverted, rhs)
13% higher than in 2022. Price support has come from ongoing strength in
central bank purchasing, economic uncertainty and geopolitical risk. Source: Bloomberg (2023); LBMA (2023) Gold price PM

Gold prices averaged about US$1,930 an ounce in the September quarter Figure 10.4: Gold price and the US dollar in H2 2023
2023. Prior to the conflict in the Middle East, pressures from surging bond
2,100 108
yields and a strong US dollar were pushing gold prices lower — declining
by 6.4% over 2 weeks to a low of US$1,820 an ounce on 5 October 2,050 106
(Figure 10.4).
2,000 104

US$ an ounce
The gold price rose sharply after the Hamas-Israel conflict started,

Index
reaching the US$2,000 an ounce mark in late October on strong safe-
1,950 102
haven demand. Gold prices were also given a boost by falling US
Treasury yields and a weakening US dollar — as markets priced in the 1,900 100
completion of the US monetary tightening cycle and commencement of
monetary easing in 2024. As at 1 December 2023, gold prices surged to 1,850 98
US$2,072 an ounce, a new record high.
1,800 96
Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23

US$ gold price US dollar index (rhs)

Notes: The dashed line indicates 6 October 2023

Source: Bloomberg (2023); LBMA (2023) Gold price PM

Resources and Energy Quarterly | December 2023 96

Gold prices to decline over the forecast period, but remain elevated If US (and global) economic activity declines substantially and interest rate
Gold prices are estimated to average about US$1,940 an ounce in 2023 cuts — not currently expected by US Fed officials and some market
— a slight upward revision compared with the September 2023 Resources participants — come to fruition in the first half of 2024, this could create a
and Energy Quarterly. Prices have gained support from declines in bond more supportive environment for gold and see a stronger price outcome
yields and a lift in safe-haven demand. than forecast. Ongoing support for the gold price would possibly come
through lower real interest rates, a weaker US dollar and demand for gold
Prices are forecast to decline throughout 2024, centred around a scenario ETFs — as equity markets likely soften.
where US economic activity slows but does not go into recession
(Figure 10.5). In this scenario, real US interest rates will remain high in line Gold prices are forecast to fall by 2.9% a year to an average of around
with current market expectations, leading to further declines in gold prices. US$1,830 an ounce in 2025, due to pressure from high real interest rates
(as global inflation eases) and a gradual easing of safe-haven demand.
Figure 10.5: US and Australian dollar gold prices
In combination with a forecast appreciation in the Australian dollar, the
3,000 3,000 lower US dollar gold price is expected to lower Australian dollar prices
from A$2,900 an ounce in 2023 to A$2,530 an ounce in 2025.
2,500 2,500
10.5 Australia’s trade, production and exploration
US$ a troy ounce

A$ a troy ounce
2,000 2,000
Australian gold exports rose in the September quarter 2023
1,500 1,500
Australia’s gold exports rose by 20% year-on-year to $8.0 billion in the
1,000 1,000 September quarter 2023. The gain was driven by higher Australian dollar
gold prices (up by 16%) and a lift in export volumes.
500 500
Growth in Australian exports was led by a 25% year-on-year increase to
0 0 the financial hubs (US, UK, Switzerland, Hong Kong and Singapore),
2017 2018 2019 2020 2021 2022 2023 2024 2025 which collectively purchased $3.8 billion worth of gold. Within the financial
US dollar gold price Australian dollar gold price (rhs) hubs, exports to the United Kingdom increased to $1.2 billion (from zero in
September quarter 2022) and exports to Hong Kong doubled year-on-year
Source: Department of Industry, Science and Resources (2023); LBMA (2023) Gold price PM to $1.8 billion. Gold exports to China fell by 9.1% to $2.0 billion year-on-
year, while exports to India more than tripled to $1.5 billion.
However, price forecasts have been revised up over the short-term, in
recognition of ongoing strength from safe-haven and central bank demand. Australian gold export earnings to decline over the medium-term
Gold prices have continued to hold up remarkably well despite downward Australian gold export earnings are forecast to increase in 2023–24 by
pressure from various sources such as high real yields, a strong US dollar 8.7% to $26.5 billion. Growth will be driven by 15% year-on-year growth in
and continued ETF outflows. Official sector buying is expected to continue export volumes and a strong September quarter 2023 result. Export
at strong levels and some degree of geopolitical risk premium is expected earnings are then forecast to decline by 20% to $21.3 billion in 2024–25
to persist, beyond what was expected in the September 2023 Resources due to lower forecast prices and export volumes (Figure 10.6).
and Energy Quarterly.

Resources and Energy Quarterly | December 2023 97

Figure 10.6: Australian gold exports and mine production movement (rather than ore movement) ahead of the planned transition to
the higher-grade Golden Pike North cutback in the first half of 2024. Lower
420 30
grades and planned mill shutdowns also led to production decreasing by
350 25 12% year-on-year at the company’s 7.6 tonnes per year Carosue Dam,
and by 14% at the 10 tonnes per year Jundee Gold Operation. Meanwhile,
280 20
the recently expanded Thunderbox mill ramped up to reach nameplate

A$ billion
capacity during the quarter, resulting in production more than doubling
Tonnes

210 15
year-on-year to 1.8 tonnes.
140 10
Compensating for lower open pit output at Evolution’s Mungari project,
70 5 production at the 8.6 tonnes per year Cowal operation increased by 22%
to 2.1 tonnes in the September quarter, as ore production continued to
0 0
ramp up from its new underground mine. Operations also returned to
2014–15 2016–17 2018–19 2020–21 2022–23 2024–25
normal at Evolution’s 2.5 tonnes per year Ernest Henry project, following
Mine production Export volume Export value (rhs) outages in the first half of 2023 related to heavy rainfall.
Sources: ABS (2023); Department of Industry, Science and Resources (2023). BHP’s 5.8 tonnes per year Olympic Dam mine continues to set records,
delivering 1.6 tonnes of refined gold in the September quarter 2023. Gold
Australian gold mine production decreased in the September quarter 2023 production from Olympic Dam has grown as a result of additional
Australia’s gold industry produced 73 tonnes of mined gold in the concentrate feed in from the recently acquired Prominent Hill and
September quarter 2023, down by 2.5% year-on-year. Production was Carrapateena assets — which collectively produced 1.1 tonnes of gold in
lower in some cases due to lower grades and major planned outages for concentrate.
maintenance. Production was also down year-on-year in some cases due
First gold was poured at the 6.2 tonnes per year Bellevue Gold Project in
to some mines having entered care and maintenance during the year.
October 2023, with work now focused on ramping up mining and
Production at Newmont’s (having recently acquired Newcrest) 19 tonnes processing operations towards nameplate capacity.
per year Cadia mine in NSW fell by 14% year-on-year to 3.8 tonnes in the
Genesis Minerals’ (having recently acquired Dacian Gold) 2.8 tonnes per
September quarter 2023. Falls in production were driven by lower grade
year Mt Morgans Gold Operation remained in care and maintenance
and reduced mill throughput resulting from major planned shutdown
throughout the quarter, having suspended operations in April. Production
activities. Cadia continued ramp up activities from its new panel cave
also continued to be low over the quarter at Wiluna Mining Corporation’s
project PC2-3 during the quarter. First renewable power from the Rye Park
namesake project, which has been processing stockpiles since entering
Wind Farm was achieved in July and early supply has commenced to
care and maintenance in December 2022.
Cadia under its Power Purchase Agreement.
Production at Northern Star’s 13.4 tonnes per year KCGM operation was Australian gold mine production to reach a near-term peak in 2023–24
down by 16% year-on-year in the September quarter 2023, at 2.8 tonnes. Australian gold production is forecast to rise marginally over the forecast
Lower production was due to planned increases in waste material period, from 301 tonnes in 2022–23 to 302 tonnes in 2024–25. The impact

Resources and Energy Quarterly | December 2023 98

of significant new projects and mine expansions coming online will be upside. Combining this with a slightly weaker than expected AUD/USD,
offset by mine closures and project delays. Australian dollar gold prices have been revised up over the outlook period.
Production will continue to ramp up for recently commenced projects, such Figure 10.7: Australian gold exploration expenditure and prices
as Pantoro’s Norseman project, Calidus’ Warrawoona Gold project and
450 3,000
Bellevue Gold’s namesake gold project.
Genesis Minerals’ 2.0 tonnes per year Ulysses project is under 375 2,500
construction, with production expected to commence in early 2024.
Westgold’s 1.4 tonnes per year Great Fingall project is also expected to 300 2,000

A$ a troy ounce
A$ million
achieve first production early in 2024–25.
225 1,500
Northern Star Resources’ Super Pit (KCGM) gold operation is scheduled
to begin long-term expansion in 2024, growing to about 20 tonnes by 150 1,000
2025–26. Northern Star recently committed to a $1.5 billion mill expansion
at KCGM to double processing capacity by 2029. This expansion will 75 500
increase the Super Pit’s production to 28 tonnes in 2028–29, compared
with 13 tonnes in 2022–23. 0 0
2009 2011 2013 2015 2017 2019 2021 2023
Weaker than expected gold prices present a downside risk to the forecasts
Exploration expenditure Australian gold price (rhs)
of Australian gold output. Much weaker prices could see higher-cost
Source: ABS, Mineral and Petroleum Exploration (cat. no. 8412.0) (2023)
Australian producers cease or cut back their operations, or upcoming
projects be further delayed. Australia’s forecast gold export earnings in 2023–24 have been revised up
Gold exploration expenditure declined in the September quarter 2023 by 12% compared with the September 2023 Resources and Energy
Quarterly. This reflects a strong September quarter 2023 result, alongside
Australia’s gold exploration expenditure decreased by 12% year-on-year to
upgrades made to forecast prices and a weaker assumed Australian
$334 million in the September quarter 2023 (Figure 10.7).
dollar. Forecast earnings have been revised up marginally in 2024–25 as
As a result, gold’s share of Australian mineral exploration expenditure an upward revision in price forecasts is offset by downgrades to export
declined to 29% in the September quarter 2023, down from 35% a year volumes.
earlier. This decline in exploration occurred despite high Australian gold
Downgrades to production forecasts (underpinning lower forecast export
prices, which have historically motivated high exploration expenditure.
volumes) are the result of project commencements being delayed,
Western Australia remained the centre of gold exploration activity in
following updated guidance from companies. Many of these updates are
Australia, accounting for 72% of total gold exploration expenditure.
covered in the 2023 Resources and Energy Major Projects report.
Revisions to the outlook
Forecast US dollar gold prices have been revised up across the board,
due to persistent strength in prices and a rebalancing of risks towards the

Resources and Energy Quarterly | December 2023 99

Table 10.1: Gold outlook
Annual percentage change

World Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

Total demand tonnes 4,699 4,500 4,445 4,460 -4.2 -1.2 0.3

Fabrication consumption b tonnes 2,504 2,450 2,570 2,680 -2.1 4.9 4.3

Mine production tonnes 3,625 3,691 3,765 3,776 1.8 2.0 0.3

Price c

– nominal US$/oz 1,801 1,943 1,893 1,833 7.9 -2.6 -3.2

– real d US$/oz 1,874 1,943 1,841 1,741 3.6 -5.2 -5.4

Australia Unit 2021–22 2022–23 2023–24f 2024–25f 2022–23f 2023–24f 2024–25f

Mine production tonnes 305 301 303 295 -1.3 0.7 -2.7

Exports

– volume tonnes 248 228 263 250 -7.7 15.2 -4.8

– nominal value A$m 23,200 24,406 26,531 21,275 5.2 8.7 -19.8

– real value e A$m 25,926 25,483 26,531 20,565 -1.7 4.1 -22.5

Price

– nominal A$/oz 2,529 2,721 2,942 2,642 7.6 8.1 -10.2

– real e A$/oz 2,826 2,842 2,942 2,050 0.6 3.5 -30.3

Notes: b includes jewellery consumption and industrial applications; c London Bullion Market Association PM price; d In 2023 US dollars; e In 2023–24 Australian dollars; s Estimate; f Forecast;
Source: ABS (2023); Department of Industry, Science and Resources (2023); London Bullion Market Association (2023) gold price PM; S&P Market Intelligence (2023); World Gold Council (2023).

Resources and Energy Quarterly | December 2023 100

Resources and Energy Quarterly | December 2023 101
Resources and Energy Quarterly | December 2023 102
11.1 Summary Energy-efficient cars to boost aluminium usage over the outlook
 The primary aluminium price has increased slightly from the September Strong global vehicle manufacturing activity is expected to offset weak
quarter. The increase comes on the back of a new round of fiscal construction activity to lift global aluminium demand by 0.4% to 68 Mt in
stimulus from China, and power supply-related smelter production 2023. Automakers are seeking to reduce vehicle weight by substituting
curtailments in China’s Yunnan province. aluminium for steel. Aluminium is 10-40% lighter than steel in comparable
 Earnings for Australian exports of aluminium, alumina and bauxite are components. Electric vehicle (EV) makers are focused on reducing vehicle
expected to rise from $16 billion in 2023–24 to $18 billion in 2024–25, weight, since it impacts heavily on a vehicle’s driving range.
as prices rise over the outlook period. In China, the government is lifting support for the EV sector. In June 2023,
 Russia’s share of world aluminium exports continues to fall as a result the government’s passenger electric vehicle (PEV) subsidy was extended
of Western nations’ sanctions over the invasion of Ukraine. to 2025, then halving until 2027. This measure will support aluminium
demand from the Chinese auto sector.
11.2 World consumption
PEV sales in the US are expected to rise in 2023, driven by an
China led higher primary aluminium consumption in Q3 2023 improvement in the supply chain. According to AutoForecast Solutions’
Strong automotive sales in China helped drive up global primary April 2023 forecasts, North American automotive production is forecast to
aluminium demand by 0.7% year-on-year in the September quarter 2023 increase by 9.1% year-on-year in 2023 to 15.6 million units.
to 17 million tonnes (Mt). Over this period, China’s passenger car sales Beyond 2023, rising sales of energy-efficient vehicles (which are more
rose by 3.4% year-on-year to nearly 6.9 million units. As a result, Chinese aluminium intensive) and lower interest rates in H2 2024 and 2025, are
primary aluminium demand increased by 4.4% year-on-year in the expected to boost global aluminium demand. In the US and Europe,
September quarter 2023 to 11 million tonnes. housing and commercial building activity are expected to recover when
In the United States (US), the United Auto Workers strike — which interest rates fall.
commenced on 15 September 2023 and ended on 30 October 2023 — Rising EU imports of Chinese EVs may adversely impact European
disrupted US automotive production and reduced US primary aluminium primary aluminium demand. In the first seven months of 2023, Europe
demand, which fell by 11% year-on-year in the September quarter 2023. In imported US$13 billion of EVs from China compared to US$15 billion
Europe, sluggish construction activity continued to affect primary during the whole of 2022.
aluminium demand. In the September quarter 2023, primary aluminium
demand in Europe fell by 10% year-on-year to 1.7 Mt. Demand from automotive and construction market participants with
decarbonisation targets will boost demand for secondary aluminium
Higher global primary aluminium production boosted the demand for consumption over the outlook period, reaching 27 Mt by 2025.
alumina by 0.9% year-on-year to 34 Mt in the September quarter 2023.
Alumina demand in Canada rose by 3.3% year-on-year in the September An expected rise in global primary aluminium production is likely to drive
quarter 2023, as Canadian aluminium smelters lifted aluminium output. higher demand for alumina over the outlook period. World alumina
consumption is forecast to grow by 2.3% in 2024 and 1.3% in 2025, up
Lower global alumina production reduced global bauxite usage by 1.3% from 1.6% in 2023.
year-on-year in the September quarter 2023.

