If it hadn't been for that great inflationary surge from March onwards, with gold, oil copper, plus iron ore and coal all rising, we would have seen lower export income for 2008.
Total earnings from Australia's mineral resource exports rose 11% to $116 billion in 2007-08, but it could have been a lot more, given the stronger dollar during the year.
ABARE (the Australian Bureau of Agricultural and Resource Economics) said this rise reflected the combination of higher prices for energy and some mineral commodities and growth in export volumes for most commodities and these factors more than offset the effect of a 14% appreciation of the Australian dollar.
But with the Australian dollar now down more than 19% in the past seven weeks, and running around the levels of August 2007, the value of 2009 exports will be much harder to work out because most commodities have experienced very sharp falls in price in recent week (and a bit longer in the case of some of the metals).
Our currency fell under 80 US cents yesterday and the trade weighted index is also down, indicating we have lost ground across the board. It hit a low of 79.12 US cents in New York and ended around 79.65.
In fact the 11% rise in export income for minerals came as a result of soaring prices for oil and related products, and the jump in iron ore, coking and thermal coal export receipts because of big price rises applying from April 1.
Higher gold and copper prices (it hit an all time high in May, gold's all time high was in March, Oil's was in July).
In fact it was that rise in the June quarter which completely changed the picture so far as the question of export revenues for the 2007-08 financial year is concerned.
Lucky country indeed, and that surge in revenue showed up in a 13.6% rise in our terms of trade in the June quarter.
ABARE figures for the March quarter show the impact of slumping prices, especially for metals.
"In the March quarter 2008, the index of export prices of Australian mineral resources (export unit returns) increased marginally by 0.5 per cent compared with the December quarter 2007, as higher energy prices were almost fully off set by lower prices for metals and other minerals.
"Strong oil and coal prices supported a 5 per cent increase in prices for energy minerals.
"Compared with the March quarter 2007, the index of export prices was nearly 4 per cent lower, with higher energy prices (up nearly 8 per cent) more than offset by a decline in prices for metals and other minerals (down 10 per cent).
"Prices for metals and other minerals have declined over the past 12 months, largely as a result of increased supply for some commodities and weaker demand growth driven by the uncertainty surrounding the outlook for the US economy."
But in its review of 2008 this week, the Bureau showed a very different picture on pricing to that at the end of March.
"In 2007-08, the index of export prices of Australian mineral resources (export unit returns) increased by 25 per cent compared with 2006-07.
"Record price increases for energy minerals during the year, such as oil (53 per cent), thermal coal (19 per cent) and liquefied natural gas (LNG) (16 per cent), underpinned this rise, with the index of energy export prices increasing by 54 per cent.
"Prices for metals and other minerals also increased by nearly 8 per cent as higher world prices for gold, silver, lead and copper offset price declines for zinc, nickel and aluminium.
"A significant proportion of the growth in the index of export prices occurred in the June quarter with total mineral export prices increasing by 21 per cent compared with 4 per cent in the previous quarter.
So the 4% drop in march had changed to a 4% rise with revisions, and then risen again in the June quarter to record levels.
The growth in the June quarter reflects the increase in contract prices of metallurgical and thermal coal, and iron ore, which took effect from April, as well as higher crude oil and gold prices."
More interestingly, our production of energy and minerals was steady in 2007-08, with higher production of metallic metals broadly offsetting lower production of energy minerals.
So if the prices that had ruled during the March quarter had continued into the final quarter of the year, we would have been looking at a noticeable fall in earnings from mineral exports.
Looking at various industries, ABARE said:
In 2007-08, there were significant increases in export earnings for: iron ore, up $4.8 billion (31 per cent) to $20 billion; crude oil and condensate, up $2.2 billion (26 per cent) to $10.5 billion; thermal coal, up $1.6 million (23 per cent) to $8.3 billion; manganese ore, up $1.1 billion (218 per cent) to $1.5 billion; metallurgical coal, up $755 million (5 per cent) to $15.8 billion; LNG, up $632 million (12 per cent) to $5.9 billion; refined gold, up $582 million (6 per cent) to $10.9 billion and uranium, up $227 million (34 per cent) to $887 million.
Apart from gold, LNG and lead, which recorded declining export volumes, higher export values for the other commodities reflect both increased volumes shipped and higher export prices.
Commodities which recorded a decline in export earnings in 2007-08 include: nickel, down $2.1 billion (33 per cent) to $4.2 billion; zinc, down $932 million (22 per cent) to $3.4 billion; aluminium, down $679 million (12 per cent) to $5 billion; and alumina, down $432 million (7 per cent) to $5.8 billion.
The decline in the export values for zinc, aluminium and alumina reflect lower prices more than offsetting higher export volumes, while the fall in the value of nickel earnings is the result of both lower export volumes and lower world prices.
Commodities for which production increased included: lead bullion (33 per cent), rutile concentrate (19 per cent), zinc ores and concentrates (14 per cent), iron ore (13 per cent) and silver ores and concentrates (12 per cent).
Lead bullion production increased in 2007-08 as recent expansions to the Mt Isa zinc-lead concentrator in Queensland and the mining of higher grade ores increased smelter output.
Rutile concentrate production was also higher as a result of increased production at Consolidated Rutile and Iluka's Queensland Douglas operation, offsetting lower production at Iluka's Western Australian operations.
Silver ores and concentrates production recovered in 2007-08, as annual production at BHP Billiton's Cannington mine in Queensland returned to capacity following maintenance in 2006-07.
Zinc production was higher as a result of one-off production at Perilya's Beltana mine in South Australia and increased production at Century, Cannington and Mt Isa mines in Queensland.
Iron ore production was also higher as BHP Billiton, Rio Tinto and Fortescue Minerals increased output from new mines in Western Australia.
Commodities which recorded a decline in production included: refined tin (100 per cent), diamonds (33 per cent), intermediate nickel (22 per cent), crude oil and condensate (10 per cent) and mined gold (9 per cent).
Production from Australia's only refined tin project, Sons of Gwalia's Greenbushes project in Western Australia, ceased in early 2007 when the company's administrators closed the mine. This meant no refined tin was produced in Australia in 2007-08.
Diamond production was lower as a result of variability in mine production at Rio Tinto's Argyle mine in Western Australia where the open pit operation is approaching the end of its life and the company continues its transition toward an underground operation.
Production at Argyle was also affected by cyclone activity in the March quarter which increased water levels at the mine, restricting access to higher grade ores.
Intermediate nickel production was lower as a result of reduced output from the Kalgoorlie nickel refinery in Western Australia. Production of crude oil and LPG declined in 2007-08 because of technical difficulties at a number of oil fields and natural field decline.
Gold production was also lower as a result of the closure of a number of gold operations with lower production also reflecting the mining of lower grade ores. Gold output was the lowest since 1989, according to ABARE.
Gold prices fell below $US750 an ounce overnight Thursday to take the fall in 2008 to 28%. very hard to see another year of solid export earnings from gold on that basis.
