Contents
Executive Summary

4

Overview

5

Macroeconomic Outlook

16

Steel

28

Iron Ore

38

Metallurgical Coal48

Thermal Coal

57

Gas

70

Oil

82

Uranium

91

Gold

97

Aluminium

109

Copper124

energy exports

162

Nickel

134

Appendix A: Definitions and classifications

170

Zinc

143

Appendix B: Glossary

172

Lithium

150

About the edition

178

Resources and Energy Quarterly | March 2024

Resources insights
Macroeconomic Outlook – Box 2.1
Commodity demand prospects will be underpinned
by urbanisation and investment in Australia’s major
trading partners

20

Lithium – Box 15.1
China’s battery and electric vehicle industries
lead global rivals

152

Principal markets for Australia’s resource and2

Further information

Creative Commons licence

For more information on data or government initiatives please access thereport from the Department’s website at: www.industry.gov.au/oce

Attribution 4.0 International Licence
CC BY 4.0

EditorDavid Thurtell

Chapter Authors
Resource and energy overview: David Thurtell
Macroeconomic overview: Chris Mornement and Kelly Sun
Gold: Chris Mornement
Steel and iron ore: Colin Clark
Metallurgical coal and thermal coal: Ranjini Palle
Uranium: Sufyan Saleem
Gas: Mark Gibbons
Zinc: Colin Clark
Oil: Sufyan Saleem
Aluminium, alumina and bauxite: Andy Lee
Copper: Eshaq Farahmand
Nickel: Andrew Nash
Lithium: Justin Tang

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Wherever a third party holds copyright in material contained in thispublication, the copyright remains with that party. Their permission may berequired to use the material. Please contact them directly.

Attribution
Content contained herein should be attributed as follows:

Acknowledgements
The authors would like to acknowledge the contributions of:Michelle Dowdell, Silvia Gong, James Hutson, Alfonso Martínez Arranz,andShevaun Fitzmyers.
Cover image source: Shutterstock, Christoph Schaarschmidt

Department of Industry, Science and Resources, Commonwealth ofAustralia Resources and Energy Quarterly March 2024.
The Commonwealth of Australia does not necessarily endorse the content
of this publication. Requests and inquiries concerning reproduction andrights should be addressed to req@industry.gov.au

ISSN 1839-5007

Disclaimer

Vol. 14, no. 1

The views expressed in this report are those of the author(s) and do notnecessarily reflect those of the Australian Government or the Department ofIndustry, Science and Resources.

© Commonwealth of Australia 2024

Ownership of intellectual property rights
Unless otherwise noted, copyright (and any other intellectual property rights,
if any) in this publication is owned by the Commonwealth of Australia.

Resources and Energy Quarterly | March 2024

This publication is not legal or professional advice. The Commonwealth ofAustralia does not guarantee the accuracy or reliability of the informationand data in the publication. Third parties rely upon this publication entirely attheir own risk.

3

Executive Summary
Australian resource and energy export earnings are forecast to be$417 billion in 2023–24. This is broadly consistent with the December
2023 Resources and Energy Quarterly (REQ) but down around 10% froma record $466 billion in 2022–23 following the spike in energy prices due
the fallout from the Russian invasion of Ukraine. In 2024–25, export
earnings are forecast to fall further to around $369 billion, reflecting further
bulk commodity price declines and a rise in the AUD/USD. Through therest of the outlook period (to 2029), export values are expected to level out
as commodity price declines slow and the AUD/USD lifts modestly.
World economic growth remains soft, weighed down by relatively tightfinancial conditions. However, key markets have continued to support
commodity demand. US economic growth has been robust despite interest
rate hikes in the past 2 years. In China, strong investment in infrastructure
and manufacturing capacity has helped resource and energy commodity
demand in the face of weak demand from the residential property sector.
Chinese demand is likely to continue to shape commodity markets overthe next five years. However, Indian economic growth is currently thestrongest in the world, and its growing manufacturing base, strong
infrastructure spending and demographics, all suggest rising per capita
consumption of resource and energy commodities. By 2029, India willaccount for a significantly larger share of world commodity demand.