Resources and Energy Quarterly | December 2023 103

An expected fall in Australia’s alumina production is estimated to reduce In China, primary aluminium output is forecast to rise from 41 Mt in 2023 to
global bauxite consumption by 0.7% in 2023 to 357 million tonnes. nearly 43 Mt in 2025. The forecast is about 600,000 tonnes less than the
Australia is the world’s second largest alumina producer, accounting for previous forecast in the September 2023 Resources and Energy
around 14% of global alumina production. Beyond 2023, an expected Quarterly, due to the hydropower supply issue in Yunnan province.
improvement in Australia’s alumina refining operations will lift global Aluminium smelters in the province are required to curtail aluminium
alumina output, and therefore, global bauxite consumption. capacity from November 2023 to May 2024. Wood Mackenzie has
estimated that around 600,000 tonnes of primary aluminium will be loss
11.3 World production from this curtailment.
Aluminium and bauxite output grew in Q3 2023 Primary aluminium production in India is forecast to increase from 4.2 Mt in
Faster than expected smelter restarts in China’s major aluminium 2023 to 4.4 Mt in 2025. In Canada, primary aluminium production is
producing cities contributed to a 1.9% year-on-year rise in the global forecast to increase from 3.2 Mt in 2023 to 3.3 Mt in 2025, driven by the
primary aluminium output in the September quarter 2023. In Yunnan continued ramp-up of production at the Kitimat aluminium smelter.
Province (the 4th largest producing province), most aluminium smelters Driven by the increasing demand for recycled aluminium, global secondary
have restarted after power restrictions in June 2023 suspended output. aluminium output is forecast to rise from 32 Mt in 2023 to 36 Mt in 2025.
A production ramp-up at Emirates Global Aluminium’s Al-Taweelah China accounts for most of this increase, with secondary aluminium
boosted the United Arab Emirates’ primary aluminium output to 637,000 production forecast to rise from 12 Mt in 2023 to 14 Mt in 2025.
tonnes in the September quarter 2023, up 2.2% year-on-year. Lower production guidance for some Australian alumina refineries is
Higher production at Rio Tinto’s 150,000 tonnes a year Kitimat aluminium expected to see a reduction in global alumina output of 1.2% in 2023. In
smelter boosted Canadian primary aluminium output to 829,000 tonnes in the June quarter 2023, Rio Tinto revised its 2023 alumina guidance for its
the September quarter 2023, up 8.5% year-on-year. Queensland Alumina Limited (QAL) refinery in Queensland down to 7.4 Mt
from 7.7 Mt. The downward revision reflects the company’s initiatives to
Lower Chinese alumina output (down 3.0% year-on-year) drove a 2.3% improve the QAL refinery’s operational stability. Alcoa indicated that its
year-on-year fall in global alumina output in the September quarter 2023 to Kwinana alumina refinery in Western Australia (WA) is mining lower grade
nearly 35 Mt. Offsetting the fall in Chinese alumina output is higher bauxite. This suggests that lower alumina output from the Kwinana refinery
alumina output in Jamaica and Brazil (up 137% and 4.1% year-on-year in is likely.
the September quarter 2023, respectively).
Rising output from new/existing refineries in China and Indonesia is
Higher output in Guinea — the world’s largest bauxite producer — drove expected to lift global alumina output over the outlook period. In China,
increased world bauxite production, which rose by 2.3% year-on-year in alumina production is expected to continue to rise, reaching nearly 84 Mt
the September quarter 2023 to nearly 96 Mt. in 2025. In Indonesia, the 2 million tonnes a year Mempawah alumina
World aluminium, alumina and bauxite output rise over the outlook period refinery (a joint-venture between China Aluminium Company and some
Production ramp-ups in China, India and Canada are expected to continue Indonesian entities), is expected to come online in 2024. It is expected that
to drive global primary aluminium output higher over the outlook period. eight more alumina refineries will be built in Indonesia in the coming years,
with a total capacity addition of around 10 Mt.

Resources and Energy Quarterly | December 2023 104

Trade sanctions imposed on Russia over its invasion of Ukraine in Figure 11.1: Russia’s alumina import sources
February 2022 have forced Rusal to turn to China and India for alumina
Ukraine
supply. Russia consumes 7.7 Mt of alumina a year, of which 39% is from
domestic production and 61% is imported. Ukraine, Australia and Ireland Australia
were Russia’s three largest suppliers of alumina in 2022, together Ireland
accounting for 78% of Russia total alumina imports (Figure 11.1). Kazakhstan
In October 2023, Rusal (Russia’s largest aluminium producer) announced Guinea
the acquisition of a 30% stake in a 4.8 Mt a year Hebei Wenfeng alumina
Jamaica
refinery in China. The deal is still waiting approval from China. If approved,
Rusal would be able to secure an alumina supply of 1.44 Mt a year. Brazil
ROW
Rising production in Guinea is expected to offset the loss of Indonesian
bauxite — due to an export ban which commenced on 10 June 2023 — 0 10 20 30 40
and help drive global bauxite output up by 3.6% in 2023 to 400 Mt. World %
bauxite production is expected to grow by 3.8% in 2024 and 3.5% in 2025. Source: International Trade Centre (2022)
Guinea and Australia are expected to contribute most to this rise. Figure 11.2: World aluminium, alumina and bauxite production and
A strong rise in bauxite production capacity in Guinea in the 2017 to 2022 consumption, average year-on-year growth 2017 to 2022
period saw global bauxite yearly output rise by an average 6.6%. Over the 7
same period, global primary aluminium and alumina output grew on 6
average 2.8% and 3.7% a year, respectively (Figure 11.2).
5
Gains in China’s primary aluminium and alumina production drove strong 4
growth in global bauxite consumption in the 2017-22 period: global bauxite

%
3
consumption rose on average 3.3% a year. Over the same period, global
primary aluminium and alumina consumption grew on average 2.5% and 2
2.5% a year, respectively (Figure 11.2). 1
Suriname is hoping to restart the bauxite operations that were stopped in 0
2015. The Surinamese Government will award an operating licence in Bauxite Alumina Primary Bauxite Alumina Primary
aluminium aluminium
November 2024 to develop a bauxite mine in the jungle of western
Suriname has a proven bauxite reserve of 324 Mt, which will be used to Production Consumption
produce an average 3.7 MT of bauxite a year. Source: Bloomberg (2023); World Bureau of Metal Statistics (2023); CRU (2023); Wood
Mackenzie (2023); Department of Industry, Science and Resources.

Resources and Energy Quarterly | December 2023 105

11.4 World trade Higher imports by China offset the fall in European and US imports. In the
September quarter 2023, China imported 489,000 tonnes of primary
Weak primary and secondary aluminium and alumina exports in Q3 2023
aluminium, a rise of 178% year-on-year. Aluminium demand from the
Lower exports from Russia reduced global primary aluminium exports by automotive and solar energy sectors was the driving force behind China’s
9.4% year-on-year in the September 2023 to nearly 3.2 Mt. Russia’s share increased imports.
of global primary aluminium exports continued to drop, falling from 13% in
the September quarter 2022 to just 5.2% in the September quarter 2023. China’s imports of Russian primary aluminium have increased significantly
Offsetting the fall in aluminium exports from Russia was higher exports so far in 2023; from 281,937 tonnes in the first nine months of 2022 to
from Canada (up 14% year-on-year in the September quarter 2023) and 820,560 tonnes in the first nine months of 2023. On a monthly basis,
Australia (up 2.0% year-on-year in the September quarter 2023). China’s primary aluminium imports from Russia reached a record high in
September 2023, at 159,642 tonnes.
The slower than expected restart of idled primary aluminium capacity in
Europe reduced world secondary aluminium exports in the September On 1 November 2023, the US Government announced the continuation of
quarter 2023. European aluminium users turned to secondary aluminium its suspension on import tariffs for European Union (EU) steel and
as a substitute for primary aluminium. As a result, less secondary aluminium pending further negotiations. In a move away from the previous
aluminium was available for export, which declined by 2.4% year-on-year. US Administration’s imposition of a 25% tariff on EU steel and 10% on EU
aluminium, the current US Administration initiated a tariff rate quota
Lower alumina exports from Brazil — the world’s second largest alumina system in January 2022 which permits 3.3 Mt of EU steel and 845,505
exporter — cut global alumina exports by 7.7% year-on-year in the tonnes of EU aluminium to enter the US without tariffs.
September quarter 2023 to 9.5 Mt. Over this period, alumina exports from
China rose by 39% to 467,000 tonnes. Western aluminium consumers have continued to opt out of purchasing
Russian primary aluminium, which accounts for around 6.0% of the world’s
Higher bauxite exports from Guinea and Australia — the world’s two primary aluminium output. In October 2023, Novelis Europe — a
largest bauxite exporters — boosted global bauxite exports by 7.2% year- subsidiary of the world’s leading rolled aluminium products maker, Novelis
on-year in the September quarter 2023. Over this period, Guinea exported announced it will exclude Russian aluminium from its 2024 supply tender.
nearly 27 Mt of bauxite (up 21% year-on-year) and Australia exported 10
Mt of bauxite (up 14% year-on-year). Lower European imports reduced global secondary aluminium imports by
1.5% year-on-year in the September quarter 2023. Many European
Lower aluminium and alumina imports, but higher bauxite imports nations reduced secondary aluminium consumption in response to slowing
Weak primary aluminium consumption in Europe and the US reduced construction activity. In Spain, secondary aluminium imports in the
global primary aluminium imports by 1.9% year-on-year in the September September quarter 2023 fell by 46% year-on-year to 7,000 tonnes. Over
quarter 2023. In the US, primary aluminium imports fell by 11% year-on- this period, Germany’s secondary aluminium imports fell by 6.7% year-on-
year in the September quarter 2023. Over this period, German and French year to 112,000 tonnes.
primary aluminium imports decreased by 11% and 2.9% year-on-year,
Higher alumina production in India reduced global alumina imports by
respectively.
8.2% year-on-year in the September quarter 2023. Over this period, India
imported 578,000 tonnes of alumina (down by 6.2% year-on-year).

Resources and Energy Quarterly | December 2023 106

Russia’s alumina import data is not available and is not included in this 11.5 Prices
assessment.
LME aluminium price has rallied from its September quarter average
Higher bauxite imports from China increased global bauxite imports by The prospect of a new round of fiscal stimulus from China and power
7.4% year-on-year in the September quarter 2023. Over this period, China supply-related smelter production curtailments in China’s Yunnan Province
imported 35 Mt of bauxite (up 17% year-on-year). in the upcoming dry season have recently boosted the London Metal
Green aluminium, alumina and bauxite Exchange (LME) aluminium price. The LME primary aluminium spot price
is likely to average around US$2,250 a tonne in the December quarter
The push to lower the industry’s carbon footprint continues in all stages of
2023, up from US$2,154 a tonne in the September quarter 2023.
the sector, both in Australia and offshore.
Aluminium is estimated to average US$2,260 a tonne in 2023, down by
In 2022, 37% of the electricity consumed at Portland Aluminium smelter in 16% from 2022 (Figure 11.3).
Victoria was derived from renewable sources, including electricity from
LME stock changes reflect a recovery in ex-China primary aluminium
nearby wind farms.
demand in recent months, falling from 515,750 tonnes in August 2023 to
South32’s Worsley Alumina refinery in Western Australia successfully 449,525 in December 2023. Shanghai Future Exchange aluminium stocks
transitioned the first of its coal-fired boilers to natural gas in October 2023. rose from 79,194 tonnes in September 2023 to 111,869 tonnes in
This transformation is expected to cut operational greenhouse gas December 2023, reflecting higher supply from Yunnan. LME off-warrant
emissions at Worsley Alumina by up to 208,000 tonnes a year of carbon stocks followed the same trend, rising from 207,056 tonnes in May 2023 to
dioxide equivalent. The company is planning to convert a second coal-fired 330,966 tonnes in October 2023 (Figure 11.4).
boiler to natural gas at Worsley Alumina in 2024.
In line with the fall in the primary aluminium price, the free on board (FOB)
In cooperation with Vedanta Aluminium, the Indian Institute of Technology Australian alumina price is estimated to fall by 5.3% to an average
has developed an innovative bauxite refining process to reduce the US$345 a tonne in 2023 (Figure 11.3).
generation of bauxite residue (known as red mud) by 30%. The process
Primary aluminium and alumina prices to rise in 2024 and 2025
eliminates the iron content at the same time as a higher alumina yield is
recovered. The enhances resource efficiency and reduces energy Growing global demand for new and energy-efficient cars and
consumption during refining, thereby reducing the carbon footprint in the technologies is expected to provide support to aluminium usage and prices
process. over the outlook period. The LME spot price for aluminium is forecast to
rise at an average annual rate of 2.9% in 2024 and 2025, reaching about
Rio Tinto Canada is partnering with the Montreal Canadiens to introduce US$2,400 a tonne by 2025.
recyclable aluminium cups at the Bell Sporting Centre in Quebec, Canada.
The new aluminium cups are produced from low-carbon aluminium and Like aluminium, the FOB Australian alumina price is forecast to rise in
expected to replace 1.5 million plastic cups annually — with around 24 2024 and 2025, averaging about US$350 a tonne in 2025. Stronger
tonnes of plastic removed from the environment. alumina supply from China is expected to be offset by higher alumina
demand from China and ex-China’ aluminium smelters.

