Australia's Outlook Dim as Bulk Commodities Lose Momentum

Arabian Post

29-06-2025

Australia's earnings from mining and energy exports are set to decline over the coming years, with rising gold revenues unable to fully offset weak demand and price falls in iron ore, liquefied natural gas and coal. Government projections show a fall from A$415 billion in 2023–24 to A$385 billion in 2024–25, and further to A$352 billion by 2026–27.
The Office of the Chief Economist highlights that surplus global supply—particularly in iron ore and LNG—is driving down prices. Forecasts indicate iron ore revenue declining from A$116 billion this year to A$97 billion by 2026–27. Meanwhile, LNG export earnings are projected to slow as US and Qatari output expands, putting downward pressure on prices.
Gold is emerging as a relative bright spot. Government figures anticipate gold export earnings reaching A$56 billion next financial year, making it Australia's third‑largest resource export after iron ore and LNG. That upswing is fuelled by both stronger prices and increased volumes, benefiting from investor flows and central‑bank demand amid global uncertainty.
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The minister for resources confirms that higher returns from gold, copper and lithium are helping to partly mitigate losses from falling iron ore, coal and LNG prices. Lithium revenues are forecast to rise from A$4.6 billion to A$6.6 billion by 2026–27. Copper too is expected to enjoy gains, driven by global demand for electrification and low‑emission technologies.
Despite these modest offsets, headwinds persist. Trade tensions—particularly from US tariffs—have intensified uncertainty, with investment decisions delayed and commodity demand subdued. Analysts warn that a slowing Chinese economy, rising global production capacity and continuous supply growth in key markets will keep downward pressure on prices.
Notably, the iron ore sector faces structural constraints. Higher production from new mines in Australia, Brazil and Africa coincides with softening Chinese steel demand, challenging the nation's pricing power. Experts underscore that iron ore export earnings may drop below A$100 billion for the first time this decade by 2026–27.
Coal is also on a downward trajectory: metallurgical and thermal coal values are expected to fall from record highs as alternatives gain traction and global supply increases. The energy transition, coupled with shifting investor sentiment and policy interventions, continues to erode demand.
Still, some longer‑term resilience remains. Critical minerals such as copper, lithium, uranium and rare earth elements benefit from tailwinds linked to clean‑energy infrastructure. Copper earnings are projected to climb significantly, while uranium demand is buoyed by nuclear power expansion. Australia's first rare‑earth refinery has now begun operations, potentially boosting export diversity.
Market watchers caution that Australia's diversified export profile provides some buffer, though it may not fully insulate the economy. The government's quarterly forecast warns that earnings could plateau around A$343 billion by decade's end under current trajectories.
Resource sector leaders have urged policy clarity to support investment amid these shifts. Industry groups argue that without reforms, Australia risks lagging in emerging markets such as green steel and battery metals. They call for streamlined approvals, targeted incentives, and regulatory certainty to foster competitiveness.
Emerging competition from the United States and Qatar in LNG, and expanding capacity in Africa and Brazil for iron ore, adds complexity. At the same time, the domestic transition to renewables, industrial decarbonisation, and evolving supply chains present both risks and opportunities for Australia's mining future.
Australia's export sector now navigates simultaneous pressures: softer bulk‑commodity demand, expanding global supply, and an accelerating shift toward critical minerals. The coming years will be marked by a transition from traditional export staples to a broader, innovation‑driven resource base.