challenges required to achieve this transformation will take both time andsubstantial capital investment. There are already many pilot steel plants
under construction around the world, especially hydrogen-based DRI
operations, most of which are expected to begin over the next two years.
Aluminium producers are increasingly resorting to renewable power toreduce their emissions, and this trend will accelerate over the outlook
period. This will include the use of green hydrogen.
The prices of lithium and nickel reached high levels in 2022 and H1 2023.
Combined with strong supply growth since 2020, softer-than-expected(cyclical and structural) demand for both metals has since seen market
surpluses develop. Since the last REQ, rising inventories have seen theprices of lithium and nickel hit 5-year lows. The relatively weak priceoutlook has contributed to announced closures and production cuts by anumber of key nickel and lithium producing nations (including Australia)
and added to existing supply chain uncertainties associated with Western
nations’ policy measures to secure future supply.
Some high-cost nickel producers may exit the market permanently.
However, nickel’s use in a widening array of materials and technologies
means a tightening global balance and improved prices in the latter half ofthe outlook period. Lithium remains a central component of batteries usedin numerous technologies. Australian lithium exports are likely to remain
substantial, with most lithium producers in Australia likely to remain
globally competitive.

The global energy transition will also be a key factor in resource andenergy commodities over the outlook period. While the transition will see
increased demand for commodities used in low emission technologies (forexample, iron ore, aluminium, copper, nickel and lithium), it will reducedemand for other commodities (such as some fossil fuels). Moreover, thecontinuing evolution of technologies during the energy transition increases
the challenge of forecasting future demand, supply and prices.

There are a number of factors that could quickly outdate some of theforecasts, including:

The decarbonisation of steel/aluminium production and supply chains willaffect growth and trade patterns over the outlook period to 2029.
Overcoming the substantial technological, energy and feedstock

Resources and Energy Quarterly | March 2024•

a further widening of Western sanctions on Russia to include basemetals, which may improve the prospects for Australian metal
producers, particularly of nickel and aluminium.

•

any further widening in the Hamas-Israel conflict could disrupt Middle
East oil/LNG supply and raise prices, hurting world economic growth.

•higher-than-normal odds of a new La Niña episode starting in H2
2024, which raises the risk of wet weather and flooding that heavily
impacted mines, transport routes and ports in Australia in 2021-23.
4

Resources and Energy Quarterly | March 2024

5

1.1

Summary The near-term outlook for Australian resource and energy commodity
exports has improved slightly in net terms since the December 2023
REQ. Major economies have avoided a recession, and the outlook is for
an improvement in world economic growth in 2025 once monetary policy
becomes less restrictive in major Western economies. The global energy
transition and firm growth in China and India will maintain the demand
for minerals over the rest of the outlook period.
 Relatively weak growth in world demand and rising world commodity
supply will see Australia’s resource and energy exports decline to$417 billion in 2023–24 from $466 billion in 2022–23. Another decline islikely in 2024–25, as commodity prices drift down and the AUD/USD lifts.
Further out, lower bulk commodity prices will dampen export earnings.
 Recent falls in nickel and lithium prices have been driven by supply
continuing to outpace demand, and iron ore prices have softened as
worries persist over the real estate sector in China.

1.2

Macroeconomic, geopolitical and policy factors

Inflation is declining, opening the way for less restrictive monetary policies

sustainable footing and support economic growth: the focus of support
measures has been on fiscal rather than monetary policy, including
infrastructure spending. Consumer spending has been slower withconfidence hurt from property price declines.
Chinese economic growth is forecast to fall to 3-4% in the latter part of theoutlook period. While this is much lower than growth averaged in the 20002020 period, it comes off a higher base — suggesting still high demand inabsolute terms. Chinese commodity demand is thus likely to (still) behighly influential over the next five years. However, India is likely to
account for a much larger share of world demand by the end of the outlook
period with a growing manufacturing base, strong infrastructure spending
and favourable demographics.
Low emission technologies will be key driver of future supply and demand
Government policies to drive ‘net zero’ and geostrategic interests are set
to continue to impact both the supply and demand for commodities used inlow emission technologies. Under the US Inflation Reduction Act, gradatedchanges to content requirements are set to impact supply chains (rightback to mine level) of EVs and other low emission technologies.