Resources and Energy Quarterly | December 2023 107

Chinese aluminium producers’ expansion into southeast Asia is expected Figure 11.4: Exchange aluminium stocks
to impact global aluminium supply over the coming years. The nearer 6
China’s domestic capacity comes to its 45 Mt a year limit, the more likely
Chinese aluminium smelters will build up their operations overseas. 5

Million tonnes
Notable development includes the construction of 1 Mt a year Shandong
Nanshan aluminium smelter in Indonesia by the end of 2023. 4

An influx of Russian primary aluminium into the LME warehouses is likely 3

to distort the LME primary aluminium prices. Figure 11.5 shows the LME
on-warrant primary aluminium stocks, which were first released in 2
February 2023. Russia’s share of the LME on-warrant stock has risen from
41% in January 2023 to nearly 80% in October 2023. As more and more 1
consumers opt not to purchase Russian primary aluminium, a further
increase of Russian aluminium in the LME stocks is expected. 0
Dec-13 Dec-15 Dec-17 Dec-19 Dec-21 Dec-23
Figure 11.3: Primary aluminium and alumina prices LME aluminium stocks Shanghai aluminium stocks
LME off-warrant stocks
3,000 500
Source: London Metal Exchange (2023); Bloomberg (2023)

2,600 440 Figure 11.5: LME on-warrant primary aluminium stocks, monthly
US$ a tonne

90

US$ a tonne
2,200 380 80
70
1,800 320 60
50

%
1,400 260 40
30
1,000 200
20
2015 2017 2019 2021 2023 2025
Average LME aluminium price 10
Average FOB Australia alumina price (rhs) 0
Jan-23 Mar-23 May-23 Jul-23 Sep-23
Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)
Russia India (non-Russian) Other non-Russian*
Notes: Non-Russian includes Australia, Bahrain, Canada, India, Indonesia, Iran, Malaysia,
Oman, Saudi Arabia, South Africa, the UAE and the US.
Source: London Metal Exchange (2023)

Resources and Energy Quarterly | December 2023 108

11.6 Australia’s exports and production 25% year-on-year to $252 million and $50 million, respectively. Largely
offsetting the fall in exports to Japan and the US was a 53% year-on-year
Strong bauxite exports drove export earnings in September quarter 2023
rise in exports to South Korea to $402 million.
Higher bauxite export volumes and values boosted Australia’s aluminium,
A 4.0% year-on-year fall in alumina export volumes reduced Australian
alumina and bauxite (AAB) exports up by 2.1% year-on-year in the
alumina export values by 0.9% year-on-year to $2.1 billion in the
September quarter 2023 to $4.0 billion.
September quarter 2023.
A ban on bauxite exports by Indonesia — which started on 10 June 2023
Higher alumina, aluminium and bauxite export earnings in prospect
— seems to have assisted Australian bauxite exporters. Provisional trade
data for the September quarter 2023 shows a 66% year-on-year rise in An expected rise in alumina and bauxite export volumes and values are
Australian bauxite export values to China, to 450 million. In the September likely to boost Australian AAB export earnings from $16 billion in 2023–24
quarter 2023, Australian bauxite exports reached 10 Mt a quarter for the to $18 billion in 2024–25 (Figure 11.7).
first time since the September quarter 2020 (Figure 11.6).
Figure 11.7: Australian aluminium/alumina/bauxite exports
Figure 11.6: Australia’s bauxite export volumes, quarterly
18
12
16
10
14
Million tonnes

8 12

$ billion
10
6
8
4
6
2 4

0 2
Sep-21 Mar-22 Sep-22 Mar-23 Sep-23
0
China South Korea US 2014–15 2016–17 2018–19 2020–21 2022–23 2024–25
Source: ABS (2023) International Trade in Goods and Services, 5368.0
Aluminium Alumina
An 8.5% year-on-year fall in the LME aluminium price in the September Bauxite High purity alumina
Aluminium waste and scrap
quarter 2023 reduced Australian primary aluminium export values by 6.4%
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
year-on-year to $1.2 billion in the September quarter 2023. Over this Industry, Science and Resources
period, primary aluminium exports to Japan and the US fell by 33% and

Resources and Energy Quarterly | December 2023 109

Australia’s aluminium/alumina/bauxite production rose in Q3 2023 the lowest cost HPA anywhere in the world. A preliminary feasibility study
is due for completion in 2024.
Higher output from the Boyne Island aluminium smelter in Queensland
helped lift Australian primary aluminium output by 0.9% year-on-year in the FYI Resources received a $1.2 million research and development tax
September quarter 2023. In mid-March 2023, amid operational instability, incentive rebate from the Australian Government in November 2023 for its
Alcoa announced an immediate 25% production cut at Portland Aluminium HPA project in WA. FYI has developed an innovative process design for
in Victoria. the integrated production of high quality HPA.
Improved operating conditions at Rio Tinto’s Queensland Alumina Limited Figure 11.8: Australian aluminium/alumina/bauxite output
and Yarwun alumina refineries in Queensland lifted Australian alumina
120 1.8
output to nearly 5.0 Mt in the September quarter 2023, up 4.2% year-on-
year. 100 1.5
Improved weather conditions in Queensland helped drive Australian

Million tonnes

Million tonnes
bauxite output up by 4.9% year-on-year in the September quarter 2023 to 80 1.2
nearly 27 Mt.
60 0.9
Higher aluminium/alumina/bauxite output expected over the outlook period
With Portland Aluminium’s production cut expected to finish by the end of 40 0.6
2023, Australian primary aluminium output should be back close to normal
over the outlook period, at about 1.6 Mt of primary aluminium a year 20 0.3
(Figure 11.8).
0 0.0
Australia’s alumina output is expected to fluctuate around the 20 Mt a year 2014–15 2016–17 2018–19 2020–21 2022–23 2024–25
level over the outlook period. At the time of writing, Alcoa is still waiting for Alumina Bauxite Aluminium (rhs)
approval from the Western Australian Government for its Mine
Source: Department of Industry, Science and Resources (2023)
Management Program — usually approved on a 5-year basis (Figure
11.8). Revisions to the outlook
The expansion of Metro Mining’s Bauxite Hills mine in Queensland from The forecasts for Australia’s AAB export earnings in 2023–24 and 2024–
3.5 Mt a year to 7 Mt a year is forecast to drive Australian bauxite output 25 have been revised up from the September 2023 REQ — by $129
up by 4.4% a year to nearly 110 Mt in 2024–25 (Figure 11.8). million and $260 million, respectively. The revision reflects forecasts for a
In November 2023, Impact Minerals released a scoping study for its lower-than-expected AUD/USD over the outlook period.
10,000 tonnes a year Lake Hope high purity alumina (HPA) project in
Western Australia. The study suggests Lake Hope could possibly deliver

Resources and Energy Quarterly | December 2023 110

 Box 11.1: Russia’s aluminium/alumina/bauxite production and trade Figure 11.9: Russia’s shares of global aluminium/alumina/bauxite
production, consumption, exports and imports
After Russia invaded Ukraine in February 2022, Australia, the United
States, Canada, the European Union and other Western countries 20 100
imposed sanctions on Russian exports of a number of commodities,
18 90
including alumina and bauxite. This analysis presents the impacts of
international sanctions on Russia’s primary aluminium, alumina and 16 80
bauxite (AAB) production and trade.
14 70
Russia’s AAB production is little changed from pre-invasion levels, as is its
share of global AAB output (Figure 11.9). After February 2022, Russia lost 12 60
two crucial sources of alumina supply, as Ukraine suspended production
10 50

%
%
and Australia banned alumina and bauxite supply to Russia. To offset for
this lost, Russia has stepped up imports of alumina from China, and 8 40
recently India.
6 30
Despite there being no direct sanctions on Russian aluminium by Western
nations, Russia’s share of world primary aluminium exports has fallen 4 20
from 18% in the December quarter 2020 (five quarters before the
invasion) to 5.2% in the September quarter 2023 (six quarters after the 2 10
invasion) (Figure 11.9). Western aluminium consumers have opted not to
0 0
buy Russian aluminium to avoid being caught up in the fallout from any

Jun-21

Jun-22

Jun-23
Mar-21

Mar-22

Mar-23
Dec-20

Sep-21

Dec-21

Sep-22

Dec-22

Sep-23
new sanctions.

Russia has diversified its primary aluminium export markets from the West Before the invasion After the invasion
to China. Russia’s share of China’s total primary aluminium imports has
Aluminium production Alumina production
risen from 5.8% in the December quarter 2021 (one quarter before the Bauxite production Aluminium exports
invasion) to 83% in the September quarter 2023 (six quarters after the Alumina imports* China's aluminium imports (rhs)
invasion). LME on-warrant stocks (rhs)

Russia has shipped its unsold primary aluminium stocks into the LME Notes: *June quarter 2022 to September quarter 2023 data is not available.
Source: China Customs (2023); London Metal Exchange (2023); World Bureau of Metal
aluminium warehouses. Russia’s share of the LME on-warrant stocks has Statistics (2023); Department of Industry, Science and Resources (2023)
risen from 53% in the March quarter 2023 to 76% in the September
quarter 2023. Source: China Customs; London Metal Exchange; World Bureau of Metal Statistics; Reuters,
Analysis: To cut reliance on China, Russia turns to India for aluminium feedstocks, 15
September 2023; Department of Industry, Science and Resources.

Resources and Energy Quarterly | December 2023 111

Table 11.1: Aluminium, alumina and bauxite outlook
Table 11.1: Annual percentage change
Aluminium alumina
World Unit 2022 2023 s 2024 f 2025 f 2023 s 2024 f 2025 f
Primary aluminium
Production kt 68,529 69,935 71,556 72,516 2.1 2.3 1.3
Consumption kt 68,050 68,354 72,238 73,385 0.4 5.7 1.6
Prices aluminiumc
- nominal US$/t 2,708 2,264 2,332 2,397 -16.4 3.0 2.8
- reald US$/t 2,818 2,264 2,269 2,277 -19.7 0.2 0.4
Prices alumina spot
- nominal US$/t 365 345 346 346 -5.3 0.1 0.1
- reald US$/t 379 345 336 329 -9.0 -2.6 -2.2
Australia Unit 2021–22 2022–23 2023–24 f 2024–25 f 2022–23 2023–24 f 2024–25 f
Production
Primary aluminium kt 1,525 1,532 1,579 1,587 0.5 3.1 0.5
Alumina kt 20,114 18,971 19,795 20,446 -5.7 4.3 3.3
Bauxite Mt 102.3 98.5 107.0 109.4 -3.7 8.6 2.2
Consumption
Primary aluminium kt 240 151 204 191 -37.1 35.0 -6.5
Exports
Primary aluminium kt 1,368 1,440 1,429 1,444 5.3 -0.7 1.0
- nominal value A$m 5,710 5,282 4,949 4,905 -7.5 -6.3 -0.9
- real valuee A$m 6,380 5,515 4,949 4,741 -13.6 -10.3 -4.2
Alumina kt 17,739 16,566 17,094 17,788 -6.6 3.2 4.1
- nominal value A$m 8,977 8,308 8,862 9,040 -7.5 6.7 2.0
- real valuee A$m 10,032 8,674 8,862 8,738 -13.5 2.2 -1.4
Bauxite kt 35,957 34,113 38,252 38,325 -5.1 12.1 0.2
- nominal value A$m 1,177 1,284 1,428 1,366 9.1 11.3 -4.4
- real valuee A$m 1,315 1,340 1,428 1,320 1.9 6.6 -7.6
Total value
- nominal value A$m 16,854 16,006 16,489 17,562 -5.0 3.0 6.5
- real valuee A$m 18,834 16,712 16,489 16,976 -11.3 -1.3 3.0
Notes: Total nominal and real values of Australian exports include primary aluminium, aluminium waste and scrap, alumina, high purity alumina and bauxite. c LME cash prices for primary
aluminium; d In 2023 calendar year US dollars; e In 2023–24 financial year Australian dollars; f Forecast; s Estimate. Sources: ABS (2023) International Trade in Goods and Services, 5368.0;
Bloomberg (2023); London Metal Exchange (2023); Department of Industry, Science and Resources (2023); World Bureau of Metals Statistics (2023)

Resources and Energy Quarterly | December 2023 112

Resources and Energy Quarterly | December 2023 113
Resources and Energy Quarterly | December 2023 114
12.1 Summary Figure 12.1: Leading global indicators for copper
 Copper prices have trended lower in H2 2023. Despite strong growth in 80 66
copper demand in China in 2023, the poor near term outlook for 60 62

Annual percentage change

construction and manufacturing in major markets such as Europe and
Advanced Asia continues to weigh on the copper price. 40 58

PMI reading
 The benchmark LME copper is estimated to average about US$8,200 a 20 54
tonne in H2 2023 (down from US$8,700 a tonne in H1).
0 50
 Global copper consumption is estimated to grow by 7.3% in 2023. China
is expected to account for the bulk of this growth, driven by increased -20 46
manufacturing activity and large investments in energy infrastructure.
-40 42
 Australian copper export earnings are forecast to reach around
$12.8 billion in 2023–24. Higher Australian production and export -60 38
volumes will see export earnings reach $13.4 billion in 2024–25. 2021 2022 2023
China property starts US building permits
12.2 World consumption Eurozone construction PMI (RHS) World manufacturing PMI (RHS)
China manufacturing PMI (RHS)
World copper demand growth robust so far in 2023, all due to China
Source: Bloomberg (2023)
Global refined copper consumption was 8.4% higher (year-on-year) in the
first nine months of 2023, reaching 20.7 million tonnes (Figure 12.2). This Figure 12.1: Refined copper consumption
growth was primarily driven by China (up 12% over the period) and Rest of 25 30%
Asia, helping to offset an almost 12% fall in US consumption.

Annual percentage change

Despite ongoing challenges faced in its residential property sector, China’s 20 20%

Million tonnes
demand for copper has remained incredibly strong so far in 2023. A key
driver has been the country’s infrastructure sector, which has maintained 15 10%
high growth this year. This includes the country’s clean energy industry,
10 0%
with the central government continuing to make large investments in
energy infrastructure (particularly renewable energy) in 2023. China is
5 -10%
estimated to have added around 150GW of additional solar and wind
power generation capacity so far this year, equating to around 650,000
0 -20%
tonnes of copper demand (equivalent to 5% of the country’s total copper World China Rest of Europe US Rest of
demand over the same period). Asia world
First nine months of 2023 Year-on-year growth (RHS)
China’s electric vehicle (EV) manufacturing sector has also seen further
growth in 2023, with pure EV passenger vehicle production in the year-to- Source: World Bureau of Metal Statistics (2023); Department of Industry, Science and
Resources (2023)
September rising 11% year-on-year.

Resources and Energy Quarterly | December 2023 115

With pure EVs (also known as battery EVs) requiring close to four times as Figure 12.3: World copper consumption in 2022, by end use
much copper as conventional internal combustion engine vehicles, EV
production is expected to become a growing source of domestic demand
for copper in China over the next few years.
These industries have helped to offset continued weakness in the
country’s property sector (Figure 12.1), which has seen further falls (year-
on-year) in new construction starts in H2 2023 (see Macroeconomic
Outlook and Steel chapters).

Weaker outlook for world (ex. China) manufacturing, and construction

A slowing global economy through 2023 has seen dampened
manufacturing activity amongst other major economies. Industrial
production fell in August in both the Eurozone and Advanced Asia regions, Notes: Uses categories from the Copper Alliance Global Semis End Use data; Consumer
and general products inc. appliances, instruments and tools, cooling equipment, electronics
while US output has been flat (year-on-year) through much of 2023. and other diverse products; Building construction inc. plumbing, telecommunications, air
Manufacturing PMIs in October point to a further contraction for key conditioning, electrical power; Infrastructure inc. power utility and telecommunications;
Transport inc. automotive, EV batteries and other transport; Industrial inc. transformers and
producers such as Europe, US and Japan heading into 2024 (Figure 12.1). motors, non-electrical fittings and plant.
Source: International Copper Study Group (2023)
Global construction activity — which accounted for about 25% of world
copper demand in 2022 — has helped to mitigate ongoing weakness in Despite an ambitious medium-term outlook for the region associated with
world manufacturing (ex China). By sector, infrastructure continues to its NextGenerationEU plan, the European construction sector faces further
drive activity, while tighter financial conditions have discouraged activity in near-term challenges. The Eurozone construction PMI in October marked
the residential and commercial sectors. By region, the Middle East & its fastest decline in 10 months, while further falls in new orders points to
Africa, and the Americas continue to see the strongest activity, though pessimism for the sector heading into 2024.
growth appears to be slowing in North America. Europe continues to see a
noticeable deterioration in both activity and year-ahead expectations, while US manufacturing faces near term challenge, but strong long-term outlook
the outlook for the Asia region remains mixed, with a positive view for India The US manufacturing PMI returned to a neutral reading in October, after
and Philippines offsetting weaker expectations for China. several months of contractionary expectations through the second half of
2023. Rising input costs continue to be a concern for producers, with
European manufacturing and construction facing continued challenges
growth in the country’s industrial output remaining flat (year-on- year)
European copper consumption in the nine months to September 2023 was through the second half of the year. Despite the near-term challenges,
0.2% lower year-on-year. This follows continued frailty in the region’s new investment — encouraged by the Inflation Reduction Act — is
manufacturing sector, with industrial output in the Eurozone (year-on-year) expected to drive stronger growth in US manufacturing activity over the
in September, and the manufacturing PMI in October at a historically medium term. This will include a particular concentration of projects in the
weak level. S&P’s Global Copper Users survey for October showed the clean energy sector, with market estimates of as much as $280 billion in
steepest decline in production in the region since May 2020. new investments in the sector since the passing of the Act.

