MARKET CONDITIONS
Average prices for most mineral commodities increased in 2006-07 compared to the previous year, largely the result of strong global demand driven in part by the continuing strong economic growth of China. Reserve Bank of Australia data shows a 16% increase in its US dollar non-rural commodity price index for 2006-07. In Australian dollar terms this translated to a 10% increase, reflecting a 6% appreciation in the Australian dollar.
As reported in ABARE's Australian Mineral Statistics, export earnings for most minerals increased in 2006-07, due principally to the rise in commodity prices. On average the export unit returns for total mineral resources were 16% higher than in 2005-06. At the same time, the volume of mine production indexes show production of total minerals to have decreased by 4%.
Export earnings for black coal fell by 9% to $21.8b in 2006-07. The average Australian dollar export price for coking coal decreased by 19%, offset by a rise of 9% in export volumes. The average price for steaming coal decreased more moderately, by 7%, with export volumes rising by 1%. Production of black saleable coal was less than 6% higher than the previous year.
Iron ore export earnings were $15.5b, an increase of 21%. The volume of iron ore exported increased by 7%, slightly less than the 9% increase in production. The average export unit value of iron ore rose by 12%, reflecting the effect of a 19% increase in contract prices in May/June 2006. A further increase of 9% was agreed by major steel producers in May/June 2007.
The world trade weighted average price of crude oil in 2006-07 was A$75.08 per barrel, an increase of 3% over 2005-06. Production increased by 24%, the increase in production was mainly attributed to new projects coming on line. Export earnings for liquefied natural gas (LNG) increased 18% to $5.2b. Export volumes of LNG reached their highest level at 15.2Mt. In previous years LNG production was solely from the North West Shelf (Western Australia), but in February 2006 production from the Bayu-Undan fields commenced when the LNG plant in Darwin (Northern Territory) began operating.
Higher average US dollar prices for copper (up 62%) and zinc (up 73%) contributed to significant increases in export earnings for these commodities.
A number of large mining businesses report in the Economic Activity Survey for financial years ending on dates other than 30 June. For this reason, these changes in market conditions may not be directly reflected in the data of financial and economic performance. See Explanatory Notes paragraph 27 and 28, where the contribution of such businesses is quantified.
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