Since the last REQ, labour markets in the major Western economies havelost some tightness and inflation has continued to moderate. Western
central banks are expected to start withdrawing their restrictive monetarystance in H2 2024. Moves towards a more neutral monetary stance by theworld’s major central banks will support a rise in world economic growthover the next five years.

Climate drivers have shifted since the last REQ: the current El Niño
weather event has peaked and is now forecast to end in H1 2024. Someweather forecasters attach a higher-than-normal chance of the start of a
La Niña episode in H2 2024. Should this eventuate, Australian miners may
experience a repeat of the wet weather and the associated flooding ofmines, transport routes and ports that hampered output in 2021-2023.

Over the same time, world economic growth will be boosted by theongoing investment needed for the global energy transition. Demographic
factors will keep labour markets relatively tight over the forecast period,
maintaining relatively high household spending on goods and services,
and improving government budgets.

Like other sectors of the economy, the increased use of AI could boost
resource and energy commodity supply by lowering the cost of
exploration, production and transportation and increasing the efficiency of
inventory management. Demand may also be increased through thebroader impact of AI on economic growth.

Investment in manufacturing capacity has helped support Chinese growth
as the property sector shake out continues. China’s government continues
to roll out new measures to put local government finances on a more

Geopolitical risks continue to challenge commodity markets

Resources and Energy Quarterly | March 2024

Geopolitical developments continue to pose risks to the outlook forcommodity markets. The widening of the Hamas-Israel conflict has already6

AUD has attracted some support
The AUD/USD has risen slightly in recent months. This reflects market
optimism over Chinese government efforts to stabilise the nation’s property
sector, and currency market expectations that moves in Australian-US
interest rate differentials will encourage AUD buying. The consensus
forecast adopted is for the AUD/USD to lift modestly in the outlook period.

1.3

Export values

Australia’s export values are forecast to be $417 billion in 2023–24
The world economic slowdown and fewer supply disruptions generally
reduced commodity prices over the past quarter. The Resources andEnergy Export Values Index fell 8% from the March quarter 2023: a rise involumes only partly offset the impact of a double digit fall in prices.
There has been a significant upward revision to the aggregate forecasts
since December. Resource and energy exports are forecast to be$417 billion in 2023–24 and $369 billion in 2024–25. Exports are forecast
to fall to around $300 billion in real terms in 2028–29 (Figure 1.1).

Resources and Energy Quarterly | March 2024

125

500

100

400

75

300

50

200

25

100

0
2008–09

2013–142018–192023–24
VolumesValues (rhs)02028–29

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

Weak demand and improved global commodity supply are expected todrive a fall in prices, more than offsetting the impact of a forecast small
rise in export volumes (Figure 1.2). Export values are forecast to fall by
12% to $369 billion in 2024–25, driven by lower prices.
Within the totals, energy export earnings are set to show double digit falls.
LNG earnings are forecast to fall by $6 billion to $65 billion in 2024–25,
and then settle at $50-55 billion in the period from 2025–26 to 2028–29.
Lower prices will drive the falls. Thermal coal exports are forecast to falleven more sharply: from $66 billion in 2022–23 to $36 billion in 2023–24
and $30 billion in 2024–25. Exports should settle at $24-27 billion
thereafter. Uranium should earn Australia $1 billion in 2023–24, and morethan $2 billion after 2024–25.
Among resource commodities, iron ore remains the largest earner,
forecast to earn about $136 billion in 2023–24, but fall to $111 billion in
2024–25. The sharp retracement in lithium prices is expected to seelithium exports fall from $20 billion in 2022–23 to $11 billion in 2023–24.
Export values should then stabilise at around the $10-11 billion mark.

7

2023–24 A$ billion

More broadly, risks to the aggregate revenue forecasts appear evenly
balanced. The impact of current relatively low prices for lithium and nickel
being sustained for longer than we expect could easily be offset by iron ore
prices holding up better than expected. Unemployment may rise as theimpact of official interest rate hikes peaks. A widening of the Hamas–Israel
conflict poses a significant risk to energy commodity and financial markets.
A further widening of sanctions against Russia to include base metals may
benefit Australian producers in the medium term.