Resources and Energy Quarterly | December 2023 116

Figure 12.4: Mined copper production Codelco — the world’s largest copper miner in 2022 — has continued to
struggle with operational issues and high debt through 2023. This
18 20%
culminated in the company recently cutting production guidance for 2023
15 15% by around 5%. In an effort to safeguard margins, the company recently
announced an aim to remove floating premiums in its 2024 contracts and
Million tonnes

12 10% revert to a fixed rate of around US$90 a tonne, down 36% from this year’s
rate. The company is reported to be exploring replacing its current long-

Growth
9 5% term copper concentrates export contracts with higher value-add products
such as blister and anodes.
6 0%
The fall in output from Chile’s (and the world’s) largest miner was partially
3 -5% offset by 8% higher (year-on-year) production from the BHP joint venture,
Escondida, in the September quarter 2023. Escondida also reported the
0 -10%
successful completion of negotiations for a new collective agreement with
World Chile Peru DRC China Indonesia Rest of
world its supervisor’s union.
First nine months of 2023 Year-on-year growth (RHS) Peru saw strong growth for the first nine months of 2023, rising 16% year-
Source: World Bureau of Metal Statistics (2023); Department of Industry, Science and on-year. This included higher production from Peru’s newest major copper
Resources (2023) mine, Quellaveco — a joint venture between Anglo American and
Mitsubishi — with the operation contributing to a 42% increase in quarterly
After strong growth in 2023, global copper demand is expected to grow by
production for Anglo American in the September quarter 2023.
0.3% per annum to 2025. World demand will be supported by considerable
infrastructure works (planned or underway) in key regions (particularly Mined copper to grow by around 2.8% annually to 2025
from the energy sector), as well as continuing penetration of EVs in the Mined copper production is expected to grow close to 1.9 million tonnes
global automotive sector. over the next two years, with the majority of the increase coming from
Chile, the Democratic Republic of Congo and Russia.
12.3 World production
Global mined copper output expected to grow modestly in 2023 Chile is expected to add around 500,000 tonnes of mined capacity over
the outlook period. This will include ramp up of Teck Resources’ Quebrada
Global mined copper production grew 2.9% (year-on-year) in the nine
Blanca Phase 2 operation, which reached a 70% run rate at the end of the
months to September 2023, to reach 16.5 million tonnes. Amongst major
September quarter. The company expects to be operating at full capacity
producers, there were falls in output for Chile, and flat growth for China
(300,000 tonnes per annum) by the start of 2024.
and Indonesia over the period (Figure 12.4).
The Democratic Republic of the Congo is expected to add around
World mine production has been affected by a number of concurrent
450,000 tonnes in new capacity over the outlook period. This expansion
issues so far in 2023, including adverse weather, equipment failure,
reflects significant Chinese investment in many of the country’s copper
community action, slower than expected ramp-up of projects, and lower
projects, including the 650,000 tonnes per annum Kamoa-Kakula project
grades from many existing operations.

Resources and Energy Quarterly | December 2023 117

(joint owned by Zijin Mining Group), the Deziwa mine (joint owned by Figure 12.5: Refined copper production
China Nonferrous Metal Mining Company), and China Molybdenum
25 20%
Company’s Kisanfu project.
Russia is also expected to see two significant copper projects 20 15%
commissioned over the outlook period, with a potential capacity of more

Million tonnes
than 400,000 tonnes of production per year. This includes the Malmyzh 15 10%
gold-copper project in Far East Russia, and Russia’s largest copper mine
Udokan in Eastern Siberia. 10 5%

China and DRC leading global refined copper production in 2023 5 0%

Refined copper production grew 7.3% year-on-year for the first nine
months of 2023, to reach around 20.4 million tonnes (Figure 12.5). This 0 -5%
included significant growth in the Democratic Republic of Congo and World China Europe Chile DRC Rest of
China — the world’s largest producer with almost half of the world’s world
First nine months of 2023 Year-on-year growth (RHS)
refined output — over the period. These gains helped to offset falls
amongst other major producers such as Europe and Chile. Source: World Bureau of Metal Statistics (2023); Department of Industry, Science and
Resources (2023)
Domestic refiners in China significantly boosted production in the first nine
months of 2023, growing 18% year-on-year. While low inventories and China is expected to see more than 1 million tonnes of refining capacity
stronger refining charges contributed to this increase, the rise was added in the next few years, equivalent to close to 10% of its total
concurrent with a significant fall in China’s imports of refined copper over production in 2022. This will include a 275,000 tonne expansion of
the same period. Rising domestic output in part reflects China’s usual Guangxi’s Nanko refinery, and three projects owned by Tongling
seasonal ramp up in inventories to meet the typical construction peak Nonferrous — and all slated for completion by 2025.
period in September and October. Indonesia is expected to drastically increase copper refining output in the
However, despite the strong rise in Chinese copper output, copper next couple of years, a consequence of a 2018 government policy to
inventories in China (as well as other exchanges) remain at historic lows, process all ores domestically. The country’s largest mine PT Freeport
and this represents an ongoing upside risk to prices over the outlook currently has construction underway on its new 600,000 tonne per year
period (Figure 12.6). Manyar Maju refinery, with first production expected in H2 2024.
India is also expected to see strong growth in refined copper output over
China, Indonesia and India to drive expansion in refined output to 2025
the next few years. This includes Adani Group’s Gujarat refinery, expected
Global refined copper production in 2023 is estimated at around 27.7
to be operational in early 2024 — with an initial capacity of 500,000 tonnes
million tonnes in 2023 and grow by around 0.7% annually through to 2025.
per year, and an eventual annual nameplate capacity of 1 million tonnes.
This is expected to be led by new capacity in China, Indonesia and India.

Resources and Energy Quarterly | December 2023 118

Figure 12.6: Global copper inventories 12.4 Prices
1,400 Global macro headwinds continuing to weigh on prices heading into 2024
From a peak of US$8,900 a tonne in March, copper prices have continued
1,200
to trend lower in recent months, averaging US$8,190 a tonne in
Thousand tonnes

1,000 November. The fall comes despite solid growth in China’s refined copper
demand through 2023, a consequence of the poorer outlook for
800 construction and manufacturing in other key markets, such as Europe and
ex-China Asia.
600
The weak global outlook (ex China) is expected to put downward pressure
400 on copper prices in the near term. Lead indicators suggest further near-
term vulnerability in global manufacturing, and in construction activity in
200
key markets such as Europe. China is also expected to face continued
0 challenges in its construction sector in coming months, though this will be
2018 2019 2020 2021 2022 2023 offset by robust activity in its manufacturing and energy infrastructure
World inventory Inventory at major exchanges Refined copper stocks in China sectors. Compared to an estimated average of around US$8,200 a tonne
in H2 2023, the price is expected to average around $8,100 a tonne in
Source: Bloomberg (2023)
2024 and rise to $8,500 a tonne in 2025 (Figure 12.7).
Figure 12.7: Copper price Upside risks to prices include the historically low levels of inventories
12,000 globally (Figure 12.6). Stronger-than-expected demand in coming quarters
could be expected to draw inventories further and possibly cause price
10,000 spikes. Continued expansion of clean energy manufacturing in economies
such as China and the US also present upside risks to copper prices over
8,000 the outlook, with significant public and private investment in manufacturing
US$ a tonne

capacity and infrastructure in both countries in recent years.

6,000
12.5 Australia
Falling copper price to offset stronger export volumes to 2024–25
4,000
Exports are forecast to be around $12.8 billion in 2023–24, a 4.2% rise
year-on-year (Figure 12.8). Moderating prices through late 2023 and
2,000
projected for 2024 are expected to be offset by stronger export volumes
forecast, for both mined and refined copper products.
0
2016 2017 2019 2020 2022 2023 2025 In 2024–25, continued growth in export volumes and stronger prices are
Source: LME (2023) official cash price, refined expected to contribute to export earnings of around $13.4 million.

Resources and Energy Quarterly | December 2023 119

Mine production sees healthy growth over the outlook period Figure 12.8: Australia’s copper export volumes and values
Mined production in the September quarter 2023 was 4.2% lower year-on- 1,200 16
year. This follows a 6.4% fall in output from BHP’s Copper South Australia

Metal content, thousand tonnes

over the period, a consequence of planned maintenance undertaken
during the September quarter. 900 12

Mined production is expected to grow over the outlook period to reach

A$ billion
around 868,000 tonnes in 2024–25. These gains are largely due to fewer 600 8
COVID- and weather-related disruptions (due to the end of the La Niña
weather episode), as well as new production from greenfield and
brownfield mid-tier producers. 300 4
The rise in Australian mined production will come despite the closure of
Glencore’s Mount Isa copper mines and concentrator in 2025. Despite the
0 0
mine closure, the company’s copper smelter in Mount Isa and refinery in 2018–19 2020–21 2022–23 2024–25
Townsville are expected to continue operating to 2030, subject to approval
Volumes Values (rhs)
of additional capital investment.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
Australia’s refined copper production is also expected to grow by around Industry, Science and Resources (2023)
1.8% annually to 2024–25, to reach around 471,000 tonnes. BHP’s
acquisition of OZ Minerals in May this year is expected to significantly Revisions to the outlook
increase refined copper output from the company’s South Australian Compared to the September Resources and Energy Quarterly, the
operations, now known as Copper South Australia. forecast for Australia’s copper export earnings in 2023–24 are little
changed over the outlook period offset by stronger export volumes.
Copper exploration very strong through 2023
Forecast earnings in 2024–25 have been revised up by $0.7 billion due to
Copper exploration expenditure rose to $183 million in the September stronger export volumes (particularly new ores and concentrates
quarter 2023. This was around 10% higher than the comparable quarter in products).
2022, and continues a general upward trend seen since 2017.

Resources and Energy Quarterly | December 2023 120

Table 12.1: Copper outlook
Annual percentage change

World Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

Production
– mine kt 21,586 22,333 23,565 24,248 3.5 5.5 2.9
– refined kt 25,786 27,585 28,073 28,213 7.0 1.8 0.5
Consumption kt 25,842 27,729 27,932 28,347 7.3 0.7 1.5
Closing stocks kt 942 644 526 655 -31.7 -18.3 24.7
– weeks of consumption 1.9 1.3 1.0 1.2 -33.6 -20.2 21.4
Prices LME
– nominal US$/t 8,815 8,469 8,072 8,509 -3.9 -4.7 5.4
USc/lb 400 384 366 386 -3.9 -4.7 5.4
– realb
US$/t 9,174 8,469 7,852 8,083 -7.7 -7.3 2.9
USc/lb 416 384 356 367 -7.7 -7.3 2.9
Australia Unit 2021–22 2022–23 2023–24 f
2024–25 f
2022–23 s
2023–24 f
2024–25f
Mine output kt 781 808 813 868 3.5 0.6 6.8
Refined output kt 368 454 469 471 23 3.3 0.5
Exports
– ores and concsc kt 1,641 1,521 1,491 1,680 -7.3 -2.0 13
– refined kt 330 415 454 471 26 9.4 3.8
– total metallic content kt 808 854 882 951 5.7 3.3 7.8
Export value
– nominal A$m 12,128 12,271 12,792 13,416 1.2 4.2 4.9
– reald
A$m 13,553 12,813 12,792 12,969 -5.5 -0.2 1.4

Notes: b In 2023 calendar year US dollars; c Quantities refer to gross weight of all ores and concentrates; d In 2023–24 financial year Australian dollars; f Forecast; s estimate
Source: ABS (2023) International Trade, 5465.0; LME (2023) spot price; World Bureau of Metal Statistics (2023); Department of Industry, Science and Resources (2023).

Resources and Energy Quarterly | December 2023 121

Resources and Energy Quarterly | December 2023 122
13.1 Summary This trend is being driven by the Chinese market. With electric vehicle
 Chinese demand (from end-uses such as stainless steel and EV battery batteries making up about a third of the cost of an EV, Chinese consumers
production) continues to drive global nickel consumption, now forecast have shown a strong preference for lower-cost EVs, favouring LFP
to rise by 5.5% year-on-year in 2023 and by 7.4% annually to 2025. chemistries. For example, in 2022, almost 95% of LFP batteries produced
globally for light duty vehicles were used to produce vehicles in China.
 A continuing oversupply in the global nickel market — driven by strong
Demand for non-nickel batteries such as LFP grew in 2023, but short-term
growth in Indonesian and Chinese supply — is expected to peak in 2023,
growth has been revised down due to softer-than-expected EV sales.
though will remain over the outlook period.
 Weaker prices over the outlook period are expected to push Australian EV-related nickel demand is expected to be the main driver of nickel
nickel export earnings lower, falling from $5.0 billion in 2022–23 to consumption from 2025 onwards, with nickel demand growth expected to
$3.9 billion in 2023–24, before recovering to $4.3 billion in 2024–25. remain the strongest out of the base metals.

13.2 World consumption Figure 13.1: World nickel consumption

World nickel demand continues to expand in 2023 due to China 2.5 30%
Global refined nickel consumption continues to strengthen, with 5.8%

Annual percentage growth

year-on-year growth in the year to September (Figure 13.1). While most 2.0 20%
major markets have seen declining demand this year, China usage has

Million tonnes
seen a significant rebound, rising 16% year-on-year over the period. 1.5 10%

Global stainless steel output — which represented around 70% of refined

1.0 0%
nickel demand in 2021 — continues to be a significant driver of growth in
Chinese nickel demand. In the September quarter 2023, China has seen a
0.5 -10%
28% year-on-year increase in stainless steel production, with output
expanding due to increased infrastructure spending by China’s central
0.0 -20%
government in recent years (see Steel chapter).
World China IDN EU Japan US ROW
Electric vehicle demand to continue to drive nickel consumption to 2025 First nine months of 2023 Year-on-year growth (RHS)
Despite growing global macroeconomic uncertainty, electric vehicle
Note: IDN ~ Indonesia; ROW ~ Rest of World
demand has continued to grow through 2023, with world sales of full Source: International Nickel Study Group (INSG); Department of Industry, Science and
electric vehicles rising close to 40% in the year to August. Nickel Resources (2023)
chemistries continue to dominate the global battery market with nickel-
Global refined nickel usage is estimated to grow to 3.1 million tonnes in
manganese-cobalt (NMC) and nickel-cobalt-aluminium (NCA) accounting
2023 — an increase of 5.5% year-on-year. Global refined nickel
for close to 75% of market EV sales over the same period. However, non-
consumption is forecast to grow to 3.6 million tonnes by 2025. This growth
nickel lithium battery chemistries have remained on the rise in 2023, with
is expected to be driven by continued growth in global stainless steel
lithium-iron-phosphate (LFP) accounting for 25% of the market and
output and nickel-intensive battery demand from rising EV sales.
growing more than 50% year-on-year over in the year to August.

Resources and Energy Quarterly | December 2023 123

13.3 World production Figure 13.2: World mined nickel production
Indonesia leads global nickel output through 2023 3.0 35%
Global mined nickel production is expected to rise by 16% year-on-year to

Annual percentage growth

2.5 25%
reach 3.7 million tonnes in 2023, as Indonesia continues to drastically
increase global supply, as well as a ramp-up in production for several

Million tonnes
2.0 15%
other key regions.
World mined nickel production is forecast to reach 4.1 million tonnes by 1.5 5%
2025. Indonesian output is expected to continue to expand, from 2 million
1.0 -5%
tonnes in 2023 to 2.5 million tonnes in 2025, representing 56% of global
supply. However, with the Indonesian government enforcing a slow-down
0.5 -15%
of 2023 mining permits — and planning on stricter permitting (in terms of
ESG and other requirements) from 2024 — there are downside risks to 0.0 -25%
growth in global production over the outlook period. World IDN PH NC RUS AUS ROW

Shifting supply of battery grade nickel First nine months of 2023 Year-on-year growth (RHS)
Note: IDN ~ Indonesia; PH ~ Philippines; NC ~ New Caledonia; RUS ~ Russia
Chinese production and consumption of battery grade material was
Source: International Nickel Study Group (2023); Department of Industry, Science and
weaker than expected. This was due to supply chain destocking caused by Resources (2023)
falling nickel prices.
Figure 13.3: World refined nickel production
The main source of global supply growth is Indonesia, with future growth
3.0 35%
focused on nickel matte and mixed hydroxide precipitate (MHP) production

Annual percentage growth

to feed battery and class 1 nickel supply chains. High-pressure acid leach 2.5 25%
(HPAL) plants are expected to drive production of MHP from 2024 on.
2.0 15%

Million tonnes
Growth of Indonesian nickel pig iron (NPI) is expected to slow in coming
months as large stockpiles built through 2022 and 2023 are drawn down. 1.5 5%
Indonesia has also announced that some NPI furnaces will be converted
to produce nickel matte. This is in addition to new nickel matte furnace 1.0 -5%
capacity that will be used to meet demand for batteries and class 1 nickel.
0.5 -15%
Global refined production to grow 5.6% annually to 2025
Global refined nickel output is forecast to rise to 3.7 million tonnes in 2025. 0.0 -25%
World Indonesia China EU Russia ROW
China and Indonesia are expected to continue to dominate refined nickel
First nine months of 2023 Year-on-year growth (RHS)
production, with each expected to increase capacity by approximately
Source: International Nickel Study Group (2023); Department of Industry, Science and
300,000 tonnes by 2025. Resources (2023)

Resources and Energy Quarterly | December 2023 124

13.4 Prices Figure 13.4 Nickel spot price and stock at exchanges
LME price continues decline throughout 2023 600 60,000
From a peak of just over US$30,000 a tonne in January, the LME nickel
500 50,000

Stocks (thousand tonnes)

price has continued to fall during 2023. After averaging just over
US$20,000 a tonne in the September quarter 2023, nickel prices have 400 40,000

US$ a tonne
declined further in the December quarter 2023, to average around
US$17,600/t. In addition to softening world industrial production (IP) and 300 30,000
manufacturing activity, the nickel market is watching the surge in output in
Indonesian — both current and prospective — for a rise in inventories. 200 20,000

The global macroeconomic environment continues to be weighed down by 100 10,000

tighter fiscal and monetary conditions. This has seen a persistent
weakness in global IP and manufacturing activity in recent months, with a 0 0
2016 2017 2018 2019 2020 2021 2022 2023
continued contraction in activity in Europe and Asia (excluding China)
LME stocks SHFE stocks LME nickel cash (rhs)
offsetting an ongoing modest recovery in Chinese industrial production.
Source: Bloomberg (2023); Department of Industry, Science and Resources (2023)
Global construction displayed modest growth through 2023, however there
were pockets of weakness: activity continues to deteriorate in Europe (due outlook period, with these facilities capable of processing lower grade ores
to aggressive monetary policy) and in the Chinese property market. into products such as Mixed Hydroxide Precipitate (MHP), which is
capable of being processed into refined nickel. The projected lift in nickel
With significant growth in mined and refined supply projected over the
refining capacity in China and Indonesia may thus maintain the global
outlook period, weak demand from key sectors — such as manufacturing
nickel market in surplus in the outlook period.
and construction — is expected to put further downward pressure on
nickel prices in 2024. Demand could pick up in 2025 if falling inflation Class 1 inventories to remain low in 2024 and 2025
allows Western central banks move to a less restrictive monetary stance. While healthy growth in mined and refined nickel supply is expected to
Robust growth in refined output in 2023 keeps market in surplus create a moderate (but reducing) oversupply to 2025, the low levels of
inventories seen at major exchanges such as LME and Shanghai Futures
The surplus seen in the global nickel market since 2022 is expected to
Exchange remain a key upside risk to prices in the near term. LME
reach its peak in 2023, at about 230,000 tonnes. This follows the recent
inventories have seen a modest recovery so far in the December quarter,
expansion of nickel refining capacity in China and Indonesia.
reaching 44,000 tonnes in mid-November, after hitting a 10-year low of
The oversupply in class II nickel products — such as nickel pig iron and 37,000 tonnes in the June quarter 2023 (Figure 13.4). However, LME
ferronickel — seen in the last 18 months now appears to be carrying over inventories remain at decade-lows. After falling below US$16,000 a tonne
into class I ‘battery grade’ products (on which exchange-traded contracts in November, the LME nickel price is estimated to average about
such as LME are based). This is being driven by the continued expansion US$21,200 a tonne in 2023. A global surplus is expected to stretch into
of nickel smelting and refining capacity, especially in Indonesia. New 2024, with prices forecast to average around US$18,000 a tonne.
HPAL projects are expected to continue being brought online over the

Resources and Energy Quarterly | December 2023 125

13.5 Australia Figure 13.5: Nickel export volumes and values
Export earnings to be impacted by falling nickel prices 240 6
Stronger production and export volumes are expected over the outlook
period, though this is initially expected to be outweighed by falling global

Thousand tonnes
prices. Export earnings are expected to fall to $3.9 billion in 2023–24,
160 4
before increasing to $4.3 billion 2024–25. Export volumes are forecast to

A$ billion
rise from 161,000 tonnes in 2022–23 to 172,000 in 2023–24 (7.1% growth)
and 195,000 in 2024–25 (14% growth).

Australian production to grow over the outlook period 80 2

Following flat growth in 2022–23, Australian mined nickel production is
forecast to grow to 159,000 tonnes in 2023–24 and 186,000 tonnes in
2024–25 (both figures have been revised down from the September
0 0
Resources and Energy Quarterly). Contributing to this increase in mine 2020–21 2022–23 2024–25
production will be IGO’s Cosmos project, a further ramp up at Kambalda
(Wyloo Metals) and a restart of Black Swan (Poseidon Nickel). Export volumes Export values (rhs)
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
Australian refined nickel production (including refined and intermediate
Industry, Science and Resources (2023)
products) is expected to grow from 134,000 tonnes in 2022–23 to 151,000
tonnes in 2024–25. This growth in output is expected to be driven by a
ramp up in production at BHP’s Nickel West operations.

Exploration expenditure remains near decade highs

Nickel and cobalt exploration expenditure for the September quarter 2023
was around $88 million. This was 5.7% higher/lower than the previous
quarter, and 11% higher than the comparable period in 2022. Exploration
for the 12 months to September 2023 was $341 million, and continues a
general upward trend seen since 2016.

Revisions to the outlook

Compared to the September 2023 Resources and Energy Quarterly, nickel
exports earnings have been revised down by $0.4 billion in 2023–24. This
is a result of slight downward revision to price forecasts for the period.

Resources and Energy Quarterly | December 2023 126

Table 13.1: Nickel outlook
Annual percentage change

World Unit 2022 2023s 2024f 2025f 2023s 2024f 2025f

Production
– mine kt 3,203 3,729 3,908 4,090 16 4.8 4.7
– refined kt 3,059 3,344 3,529 3,728 9.3 5.6 5.6
Consumption kt 2,956 3,119 3,381 3,601 5.5 8.4 6.5
Closing stocks kt 691 916 1 065 1 191 33 16 12
– weeks of consumption 12.2 15.3 16.4 17.2 26 7.2 5.1
Prices LME
– nominal US$/t 25,696 21,477 17,875 18,875 -16 -17 5.6
USc/lb 1 166 974 811 856 -16 -17 5.6
– real b
US$/t 26,744 21,477 17,388 17,931 -20 -19 3.1
USc/lb 1,213 974 789 813 -20 -19 3.1
Australia Unit 2021–22 2022–23 2023–24 f
2024–25 f
2022–23 2023–24 f
2024–25f
Production
– mine c kt 154 152 159 186 -1.4 4.9 16
– refined kt 98 97 94 104 -1.7 -3.1 11
– intermediate 31 38 45 46 20 19 3.5
Export volume dg
kt 155 161 172 195 3.3 7.1 14
Export valueg
– nominal value A$m 4,405 4,956 3,875 4,285 13 -22 11
– real value e A$m 4,923 5,175 3,875 4,142 5.1 -25 7
Notes: b In 2023 calendar year US dollars; c Nickel content of domestic mine production; d Includes metal content of ores and concentrates, intermediate products and nickel metal; e In 2023–24
financial year Australian dollars; f Forecast; g OCE estimates based on publicly available data; s Estimate.
Source: ABS (2023) International Trade, 5465.0; LME (2023) spot price; International Nickel Study Group (2023); Company reports; Department of Industry, Science and Resources (2023).

Resources and Energy Quarterly | December 2023 127

Resources and Energy Quarterly | December 2023 128
Resources and Energy Quarterly | December 2023 129
14.1 Summary down 6.3% year-on-year. This is weaker than the data reported for
January to June, which was down 2.8% year-on-year.
 The outlook for zinc demand remains subdued due to both increased
supply and ongoing weakness in China’s property market. The zinc Figure 14.1: Zinc consumption vs industrial and steel production
price is forecast to average US$2,600 a tonne in 2024 and then rise to 10
US$2,700 a tonne in 2025.
 Australia’s zinc output has fallen in 2023, as some small mines closed.

Annual percentage change

But output is expected to rise over the outlook period due to the 5
Century mine expansion and higher Golden Grove mine output.
 Australia’s zinc exports are forecast to fall to $3.9-4.0 billion in 2023–24
0
and 2024–25, with higher volumes partially offsetting the impact of
lower prices.

14.2 World consumption -5

Global zinc consumption strengthens as China’s property market stabilises

Zinc consumption tends to follow the global industrial production cycle, -10
given its primary role in galvanising steel (Figure 14.1) and its heavy use in 2013 2015 2017 2019 2021 2023 2025
manufacturing, construction and automotive sectors. The International world zinc consumption growth
world industrial production growth
Lead and Zinc Study Group (ILZSG) estimates that world demand rose World steel production
0.5% year-on-year in the September quarter 2023. China is the world’s Source: International Lead Zinc Study Group (2023); CPB Netherlands Bureau for Economic
largest consumer of zinc, and China’s consumption recovered in the Policy Analysis (2023); World Steel Association (2023); Department of Industry, Science and
Resources (2023).
September quarter to rise 2.8% year-on-year. Consumption in the US is
estimated to have fallen 10% year-on-year, while the EU fell 4.4% year-on- China’s passenger vehicle production fell 2.8% year-on-year in the
year. September quarter 2023 but remains 10% higher than China’s average
There are signs that China’s residential property sector is stabilising. quarterly production in 2022. China is emerging as a leading manufacturer
China is prioritising the delivery of its existing construction pipeline, after of electrical vehicles, which are often less expensive than comparable
worries that liquidity constrained developers had been forced to abandon models from international competitors. China overtook Japan as the
projects already started. China’s National Bureau of Statistics reported that world’s largest exporter of passenger motor vehicles in H1 2023.
residential floor space completed from January to September 2023 is up Other major passenger vehicle producers posted production gains in 2023,
20% year-on-year. This is an improvement compared to the January to as chip shortages affected production over much of 2022. In the
June period, which was up 18.5% year-on-year. However, sales remain September quarter, Japanese passenger vehicle output rose by 7.5%
weak, with residential floor space sold from January to September 2023, year-on-year, while production in Germany rose by 5.9% year-on-year.

Resources and Energy Quarterly | December 2023 130

Despite the estimated fall in US and EU zinc usage, indicators of related 14.3 World production
construction activity have been positive. US construction spending rose Zinc concentrate market tightens as mines closure reduces supply
4.3% in the September quarter 2023 in nominal terms. A large rise in non-
World mine production fell by 2.2% year-on-year in the September quarter
residential construction spending, up 21% year-on-year, was offset by a
2023. About a third of global zinc mine production is in China, where mine
decline in spending on residential construction, down 5.5% year-on-year.
production fell 2.6% year-on-year.
The rise in non-residential construction spending was driven by
manufacturing (up 65% year-on-year) and computer/electronics (up 146% The sharp fall in zinc prices since April 2022 has led to the closure of
year-on-year). US motor vehicle assemblies — the majority of which are several zinc mines. European production fell 14% year-on-year in the
commercial vehicles — rose 3.8% year-on-year in the September quarter. September quarter 2023. The Tara mine in Ireland — the largest zinc mine
in Europe — closed in June, and the Aljustrel mine in Portugal closed in
The EU’s construction production (volume) index rose 1.0% year-on-year
September. Australian production fell 6.1% year-on-year. The unlisted
in the September quarter 2023. This was largely due to a low September
Australian mining company Aurora Metals entered into administration in
quarter 2022 result, when high energy prices — following the Russian
July, resulting in the closure of the Mount Garnet and King Vol mines in
invasion of Ukraine — impacted adversely on economic activity. Prices
Australia. The Jaguar mine operated by Aeris Resources was placed on
have since settled with Europe’s 2022/23 winter the warmest on record.
care and maintenance in August.
Demand outlook for zinc faces headwinds
World refining production rose 8.0% year-on-year in the September
Growth in world zinc consumption is forecast to average 1.0% per year quarter 2023. Output in China — the world’s largest zinc refiner — rose by
over 2024 and 2025. This is much slower than the 2009 to 2019 period 15% year-on-year in the September quarter 2023. The surge in refining
when zinc consumption grew by an average of 2.4% per year. China’s capacity in China resulted in a rapid decline in the spot treatment price for
housing market faces much slower growth than at any time over the past zinc ore imported to China. The price fell to US$95 a tonne in October
twenty years, with a weak demand outlook due to high levels of building 2023 from an average of US$263 a tonne in the March quarter 2023, when
stock and slowing urban population growth. Residential construction the closure of some European zinc smelters (due to high energy prices)
activity will likely stabilise at a lower level, reducing zinc demand. resulted in a crunch in global zinc refining capacity.
Offsetting some of this decline is higher infrastructure spending in China
as the government seeks to support the economy. In October 2023, China Projects delayed as outlook for zinc demand remains weak
issued 1 trillion yuan in bonds to fund new infrastructure spending. Over the outlook period, world mine output is forecast to average annual
growth of 1.1% (Figure 14.3). The fall in mine production and rise in
The global energy transition will increase demand for zinc in some sectors
refining production over the past year has eliminated much of the surplus
but may also see zinc usage reduced for other applications. Globally, the
in the concentrate market from earlier this year. The weak demand outlook
rollout of renewable energy infrastructure is expected to support demand
suggests growth in zinc production will be slow over the outlook period,
for zinc due to its role as a key input to wind turbines, solar panels and
and the opening of new mines expected from Mexico and Russia have
transmission towers. However, growing electric vehicle adoption could
already been delayed. Refined production is expected to rise by 1.0% a
also weaken demand for zinc as automakers prefer lighter materials to
year on average. Most of the new capacity is expected to be in China.
steel (in particular, aluminium) to raise the interval between EV recharges.