Figure 1.1: Australia’s resource and energy export values/volumes

Index, 2023–24 = 100

had an impact on energy markets: attacks on shipping in the Red Sea
have forced cargo ships to take alternate routes, adding to voyage time
and thus shipping costs. The ongoing Russia invasion of Ukraine willcontinue to harm Russia’s ability to produce/export resource and energy
commodities; Russian miners face rising borrowing costs, impacting on
their ability to develop new projects and expand existing ones. Potential
investment in Russia by Chinese and Indian interests will likely only partly
replace Western investment/participation.

Figure 1.2: Annual growth in Australia’s resources and energy export
values, contributions from prices and volumes

Figure 1.3: Resource and energy export prices, A$ terms
160

50

140
Index , 2023–24 = 1004030

Per cent

20
10
0

100
80
60
40

-10

20

-20

0
2008–09-30
2008–09

2012–13

2016–17

Prices

2020–21

Volumes2024–25

2028–29

Values

Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

1.4

120

PricesSince the December 2023 Resources and Energy Quarterly, resource andenergy prices have generally declined in US$ terms (Figure 1.3). Slow
world economic growth has overwhelmed the impact of new efforts by the
Chinese government to boost growth. Prices are likely to fall further but
remain above pre-pandemic levels, as supply remains relatively tight forsome commodities (such as coal, iron ore and copper).
In Australian dollar terms, the Resources and Energy Commodity Price
Index fell by 2% (preliminary estimate) in the March quarter 2024, to be
down 11% on a year ago. In US dollar terms, the index fell by 1% in thequarter, to be down 14% on a year ago. Resource export prices (inA$ terms) were unchanged from the March quarter 2023, while energy
prices fell by 21%.

Resources and Energy Quarterly | March 2024

2013–14

Resources

2018–19
Energy2023–24

2028–29

Total resources and energy

Notes: The export price index is based on Australian dollar export unit values (EUVs, export
values divided by volumes); the export price index is a Fisher price Index, which weights
each commodity’s EUV by its share of total export values.
Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

Iron ore prices have declined in net terms in recent months, hurt byworries of falling Chinese demand and high Chinese stockpiles (Figure1.4). The price of metallurgical coal has held relatively high, withproduction problems adding to firm demand. Some Russian supply
remains stranded from world markets and some Queensland mines havecontinued to be affected by bad weather.
Energy prices continue to ease, as demand and supply factors push in thesame direction. The enormous supply chain disruptions that pushed prices
high in 2022 and 2023 have continued to ease, with Western European
nations obtaining supply elsewhere from Russia. Slow world economic
growth has constrained energy usage. Thermal coal prices are still above
pre-pandemic levels, with some Russian production shut in.

8

Figure 1.4: Bulk commodity prices

Indonesian output and moderating (cyclical) global demand. Closures andcutbacks are occurring in many nickel producing nations, and further
expansions in Indonesia will likely be put on hold if prices fall back to
January/February 2024 lows. Exchange inventories of Russian aluminium
are rising, shunned by Western consumers. Stocks of most base metals
are low for this stage of the economic cycle, which skews price risks to theupside. Rising infrastructure-related demand (particularly for the global
energy transition) should support prices over the outlook period, combinedwith broader demand following easing monetary policy.

750

450
300

Figure 1.5: Base metal prices
1500
Jun–15225
200
Jun–17 Jun–19 Jun–21 Jun–23
Iron ore
Metallurgical coalJun–25 Jun–27
Thermal coalJun–29Notes: Prices are in US dollars, and are the international benchmark prices
Source: Bloomberg (2024); Department of Industry, Science and Resources (2024)

LNG prices are declining as the Northern Hemisphere winter passes andEuropean storage levels remain relatively high. Prices should come under
downward pressure from rising US and Qatari supply in 2025. Gas/LNG
markets remain more vulnerable to supply shocks following the strandingof some Russian supply.
Oil prices have risen modestly since the last REQ, with OPEC+ extending
output cuts to offset the impact of weak demand. However, the rising takeup of EV’s will detract from demand over the outlook period.
The gold price has hit a record above US$2,100 since the last REQ, on
the back of a number of supportive factors: the prospect of lower interest
rates in most economies in 2024–25, geopolitical tensions, and worries
over the Chinese property market.
Base metal prices have been mixed, impacted by weak construction andmanufacturing in major economies (Figure 1.5). The price of nickel has
steadied after falling throughout 2023: inventories are rising due to highResources and Energy Quarterly | March 2024