Resources and Energy Quarterly | December 2023 131

Figure 14.3: World zinc mine production, metallic content The LME (spot) zinc price is forecast to stay relatively low through 2024,
16 8 due to the soft demand outlook. The price should average about US$2,600
a tonne before recovering to US$2,700 a tonne in 2025 as growth in the
world economy picks up. (Figure 14.4).

Annual percentage change

12 4
Figure 14.4: Zinc prices and stocks
Million tonnes

4,000 12
8 0

3,000 9

Weeks of consumption
4 -4

US$ a tonne
2,000 6
0 -8
2013 2015 2017 2019 2021 2023 2025
Mine production Mine production change (rhs) 1,000 3
Source: International Lead Zinc Study Group (2023); Department of Industry, Science and
Resources (2023).
0 0
14.4 Prices 2013 2015 2017 2019 2021 2023 2025
Prices weaken on growing concerns over the demand outlook Price Stocks (rhs)
Source: LME (2023); International Lead Zinc Study Group (2023); Department of Industry,
The London Metal Exchange (LME) zinc spot price declined slightly in the Science and Resources (2023).
September quarter 2023 to around US$2,400 a tonne. This compared to
an average of about US$3,100 a tonne in the March quarter, when worries 14.5 Australia’s exports and production
over shortages of zinc refining capacity kept prices high. The price falls Export earnings to fall as price declines outweigh growing domestic output
were triggered by the reopening of some European zinc smelters and was
Australia’s export earnings for both zinc concentrates and refined zinc
sustained by the underlying weakness in demand — as China’s reopening
(combined) rose 6.8% year-on-year to $1.1 billion in the September
from COVID lockdowns had failed to deliver the widely expected recovery
quarter 2023. The rise was driven by a lift in export volumes, while the fall
in demand.
in the zinc price was partially offset by the impact of a weaker AUD/USD.
Zinc inventories have whipped around in 2023. Weak demand over the H1
The increase in export volumes (of both zinc ores and concentrates and
2023 saw LME zinc stocks rise rapidly over the June quarter to reach 81
also refined zinc metal) in the quarter exceeded the increase in production,
thousand tonnes. Stocks then jumped to 148 thousand tonnes by the end
and was likely due to the timing of shipments. Export volumes of zinc ore
of August. However, consumption strengthened over the September
rose 36% year-on-year, while export volume of refined zinc metal rose
quarter 2023 and LME zinc stocks have since been drawn down to 69
76% year-on-year.
thousand tonnes as at mid-November.

Resources and Energy Quarterly | December 2023 132

Higher refined zinc production helped increase refined metal exports, with Figure 14.5: Australia’s zinc exports, metallic content
Australian production of refined zinc rising 8.6% year-on-year in the 1,800 6
September quarter 2023. The Townsville refinery completed an expansion
project in the March quarter 2023, and is now operating at a higher 1,500 5
capacity. Delays with commissioning this project disrupted production in
2022.

Thousand tonnes
1,200 4

A$ billion
Australian mine output fell 8.1% year-on-year in the September quarter
900 3
2023, as the fall in global zinc price resulted in the closure of several small
mines. The Jaguar mine operated by Aeris Resources was placed on care
600 2
and maintenance in August 2023. The unlisted company Aurora Metals
entered into administration in the July 2023, and two zinc mines owned by 300 1
the company have closed as a result. Additionally, the Hera mine, owed by
Aurelia metals, closed early at the end of March 2023. 0 0
2014–15 2016–17 2018–19 2020–21 2022–23 2024–25
Australian mine output is expected to grow by an average 4.8% per year
Volumes Values (rhs)
over the outlook period. Output growth over the next two years will be
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of
driven by an expansion of the Century mine, as well as increases in Industry, Science and Resources (2023).
production from the Golden Grove mine (following the completion of
ventilation upgrades). Revisions to the outlook

From $4.3 billion in 2022–23, Australia’s export earnings for concentrates Compared to the September 2023 Resources and Energy Quarterly,
and refined zinc (combined) are forecast to fall to $4.0 and $3.9 billion in export earnings for 2023–24 have been revised up by 8.9%. The upward
2023–24 and 2024–25, respectively. The fall in earnings is due to revision is due to stronger than expected export volume data for H2 2023,
relatively low prices and mine closures (Figure 14.5). as well as a weaker forecast for the AUS/USD than envisaged in the
September quarter 2023 REQ.
Exploration expenditure softens in the September quarter
Export earnings for 2024–25 have been revised up by 4.2% due to a
Exploration expenditure for silver, lead and zinc fell 5.7% year-on-year in
higher zinc price forecast.
the September quarter 2023. Exploration expenditure slumped in 2020 —
due to the COVID pandemic — but recovered as zinc prices rose over
2021 and 2022. Exploration expenditure is moderating with zinc prices
returning to a lower level.

Resources and Energy Quarterly | December 2023 133

Table 14.1: Zinc outlook
Annual percentage change

World Unit 2022 2023 s 2024 f 2025 f 2023 f 2024 f 2025 f

Production
– mine kt 12,428 12,338 12,436 12,592 -0.7 0.8 1.3
– refined a kt 13,353 13,478 13,592 13,762 0.9 0.8 1.2
Consumption kt 13,454 13,389 13,490 13,646 -0.5 0.8 1.2
Closing stocks kt 653 742 844 960 13.7 13.7 13.7
2.5 2.9 3.3 3.7 14.3 12.85 12.6
– weeks of consumption
Price
– nominal US$/t 3,485 2,654 2,559 2,665 -23.8 -3.6 4.1
USc/lb 158 120 116 121 -23.8 -3.6 4.1
– real b
US$/t 3,627 2,654 2,490 2,531 -26.8 -6.2 1.7
USc/lb 165 120 113 115 -26.8 -6.2 1.7

Australia Unit 2021–22 2022–23 2023–24 f 2024–25 f 2022–23 2023–24 f 2024–25 f

Mine output kt 1,257 1,165 1,190 1,280 -7.3 2.1 7.6

Refined output kt 435 410 444 505 -5.8 8.4 13.7
Export volume
– ore and concentrate c kt 2,033 1,886 2,133 1,985 -7.2 13.1 -7.0
– refined kt 313 388 431 476 23.9 11.1 10.3
– total metallic content kt 1,220 1,247 1,392 1,370 2.3 11.6 -1.6
Export value
– nominal A$m 4,506 4,315 3,951 3,903 -4.2 -8.4 -1.2

A$m 5,036 4,506 3,951 3,773 -10.5 -12.3 -4.5

– real d
Notes: a Includes secondary refined zinc; b In 2023 US dollars; c Quantities refer to the gross weight of all ores and concentrates; d In 2023–24 Australian dollars; f Forecast; s Estimated.
Source: ABS (2023) International Trade in Goods and Services, Australia, Cat. No. 5368.0; Company reports; Department of Industry, Science and Resources (2023); International Lead Zinc Study
Group (2023); Wood Mackenzie (2023); LME (2023).

Resources and Energy Quarterly | December 2023 134

Resources and Energy Quarterly | December 2023 135
15.1 Summary Figure 15.1: World lithium consumption, by demand source
 Lithium export earnings are forecast to fall as lower prices more than 1,600
offset higher export volumes. Exports will be $14-15 billion in 2023–24
1,400
and 2024–25, down from record levels ($20 billion) in 2022–23.

thousand tonnes LCE

1,200
 Price declines since the September quarter reflect rising lithium
inventories. High-cost producers have become unprofitable and have 1,000
cut output. Australia’s Greenbushes lithium mine (the world’s largest) 800
reported stockpiling of surplus production and flagged the prospect of
600
future output cuts if weakness in prices and demand persists. However,
most producers remain profitable at current prices. 400
 Three Australian lithium hydroxide refineries are either operating or 200
under construction, targeting a total capacity of 198 thousand tonnes
0
(kt) of lithium hydroxide. By 2030, close to 20% of Australian spodumene 2020 2021 2022 2023 2024 2025
could be refined domestically. Investments have also been made in low- EV battery ESS battery Other battery Other (industrial)
emissions refining technology including a lithium phosphate refinery.
Source: Department of Industry, Science and Resources (2023), Wood Mackenzie (2023)
15.2 World demand
One reason why US EV sales appear to have been below expectations is
High growth outlook for lithium demand, but some near term challenges for the relatively high prices for EVs in the US compared to other markets
downstream markets such as the EV sector such as China. Since 2022, some EV manufacturers (such as Tesla) have
The high growth trajectory consensus forecast for global lithium demand is engaged in a price war in the Chinese market. For example, it is estimated
driven by government policies to increase electrification and decarbonise Tesla’s Model Y SUV costs 40% less in China than in the US (as of
the global economy. Lithium is a key input to the global energy transition, January 2023). More broadly, Chinese EV carmakers have focused on
making up a sizeable share of the cost of the most popular batteries smaller and more affordable models, cutting down costs. The IEA reports
(expected to be) used in electric vehicles (EVs) and stationary energy the two best selling EVs in China in 2022 were the Wuling Mini BEV
storage systems (ESS). In lithium carbonate equivalent (LCE) terms, (US$6,500) and the BYD Dolphin (US$16,000). In contrast, EV carmakers
global lithium consumption is forecast to increase from 797 kt in 2022 to in Europe and the US have prioritised larger and more luxurious models to
1,428 kt in 2025 (Figure 15.1). date. In 2022, the Tesla Model Y was the best selling EV in Europe
(US$65,000) and the United States (US$50,000).
Since the September REQ, there have been reports highlighting weakness
in the EV sector, particularly in the United States. EV manufacturers Recently, some US EV makers are reported to have begun making price
including General Motors, Ford and Tesla have delayed some investments cuts. However, this appears to largely be in response to the recent
in factories in response to disappointing EV sales growth and the broader slowdown in sales as opposed to a broader shift to better affordability by
economic slowdown. EV makers in the US and Europe.

Resources and Energy Quarterly | December 2023 136

To achieve the ambitious targets set by governments for EV uptake by Other sources of lithium demand to maintain growth outlook
2030, it is necessary for EVs to become more cost competitive with Other sources of battery demand for lithium will also experience strong
internal combustion engine vehicles. In China, the country’s National growth, largely driven by efforts to spur the energy transition. This will
Action Plan sets a target of 40% sales share for ‘new energy vehicles’ reflect higher uptake of ESS, electrification of tools and products (such as
(includes electric and fuel cell vehicles) by 2030. In the European Union electric scooters), and growth in portable electronics. ESS demand for
(EU), the ‘Fit for 55’ package requires new car sales to have 55% lower lithium is expected to more than double between 2022 and 2025, driven by
emissions from 2030 and zero CO2 emissions from 2035. The US is demand growth from major economies including China, the EU, and the
targeting ‘clean energy vehicles’ including EVs to make up a 50–52% US. The demand for lithium for non-EV battery usage is expected to
share of vehicle sales by 2030. increase by 68% between 2022 and 2025.
The outlook for EV demand is largely determined by government targets The use of lithium is also underpinned by stable growth in areas of
and the high levels of policy support directed to the sector. Global EV industrial demand that are well established, including ceramics, glass-
sales are projected to more than double between 2022 and 2025 ceramics, and greases. Industrial demand for lithium is expected to grow
(11 million to almost 25 million cars per annum) (Figure 15.2). EVs are the by 2-3% per annum, in line with historical growth trends.
dominant source of demand for lithium (and batteries), making up 60% of
lithium consumption in 2022. 15.3 World production
Figure 15.2: Global electric vehicles sales Growing global lithium extraction leading to a short-term surplus of supply
Reflecting surplus supply, global lithium inventories are rising following a
25
prolonged deficit in the last few years. The surplus is due to higher
extraction of lithium from mineral concentrate (e.g. spodumene and
20 lepidolite) and brine sources. Higher extraction is largely in response to a
recovery in lithium prices in 2021 and the record highs set in 2022.
million units

15 Increased extraction of lithium resources reflects higher production across

all major producer nations, as well as the emergence of a number of new,
10 smaller producers (Figure 15.3). Prices are expected to remain above pre-
2021 levels, enabling higher cost producers and projects to enter the
market.
5
Australia leads the world in lithium extraction, accounting for 50% of global
output in 2022. Spodumene production is forecast to increase from 386 kt
0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 in 2022 to 633 kt LCE in 2025 period (see Australia section). Most
China Europe United States Other Australian spodumene is exported and processed into lithium hydroxide or
carbonate overseas (mostly China). However, investments in domestic
Note: Electric vehicles (EVs) are defined to be battery EVs and plug-in hybrid EVs.
Source: Wood Mackenzie (2023)

Resources and Energy Quarterly | December 2023 137

refineries will result in a rising share of spodumene being processed Figure 15.4: Share of global lithium refining
domestically. 100%
Amongst other major producers, Chile and China are the two largest 90%
sources of lithium extraction. Chile is expected to see further growth in 80%
lithium extraction (from brine sources) over the outlook period, rising from 70%
162 kt in 2022 to 227 kt LCE in 2025. Brine is refined into lithium 60%
carbonate which is typically exported to other markets. 50%
China is also forecast to increase lithium extraction (from brine and mine 40%
sources) from 166 kt LCE in 2022 to 373 kt LCE by 2025. Notwithstanding 30%
its own production, China is a net importer of lithium resources, buying 20%
lithium from countries such as Australia and Chile. 10%
0%
Among other countries, Argentina, Canada and Zimbabwe are expected to 2020 2021 2022 2023 2024 2025
significantly increase lithium extraction, and account for a combined 19% China Chile Argentina
share of global production by 2025 (from 5.1% in 2022). Australia United States Other countries
Recycling
Figure 15.3: Global lithium extraction by country Note: This figure reflects the production of global refined lithium, not lithium refining capacity.
1,800 Source: Department of Industry, Science and Resources (2023), Wood Mackenzie (2023)

1,600
Global supply of refined lithium products to diversify over outlook period
1,400
thousand tonnes LCE

Lithium bearing ores/brines are processed into a product for downstream

1,200 applications. Refined lithium products include lithium hydroxide (often used
1,000 in NMC batteries) and lithium carbonate (favoured in LFP batteries).
800 Refined lithium chemicals are used in the production of active materials
600 that are part of the cathode of the battery. Batteries need high purity
materials, so making battery-grade lithium is a complex chemical process.
400
200 The global supply of refined lithium products is highly concentrated, with
0
the top three producers having around a 90% market share (Figure 15.4).
2020 2021 2022 2023 2024 2025 China is the dominant producer of refined lithium and is expected to
Australia Chile China Argentina Canada Zimbabwe Other maintain its share at about 60% of global refining capacity by 2025.
Notes: Global lithium extraction differs from the measure of world lithium production in this China’s high market share is supported by the cost competitiveness of its
report. Lithium production is defined to reflect refined production of lithium chemicals such as refineries and a dominant share in downstream markets in the battery
lithium hydroxide and lithium carbonate. In contrast, lithium extraction includes lithium
resources extracted from brines or mines. supply chain that use refined lithium products. Other major refined lithium
Source: Department of Industry, Science and Resources (2023), Wood Mackenzie (2023) producers include Argentina and Chile which extract lithium from brine.