Index, June 2015 = 100

Index, June 2015 = 100

600

175
150
125
100
75
50
25
0
Jun–15

Jun–17 Jun–19
Aluminium

Jun–21 Jun–23 Jun–25
CopperNickelJun–27
Zinc

Jun–29Notes: Prices are in US dollars, and are the international benchmark prices
Source: Bloomberg (2024); Department of Industry, Science and Resources (2024)

Since the last REQ, lithium prices (spodumene and lithium hydroxide)
have dropped to their lowest level since 2019. Market surpluses have seen
inventories rise, and producers in a number of countries (including
Australia) have announced cuts/closures in response to the relatively weakoutlook for prices. However, Australian lithium exports will continue tocontribute substantially to resource and energy export earnings.

9

Export volumes

March quarter export volumes rose
The Resources and Energy Export Volumes Index (preliminary estimate)fell 1.1% in the March quarter 2024 from the December quarter 2023 but
was up 6.7% on the March quarter 2023. Resource commodity volumesrose by 5.1% in the year to the March quarter 2024 and energy export
volumes recorded 8.5% gains (Figure 1.6). High prices, better weather
conditions and easing workforce problems have driven the improvement.
In volume terms, most resource exports are likely to show only modest
growth in 2024 but pick up with improved world economic growth in 2025
and 2026. The global energy transition will support resource export
volumes over the outlook period. Relatively high prices (due to low
investment in new supply) and the global energy transition are set to see
energy production and exports stagnate over the outlook period.
Figure 1.6: Resource and energy export volumes
140

Index, March 2024 = 100120

The current El Niño climate episode is expected to end by June 2024.
There is a strong chance of a La Niña episode developing in 2024–25,
raising the odds of the type of wet weather disruptions that hampered the
production and transportation of Australian mines in the 2021-2023 period.
Further out, depleting oil fields will hurt oil exports, and coal exports will be
impacted by the global energy transition and constraints on finance fornew mines.

1.6

Australia’s real GDP rose by 0.2% in the December quarter 2023, to be up
1.5% from a year before. Mining value-added rose by 1.0% in the
December quarter but was 0.5% lower than in December 2022 (Figure1.7). The quarterly rise was driven by stronger Iron Ore mining (up by1.9%) and Coal mining (up by 1.6%) which continues to recover from theimpact on production of the La Niña weather episode. Exploration rose by
1.1% to be up 9.8% over the year. Oil and gas extraction contracted, as
maintenance and operational issues impacted.
Figure 1.7: Contribution to quarterly growth, by sector
6

100

5

80

4
3

60
40
20
0
Jun–14Contribution to growth and investment

Mining output rose while the overall economy grew more modestly

Jun–17

Jun–20Resources

Jun–23

Jun–26Jun–29EnergySource: Department of Industry, Science and Resources (2024)

Energy exports will level out in 2024, as the sharp price falls of the past
year temper production and encourage delayed maintenance to occur.

Resources and Energy Quarterly | March 2024

Percentage points

1.5

2
1
0
-1
-2
-3
Jun–14

Jun–16Jun–18
Coal mining
Oil and gas extraction
Mining total

Jun–20
Jun–22Iron ore mining
Other mining

Source: ABS (2023) Australian National Accounts, 5206.0

10Figure 1.8: Mining capex by commodity, not seasonally adjusted
18
15

A$ billion

12

25

5

20

4

15

3

10

2

5

1

0
2005

9

2008

2011

Buildings & structures

2014

2017

2020

2023

A$ billion

The latest ABS Private New Capital Expenditure and Expected
Expenditure survey shows that Australia’s resources industry invested$14.7 billion in the December quarter 2023, up 17% from the December
quarter 2022. In quarterly terms, investment grew for all categories, withparticular strength in coal, oil & gas mining (Figure 1.8).