Resources and Energy Quarterly | December 2023 138

By 2025, investments to develop lithium refining in Australia and the US In the near-term, the demand for lithium is facing headwinds due to slower
are expected to lead to market shares of 6.0% and 1.2% respectively. than expected growth in EV uptake in recent months, especially in the US.
Recycling is expected to maintain a 2–3% share over the outlook period.
The average price over the month of October 2023 was US$2,168 and
15.4 Prices US$25,327 per tonne for spodumene and lithium hydroxide, respectively.

Lithium prices to decrease as market enters a period of surplus production To account for recent further price falls, lithium price forecasts have been
revised downward compared to the September REQ, especially for lithium
During 2022 and early 2023, prices for lithium reached levels well above
hydroxide. For spodumene, the average spot price has been revised down
previous records as the market moved to a large deficit. In 2022, spot
by 5-10% for each year of the outlook period. For lithium hydroxide, the
prices for spodumene (concentrated ore) averaged US$4,364 per tonne,
average price has been revised downward by 10-30% for each year of the
well above the average level of US$663 per tonne over the 3 years to
outlook period. These revisions are line with consensus forecasts.
2021 (Figure 15.5). The spot price of lithium hydroxide (a refined lithium
product) averaged US$67,279 per tonne in 2022, dramatically higher than Notably, prices are not expected to return to previous high levels (such as
the average price of US$13,656 per tonne over the 3 years to 2021. during 2022 and early 2023) before 2025, due to the forecast surplus in
supply over the outlook period. This appears to have already incentivised
In 2023, prices have fallen significantly as the market has swung from
some production cuts, with reports that some higher-cost producers, such
deficit to surplus. The high prices in 2021 and 2022 incentivised more
as lepidolite miners in China, have become unprofitable and cut
investment in lithium production, resulting in growth in supply outpacing
production. However, most lithium producers will remain profitable at
demand. Adding to this, lithium consumers destocked during the period of
current prices and continue to produce. In Australia, the five largest lithium
high prices to lower the cost of carrying inventory.
mines (covering 99% of Australian spodumene production) reported their
Figure 15.5: Average monthly lithium spot prices average costs of production per tonne over the 2022–23 financial year to
7 84
range from A$670 to A$1225. Notably, these estimates are based on costs
reported by mines and does not account for differences in the lithium
6 72
content spodumene.
5 60
'000 US$ per tonne

'000 US$ per tonne

The spot price of spodumene is estimated to average US$3,840 per tonne
4 48
in 2023 and forecast to fall to US$2,200 in 2025. The spot price of lithium
3 36
hydroxide is estimated to average US$52,450 in 2023 but is forecast to
2 24 decline to average around US$30,000 per tonne in 2025.
1 12
In terms of risks for the price forecasts, there is an unusually high degree
0 0
of uncertainty. The lithium market has undergone significant structural
Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23
change in recent years due to new producers entering the market and the
Spodumene China (LHS) Lithium hydroxide China (RHS)
rapid pace of EV demand growth.
Notes: The spodumene price is CIF (cost including freight), with an average grade of 5-6%.
The lithium hydroxide price is FOB (free on board). Price series are smoothed.
Source: Bloomberg (2023)

Resources and Energy Quarterly | December 2023 139

Prices received by lithium mines typically reflect falling spot prices with a slower than expected ramp up of production at this new facility. Total
lag due to the use of offtake agreements with specified pricing terms. output was 0.6 kt in the September quarter, and the facility is expected to
Albemarle reports that only 20% of sales are via spot markets, with the be at 50% of capacity by the end of this year.
remainder based on contract sales typically linked to a price index with a
3-month lag, alongside some floors and ceilings for prices. Pilbara Figure 15.6: Australian output of lithium ores and chemicals
Minerals report a 2-month pricing period (including month of shipment) so 5 100
that prices are better aligned with the time of delivery to the consumer.
4 80
15.5 Australia

thousand tonnes
million tonnes
Lithium mines expected to continue to increase production over outlook 3 60

Australia is the leading global source of lithium (50% share of extraction in

2 40
2022), and mine output is expected to lift further after recent capital
expenditure. The output of spodumene is forecast to rise to 3.4 million
1 20
tonnes (Mt) in 2023–24 and 4.0 Mt in 2024–25, up from to 3.1 Mt in 2022–
23 (Figure 15.6).
0 0
Rising mine production will be driven by the expansion of existing mines, 2015-16 2018-19 2021-22 2024-25
including Greenbushes, Finniss, Wodgina, Pilgangoora, Mt Marion and Mt Spodumene (LHS) Lithium hydroxide (RHS)
Cattlin. Over the outlook period, greenfield production is also due to Source: Department of Industry, Science and Resources (2023), Wood Mackenzie (2023)
commence at Mt Holland and Kathleen Valley.
The second Kwinana refinery — owned by Wesfarmers (50%) and SQM
Since the September REQ, falls in lithium prices have led to some mines (50%) — remains under construction, with first production expected in
reporting stockpiling and the prospect of production cuts. Greenbushes 2024 and an eventual capacity of 50 kt per year.
(the world’s largest lithium mine, based in Australia) reported it was
stockpiling spodumene output, and flagged future production cuts if The Kemerton lithium hydroxide refinery — owned by Albemarle — is
weakness in prices and demand persists. reported to be in operation. In May 2023, a commitment was made to an
expansion to double capacity to 100 kt and this expansion is currently
Growing domestic processing as Australian lithium refineries to ramp up under construction.
Australia is continuing to develop new lithium refining capacity. There are
In August 2023, Pilbara Minerals and Calix Limited committed to the
three lithium hydroxide refineries either operating or under development
construction of a lithium phosphate refinery at Pilgangoora. This plant will
(two based in Kwinana and one in Kemerton) with a combined target
use a patented electric kiln technology that can reduce emission intensity if
capacity of 198 kt of lithium hydroxide. This suggests Australia could refine
powered by renewable energy (up to 80% reduction compared to
close to 20% of spodumene mined in Australia domestically.
conventional coal/gas kiln). This facility is only expected to produce over
The first is Tianqi Lithium Corporation (51%) and IGO’s (49%) Kwinana 3 kt of lithium phosphate at full capacity, to demonstrate the viability of this
refinery. Technical challenges (primarily debottlenecking) have meant a type of low emissions refining technology.

Resources and Energy Quarterly | December 2023 140

Record lithium export earnings to decrease as prices decline Figure 15.7: Value of Australian lithium exports
Lithium exports reached a record $20 billion in 2022–23, a significant 21
increase from the previous record of $5.0 billion in 2021–22 (Figure 15.7).
18
The increase was driven by a near-tripling in prices over the period, as
well as a 46% lift in the volume of spodumene exports. In 2022–23, 98% of 15
spodumene by volume was exported to China, with the rest exported to

A$ billion
12
nations such as Belgium (1.2%), South Korea (0.5%), and the US (0.1%).
9
The value of lithium exports is forecast to decline to around $14 billion in
2023–24, reflecting the lower prices compared to the previous financial 6
year. Total lithium export earnings are then forecast to increase to 3
$15 billion in 2024–25, as volumes rise with prices forecast to be little
changed year on year. 0
2015-16 2018-19 2021-22 2024-25
Revisions to the outlook Spodumene Lithium hydroxide Other lithium products
Significant revisions have been made to the forecasts for Australian lithium Note: Before January 2021, ABS spodumene exports data was subject to confidentiality.
export earnings compared to the September 2023 Resources and Energy Data before this date comes from WA Department of Mines, Industry Regulation and Safety.
Source: ABS (2023), Department of Industry, Science and Resources (2023), WA
Quarterly. In 2023–24 and 2024–25, the value of exports has been revised Department of Mines, Industry Regulation and Safety (2023).
downward by 23% and 6% respectively. These revisions are driven by
revisions to price forecasts (see Prices section).

Resources and Energy Quarterly | December 2023 141

Table 15.1: Lithium outlook

Annual percentage change

World Unit 2022 2023f 2024f 2025f 2023f 2024f 2025f
Production a b kt 737 985 1 271 1 528 33.6 29.0 20.2

Demand a kt 802 1,022 1,252 1,444 27.6 22.5 15.4

Spodumene price

– nominal US$/t 4 364 3 842 2 300 2 200 -12.0 -40.1 -4.3

– real c US$/t 4,542 3,842 2,237 2,090 -15.4 -41.8 -6.6

Lithium hydroxide price

– nominal US$/t 67,279 52,437 31,066 29,715 -22.1 -40.8 -4.3

– real c US$/t 70,022 52,437 30,220 28,228 -25.1 -42.4 -6.6

Australia Unit 2021–22 2022–23s 2023–24f 2024–25f 2022–23s 2023–24f 2024–25f

Production

– Mine (spodumene) kt 2,130 3,088 3,420 4,031 45.0 10.8 17.9

Export volume

– Ore and concentrate (spodumene) d kt 2,248 3,282 3,050 3,432 46.0 -7.1 12.5

– Refined (lithium hydroxide) kt 0 0 40 89 -100.0 NA 122.1

Export value

– Ore and concentrate (spodumene) d A$m 4,899 20,110 12,040 11,345 310.5 -40.1 -5.8

– Refined (lithium hydroxide) A$m 0 0 1,829 3,851 -100.0 NA 110.5

– Total (nominal) d g A$m 4,972 20,194 13,918 15,242 306.2 -31.1 9.5

– Total (real) d g h A$m 5,556 21,085 13,918 14,734 279.5 -34.0 5.9

Notes: a Lithium carbonate equivalent: this is a measure of the quantity of refined product; b Refined lithium products include lithium hydroxide and lithium carbonate; c In current calendar year US
dollars; d Prior to January 2021, ABS reported spodumene exports value and volume data was confidential. Data over this period instead sourced from the Western Australia Department of Mines;
g Revenue from spodumene concentrate, lithium hydroxide and other lithium products; h In current financial year Australian dollars; f Forecast; s Estimate.
Source: ABS (2023), Company reports; Department of Industry, Science and Resources (2023); Government of Western Australia Department of Mines, Industry Regulation and Safety (2023);
Wood Mackenzie (2023).

Resources and Energy Quarterly | December 2023 142

Trade summary tables
Table 17.1: Principal markets for Australia’s total resource and energy exports
Unit 2018–19 2019–20 2020–21 2021–22 2022–23 Share
(2022-23)

China $m 111,167 126,595 148,787 149,538 165,102 35%

Japan $m 50,605 45,539 34,223 75,941 98,962 21%

Other Asia a $m 34,648 29,546 33,491 46,261 51,523 11%

Korea, Rep. of $m 21,746 21,423 23,042 43,210 45,066 10%

India $m 14,427 9,449 11,612 26,418 21,265 5%

EU28 $m 11,616 18,633 15,546 13,711 14,386 3%

Other b $m 35,862 38,304 41,793 66,612 70,007 15%

Total $m 280,071 289,489 308,494 421,691 466,310 -

Notes: a Other Asia excludes China, Japan, South Korea and India b may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade,
Australia: Concepts, Sources and Methods 2018 Data confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Table 17.2: Principal markets for Australia’s iron ore exports

Unit 2018–19 2019–20 2020–21 2021–22 2022–23

China $m 63,467 84,786 124,820 108,307 104,783

Japan $m 5,757 7,038 9,080 10,257 8,077

Korea, Rep. of $m 4,667 6,222 9,033 8,293 6,887

Taiwan $m 1,768 1,876 3,070 2,793 1,978

India $m 237 21 9 34 67

Indonesia $m 44 27 40 38 38

Other a $m 1,614 2,891 6,922 2,766 2,270

Total $m 77,553 102,861 152,975 132,489 124,101

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 144

Table 17.3: Principal markets for Australia’s LNG exportsa
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

Japan $m 21,210 19,928 11,649 24,800 34,508

China $m 17,482 16,277 11,377 21,420 19,833

South Korea $m 5,307 5,161 3,343 11,473 18,310

Taiwan $m 2,343 2,593 2,237 7,521 12,070

Singapore $m 1,237 1,039 175 2,377 3,165

Malaysia $m 872 1,456 499 559 2,121

Other b $m 1,276 1,071 1,198 2,421 2,232

Total $m 49,727 47,525 30,477 70,571 92,238

Note: a Department of Industry, Science and Resources estimates based on International Trade Centre data. b may include ‘No Country Detail’ where various confidentiality restrictions may apply,
see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; International Trade Centre (2023); Department of Industry, Science and Resources (2023)

Table 17.4: Principal markets for Australia’s thermal coal exports

Unit 2018–19 2019–20 2020–21 2021–22 2022–23

Japan $m 11,630 8,347 7,009 23,819 37,724

Taiwan $m 3,162 2,386 2,060 6,636 9,456

Korea, Rep. of $m 3,812 2,843 2,568 6,819 4,774

China $m 4,230 3,930 487 0 3,505

Malaysia $m 905 534 560 1,432 2,363

Vietnam $m 664 1,041 711 1,688 2,205

Other a $m 1,555 1,295 2,613 5,863 5,495

Total $m 25,958 20,376 16,009 46,258 65,522

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 145

Table 17.5: Principal markets for Australia’s metallurgical coal exports
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

India $m 11,242 7,489 7,580 20,889 17,078

Japan $m 7,657 6,084 4,744 14,131 15,630

Korea, Rep. of $m 4,023 3,033 2,732 9,430 8,249

Taiwan $m 2,597 1,993 1,332 3,967 3,752

Netherlands $m 1,792 1,242 885 4,102 3,609

China $m 9,890 9,777 1,668 0 492

Other a $m 6,436 4,626 4,246 15,070 13,092

Total $m 43,637 34,245 23,187 67,588 61,901

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Table 17.6: Principal markets for Australia’s gold exports

Unit 2018–19 2019–20 2020–21 2021–22 2022–23

China $m 5,072 824 2,028 8,179 8,141

Hong Kong $m 4,370 3,341 1,410 4,893 3,778

Singapore $m 1,589 1,423 2,933 1,607 3,480

Switzerland $m 1,161 1,899 1,889 1,878 2,239

India $m 578 66 1,474 1,928 1,508

United States $m 127 3,079 3,937 1,382 1,251

Other a $m 5,969 13,762 12,433 3,334 4,008

Total $m 18,867 24,394 26,105 23,200 24,406

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 146

Table 17.7: Principal markets for Australia’s lithium exports
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

China $m na na na 4,725 19,828

Belgium $m na na na 85 169

Korea, Rep. of $m na na na 46 90

United States $m na na na 37 15

Other a $m na na na 7 8

Total $m na na na 4,899 20,110

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Table 17.8: Principal markets for Australia’s crude oil and refinery feedstocks exportsa
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

Singapore $m 1,946 1,360 1,661 1,512 1,470

Korea, Rep. of $m 694 337 89 649 1,093

China $m 1,008 1,033 161 158 1,015

Thailand $m 1,120 618 365 0 898

Malaysia $m 1,640 1,013 658 47 948

Japan $m 301 137 91 219 222

Other b $m 2,362 4,510 4,409 11,447 7,547

Total $m 9,071 9,009 7,434 14,031 13,192

Note: Department of Industry, Science and Resources estimates based on International Trade Centre data; b may include ‘No Country Detail’ where various confidentiality restrictions may apply,
see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; International Trade Centre (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 147

Table 17.9: Principal markets for Australia’s copper exports
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

China $m 3,606 3,787 2,747 1,958 2,351

Korea, Rep. of $m 683 651 1,315 1,375 1,415

Malaysia $m 1,241 824 850 961 1,084

India $m 444 463 626 941 457

Japan $m 1,833 2,126 17 18 1

Other a $m 1,962 2,357 5,885 6,875 6,964

Total $m 9,770 10,208 11,440 12,128 12,271

Notes: a may include ‘No Country Detail’ where various confidentiality restrictions may apply, see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data
confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2023)

Table 17.10: Principal markets for Australia’s alumina exportsa

Unit 2018–19 2019–20 2020–21 2021–22 2022–23

Bahrain $m 0 0 0 923 1,559

UAE $m 29 0 0 747 1,075
South Africa $m 921 577 na 433 660
Canada $m 17 0 0 424 638
Mozambique $m 644 453 54 431 573

Otherb $m 8,633 6,401 6,894 6,019 3,804

Total $m 10,245 7,431 6,948 8,977 8,308
Note: Department of Industry, Science and Resources estimates based on International Trade Centre data; b may include ‘No Country Detail’ where various confidentiality restrictions may apply,
see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; International Trade Centre (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 148

Table 17.11: Principal markets for Australia’s aluminium exportsa
Unit 2018–19 2019–20 2020–21 2021–22 2022–23

Korea, Rep. of $m 768 1,138 905 1,029 1,538

Japan $m 1,320 1,016 956 1,505 1,319

United States $m 841 247 256 596 533

Thailand $m 392 290 349 521 347

Taiwan $m 293 360 417 618 319

China $m 17 29 118 132 78

Other b $m 535 612 762 1,309 1,147

Total $m 4,166 3,692 3,763 5,710 5,282

Note: Department of Industry, Science and Resources estimates based on International Trade Centre data; b may include ‘No Country Detail’ where various confidentiality restrictions may apply,
see International Merchandise Trade, Australia: Concepts, Sources and Methods 2018 Data confidentiality for more information.
Source: ABS (2023) International Trade in Goods and Services, 5368.0; International Trade Centre (2023); Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 149

Appendices
Appendix A A.3 Time periods
Definitions and classifications The terms ‘estimate’, ‘forecast’ and ‘projection’ refer to different time
periods in this report. Estimate refers to a time period that has passed, but
for which full historical data is not yet available, while ‘forecast’ and
A.1 Exchange rates
‘projection’ refer to different periods in the future. It is important to
In this report, the AUD/USD exchange rate (Australian dollar relative to
distinguish between different future time horizons, as factors affecting
the US dollars) is based on the median of economic forecasters at the time
production, consumption and prices in the short-term differ from factors
that the report is prepared. The source is the Bloomberg survey of
affecting these components in the medium to long-term. Forecasts also
economic forecasters. become increasingly imprecise over longer time horizons, due to
World commodity prices are typically denominated in US dollars, and increased risk and uncertainty. For these reasons, the Department of
exchange rate movements can have a significant effect on the actual Industry, Science and Resources’ Office of the Chief Economist
outcomes of commodity prices and export earnings. A change in the value (DISR OCE) uses different terminology to distinguish between short-term
of the US dollar against other floating international currencies can forecasts and medium to long-term projections, as outlined in Table A2.
influence movements in world resources and energy prices. A change in
the Australian dollar against the US dollar will impact on export earnings Table A1: OCE terminology for different time periods/horizons
for domestic commodity exporters and producers. There is substantial Period Years Terminology
uncertainty surrounding any exchange rate forecast, with changes to
exchange rates influenced by changes in financial market sentiment, Time period has passed but
Historical complete data for the period is not Estimate
sometimes resulting in strong volatility. yet available
A.2 Conversion to real dollars
Short-term 1 to 2 years Forecast
Nominal values and prices are converted to real dollars using Australian
and US consumer price indexes (CPI). The Australian and US CPI Medium-term 3 to 5 years Projection
forecasts are based on the median of economic forecasters at the time
Long-term Beyond 5 years n/a
that the report was prepared. The source is the Bloomberg survey of
economic forecasters.
Source: Department of Industry, Science and Resources (2022)

Resources and Energy Quarterly | December 2023 151

A.4 Commodity classifications In this report, benchmark prices and Australian production and exports are
The DISR OCE defines exports for each commodity by a selected set of 8- forecast for 21 commodities, as shown in Table A2. In estimating a total for
digit Australian Harmonised Export Commodity Classification (AHECC) Australia’s resources and energy exports, the remaining commodities,
codes. Where possible, the choice of AHECC codes is based on alignment defined as ‘other resources’ and ‘other energy’, are forecast as a group.
with international trade data, to ensure that direct comparisons can be
made. For example, groupings for various commodities are aligned with
classifications used by the International Energy Agency, World Steel
Association, International Nickel Study Group, International Lead and Zinc
Study Group, International Copper Study Group and World Bureau of
Metal Statistics.

Table A2: Resources and energy commodities groupings and definitions

Resources (non-energy) Energy

Resource commodities are non-energy minerals and

Energy commodities are minerals and petroleum
Definition semi-manufactured products produced from non-
products that are typically used for power generation
energy minerals

Australian Harmonised Export Commodity 25 (part); 26 (part); 28 (part); 31 (part); 73 (part); 74;
27 (part)
Classification (AHECC) chapters 75; 76; 78; 79; 80; 81

Commodities for which data is published, forecasts are Aluminium; alumina; bauxite; copper; gold; iron ore; Crude oil and petroleum products; LNG; metallurgical
made and analysed in detail in this report crude steel; nickel; zinc, lithium coal; thermal coal; uranium

Notes: The AHECC chapter is the first two digits of the trade code. Groupings are made at the 8-digit level.
Source: Department of Industry, Science and Resources (2022)

Resources and Energy Quarterly | December 2023 152

 Appendix B Glossary

Term Description

A$ Australian dollar

ABS Australian Bureau of Statistics

AHECC Australian Harmonized Export Commodity Classification

AISC All-In Sustaining Cost — an extension of existing cash cost metrics and incorporates costs related to sustaining production.

Base metals A common metal that is not considered precious (includes aluminium, copper, lead, nickel, tin, zinc)

Bbl Barrel

Bcm Billion cubic metres

Benchmark A standard specification used to price commodities.

BF and BOF Blast furnace and basic oxygen furnace — used in an integrated steelmaking process that uses iron ore and coal.

Bulks Non-liquid and non-gaseous commodities shipped in mass and loose (iron ore, coal, bauxite)

CAGR Compound annual growth rate

Capex Capital expenditure

CFR Cost and freight — Seller clears exports, and pays freight.

CIF Cost, Insurance, and Freight

Coal Seam Gas (CSG) Natural gas found in coal seams. Also known as Coal Bed Methane (CBM)

Coke Made by heating coal at high temperatures without oxygen, and used to reduce iron ore to molten iron saturated with carbon, called hot metal

Resources and Energy Quarterly | December 2023 153

 Conventional gas Natural gas that can be produced from reservoirs using traditional techniques. Contrasts with unconventional gas.

COVID-19 2019 Novel Coronavirus

CPB CPB Netherlands Bureau for Economic Policy Analysis

Consumer Price Index — measures quarterly changes in the price of a basket of goods and services which account for a high proportion of
CPI
expenditure by the CPI population group (i.e. metropolitan households).

Crude steel Steel in the first solid state after melting, suitable for further processing or for sale.

DES Delivered Ex Ship — price of LNG including shipping and insurance.

DISR Department of Industry, Science and Resources

DMO Domestic Market Obligation — a policy to reserve energy commodities for domestic usage

DRC Democratic Republic of the Congo

ECB European Central Bank

An increase in the capacity of an economy to produce goods and services, compared from one period of time to another. It is measured in
Economic growth
nominal or real gross domestic product (GDP).

EIA The United States Energy Information Administration

EAF Electric arc furnace — a furnace that melts steel scrap using the heat generated by a high power electric arc.

ETF Exchange Traded Fund — an exchange traded fund that allows investors to invest in gold on the exchange.

EUV Export unit value — export value/volumes exported

EV Electric vehicle

f Forecast — a two year outlook

FEED Front end engineering design

FID Final investment decision

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 FOB Free on board — seller clears export, buyer pays freight.

GAD Gross air dried basis — For measuring coal quality.

GAR Gross as received basis — For measuring coal quality.

GBP Great Britain Pounds

GDP Gross Domestic Product — measures the value of economic activity within a country/group.

GFC Global Financial Crisis — the period of extreme stress in global financial markets and banking systems between mid-2007 and early 2009.

GJ Gigajoule

GST Goods and Services Tax — a value-added tax levied on most goods and services sold for domestic consumption.

Hard coking coal — The best grade of metallurgical coal used in the steel production process. Australian hard coking coal is regarded as the
HCC
industry benchmark.

IEA International Energy Agency

IMF International Monetary Fund — an international organisation that promotes international financial stability and monetary cooperation.

IMO International Maritime Organisation

IP Industrial Production — measures the output of the industrial sector that comprises mining, manufacturing, utilities and construction.

IPO Initial public offering — a process of offering shares of a private corporation to the public in a new stock issuance.

ISM US Institute for Supply Management

ISM Institute of Supply Management

Japan Customs-cleared Crude (or Japan Crude Cocktail) — average price of crude oil imported by Japan and a common price index in long-term
JCC
LNG contracts.

JFY Japanese fiscal year

kcal/kg Kilocalories per kilogram

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 kt Thousand tonnes

ktpa Kilotonnes per annum

LBMA London Bullion Market Association

LCE Lithium Content Equivalent

Li OH Lithium Hydroxide

LME London Metal Exchange

LNG Liquefied natural gas

LNY Lunar New Year

LPG Liquefied petroleum gas

LVPCI Low volatile pulverised coal injection — a type of low volatile coal used in the PCI process

m Million

MMbtu Million British thermal units

Mt Million tonnes

mtpa Million tonnes per annum

MW Megawatts

Nameplate capacity The theoretical maximum annual production capacity

NAR Net as received basis — For measuring coal quality

NDRC China’s National Development and Reform Commission

NEV New energy vehicle — term used for plug-in electric vehicles eligible for public subsidies (battery electric vehicles and plug-in hybrid vehicles)

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 OCE Office of the Chief Economist

OECD Organisation for Economic Co-operation and Development

OPEC Organisation of Petroleum Exporting Countries, a formal alliance of 14 countries to collaborate to manage the world oil market

OPEC+ Informal term for agreements between OPEC and ten other oil-producing countries (which are not members of OPEC)

Oz Ounce

PCE Personal Consumption Expenditure — a measure of the changes in price of consumer services and goods.

Pulverised coal injection — PCI coal is used for its heat value and injected directly into blast furnaces as a supplementary fuel, which reduces the
PCI
amount of coke required.

PCI Pulverised coal injection — a process used in blast furnace operations

PM The afternoon price of gold set at 3.00pm each business day at the London Bullion Market Association

PMI Purchasing Managers Index — an indicator of economic health for manufacturing and service sectors.

Purchasing Power Parity — a way of measuring economic variables in different countries that equalise the purchasing power of different
PPP
currencies

RoW Rest of world

s Estimate — Incomplete data or subject to revision

Shale gas Natural gas found in shales

SDR Special drawing right

SHFE Shanghai Futures Exchange

Semi-soft coking coal — A type of metallurgical coal used in the steel production process alongside hard coking coal, but results in a lower coke
SSCC
quality and more impurities.

Tariff A tax on imports or exports that is used by governments to generate revenue or to protect domestic industries from competition.

Tight gas Natural gas found in low quality reservoirs

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 TWI Trade Weighted Index — a measure of the foreign exchange value of the US dollar against a basket of major foreign currencies.

U3O8 Triuranium octoxide — a compound of uranium.

UAE United Arab Emirates

UK United Kingdom

Unconventional gas Natural gas that is more difficult to extract, including coal seam gas, shale gas and tight gas. Contrasts with conventional gas.

US United States

US$ United States dollar

WEO The International Energy Agency’s World Energy Outlook

WTI West Texas Intermediate crude oil price

z Projection a five year outlook

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About this edition
The Resources and Energy Quarterly (REQ) contains forecasts for the The Resources and Energy Quarterly uses IMF economic growth forecasts
value, volume and price of Australia’s major resources and energy as the basis of its world growth forecasts.
commodity exports. In this report, commodities are grouped into two broad categories,
A ‘medium term’ (five year) outlook is published in the March quarter referred to as ‘resources’ and ‘energy’. ‘Energy’ commodities comprise
edition of the Resources and Energy Quarterly. Each June, September metallurgical and thermal coal, oil, gas and uranium. ‘Resource’
and December edition of the Resources and Energy Quarterly features a commodities in this report are all other mineral commodities.
‘short term’ (two year) outlook for Australia’s major resource and energy Unless otherwise stated, all Australian and US dollar figures in this report
commodity exports. are in nominal terms. Inflation and exchange rate assumptions are
Underpinning the forecasts/projections contained in the Resources and provided in tables 2.1 and 2.2 in the Macroeconomic outlook chapter.
Energy Quarterly is the outlook for global resource and energy commodity Information in this edition of the Resources and Energy Quarterly is
prices, demand and supply. The forecasts/projections for Australia’s current as of 12 December 2023.
resource and energy commodity exporters are reconciled with this global
context. The global environment in which Australia’s producers compete
can change rapidly. Each edition of the Resources and Energy Quarterly
factors in these changes and makes alterations to the forecasts and
projections by estimating the impact on Australian producers and the value
of their exports.

Resources and Energy Quarterly publication schedule

Publication Expected release date Outlook period final year

March 2024 27 March 2024 Australian data: 2028–29

World data: 2029
June 2024 1 July 2024 Australian data: 2025–26
World data: 2026
September 2024 30 September 2024 Australian data: 2025–26
World data: 2026
December 2024 20 December 2024 Australian data: 2025–26
World data: 2026
Source: Department of Industry, Science and Resources (2023)

Resources and Energy Quarterly | December 2023 159