A$ billion

Figure 1.9: Mining industry capital expenditure by type, quarterly

Mining investment is growing strongly

0

Equipment, plant & machinery

Notes: Chart data is in nominal terms, seasonally adjusted.

6

Source: ABS (2024) Private New Capital Expenditure and Expected Expenditure, 5625.0

3
0
2013

2015

2017

Oil and gas extraction
Coal mining

2019

2021

2023

Metal ore mining
Other mining

Notes: Other mining includes non-metallic mineral mining and quarrying and exploration andother mining support services; chart data is in nominal, original terms
Source: ABS (2024) Private New Capital Expenditure and Expected Expenditure, 5625.0

Expenditure for buildings and structures rose by 1.6% in the December
quarter, while investment in equipment, plant and machinery rose by 4.7%,
capping off two years of strong growth (Figure 1.9).
Spending on plant and machinery has accounted for a steadily rising shareof total investment spending since 2017, but spending on buildings andstructures is now growing steadily.

Resources and Energy Quarterly | March 2024

Forward expectations suggest that total mining industry investment in2023–24 is set to rise in the near-term (Figure 1.10). The fifth estimate for2023–24 suggests the mining industry will invest $52 billion during thefinancial year. This is around 2% higher than the fourth estimate in thesurvey. The first estimate for 2024–25 ($45 billion) is around 7% higher
than the equivalent estimate for 2023–24. Estimates for forward spending
tend to be revised up over time.
Further out in the outlook period, capital expenditure in the lithium andnickel industries is expected to edge back following recent declines inprices.
Energy commodities including coal, gas and (especially) uranium areexperiencing relatively strong prices at present, and have good prospects
for enhanced exploration activity over the next few years.

11

100

36

2.4

80

30

2.0

24

1.6

18

1.2

12

0.8

6

0.4

60
40

A$ billion

Figure 1.11: Mining capital expenditure vs exploration (real, quarterly)

A$ bilion$ billion

Figure 1.10: Mining industry capital expenditure, fiscal year

20

0.0
0
2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
Mining capex, chain volume measures
Exploration (rhs)

2012–13 2014–15 2016–17 2018–19 2020–21 2022–23 2024-25
ActualExpected

Notes: Chart data is in nominal terms
Source: ABS (2024) Private New Capital Expenditure and Expected Expenditure, 5625.0

Exploration expenditure (adjusted for inflation) fell by 5% to $993 million inyear to the December quarter 2023. However, in trend terms, exploration
is rising, encouraged by relatively high commodity prices and the need forminerals vital to the global energy transition (Figure 1.11).
Industries recording significant growth in exploration expenditure include
coal (up by 34% in the December quarter), oil and gas (up by 19%), and‘other mining’ (up by 19%). Fossil fuel exploration is likely to have received
a boost from the energy price spike of 2022. This price spike occurred asWestern nations moved away from Russian exports, raising the likelihoodof some Russian production being stranded for many years.
Exploration spending is a leading indicator of broader capital investment,
and recent growth suggests interest is rising in precious and industrial
metals (such as copper and iron ore), and critical minerals. Given the
typical lags involved, we could expect capital spending by resource andenergy companies to continue to lift over the next few years.

Resources and Energy Quarterly | March 2024

Source: ABS (2024) Private Capital Expenditure Survey, Chain Volume measure, 5625.0

Figure 1.12: Shares of exploration expenditure by commodity type
80%
70%
60%
Shares of total

0

50%
40%
30%
20%
10%
0%
2003

2007
Petroleum
Iron ore
Gold

2011

2015
2019
2023
Base and other metals
Coal

Source: ABS (2024) Private Mineral and Petroleum Exploration, 8412.0

12

1.7

Revisions to the outlook

The forecast for Australia’s resources and energy exports in 2023–24 is$10 billion higher than the forecast contained in the December 2023
Resources and Energy Quarterly. The forecast for 2024–25 (nominal
prices) is $19 billion higher than the same report (Figure 1.13). Comparedto the March 2023 REQ, export earnings further out in the outlook period
are holding up better than expected.
The 2023–24 and 2024–25 revisions have been largely driven by an
upward revision to the iron ore price and the impact of a weaker than
expected exchange rate against the US dollar (AUD/USD). Further out, an
improved outlook for iron ore has more than offset downward revisions toexport earnings for lithium and oil.
Figure 1.13: Resource and energy exports, by forecast publication
475

A$ billion

425
375
325
275
225
175
125
2012–13

2016–17

2020–21

Actual
Mar–23 forecast

2024–25

2028–29

Mar–22 forecast
Mar–24 forecast

Source: Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 202413

Figure 1.14: Australia’s major resources and energy commodity exports, 2023–24 dollars % change from 2022–23

CAGR % change from 2022–23

2023–24 f

Iron ore

A$83b

LNG

A$72b

A$45b

Metallurgical
coal

A$35b

Thermal coal

A$21b

A$96b

value

volumeEUV

value

A$129bIron ore
A$136b













1

4

5

2

-9

-7

LNG













-3

-23

-25

0

-12

-12

Gold

A$25b
A$28b
A$20b

Gold

EUV

Thermal coal

A$68b

A$36b

volumeMetallurgical coal

A$64b
A$56b

Copper

A$13b
A$12b
A$17b

CopperLithium

A$21b
A$11b
A$9b

Lithium

Alumina

A$9b
A$9b
A$7b

Alumina

A$14b
A$13b
A$7b

Oil & condensate

Aluminium

A$5b
A$5b
A$5b

Aluminium

Nickel

A$5b
A$4b
A$4b

Nickel

Zinc

A$4b
A$4b
A$3b

Zinc

Oil & condensate

0

20

40
2022–2360

80

2023–24 f

100

120

2028–29 z

140













3

-16

-14

2

-11

-10













14

-53

-47

2

-19

-18













11

-1

10

3

-7

-4













-1

-4

-4

5

0

5













13

-53

-46

7

-19

-13













4

-1

2

0

-3

-3













-3

-2

-5

-4

-7

-11













1

-11

-9

0

-3

-3













-1

-30

-31

5

-9

-5













12

-21

-11

0

-5

-5

160

2028–29 z

Notes: f forecast; z projection. EUV is export unit value.
Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

14

Table 1.1: Outlook for Australia’s resources and energy exports in nominal and real terms
Percentage change
Exports (A$m)

2022–23

2023–24f

2024–25f

2025–26f

2026–27f

2027–28f

2028–29f

CAGRg %

Resources and energy

466,338

417,092

368,892

338,664

336,657

339,042

336,128-5.3– realb

485,078

417,092

357,541

319,423

309,786

304,371294,395-8.0

Energy238,711

183,402

163,127

141,082

140,437

137,686

130,916-9.5– realb

248,304

183,402

158,108

133,067

129,227

123,606

114,662-12.1

Resources

227,627

233,690

205,765

197,581

196,220

201,356

205,212-1.7– realb

236,774

233,690

199,434

186,356

180,558

180,765

179,734-4.5

Notes: b In 2023–24 Australian dollars; f forecast; g growth rate on 2022-23 levels.
Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

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

Real export values, A$b, 2023–24 prices

Unit2022–23

2023–24

2028–29

Unit

2022–23

2023–24

2028–292022–23

2023–24f

2028–29f

Iron ore

US$/t

95

103

75

Mt

895

900

983

129

136

83

LNG

A$/GJ

21

17

12

Mt

82

79

79

96

72

45

Thermal coal

US$/t

302

135

115

Mt

182

208

207

68

36

21

Metallurgical coal

f

f

f

f

US$/t

277

289

207

Mt

156

161

175

64

56

35

Gold

US$/oz

1,831

1,995

1,909

Mt

228

253

275

25

28

20

Lithium

US$/t

5,174

1,800

1,231

Kt

440

499

676

21

11

9.1

Crude oil

US$/bbl

87

84

73

Kb/d

852

845

1,135

14

13

6.9

Copper

US$/t

8,289

8,258

10,061

Kt

282

274

215

13

12

17

Alumina

US$/t

343

341

369

Mt

16,566

17,165

16,708

8.6

8.8

7.2

Aluminium

US$/t

2,333

2,204

2,685

Kt

1,440

1,462

1,483

5.5

5.0

4.6

NickelUS$/t

23,911

17,88920,950

Kt

161

159

214

5.2

3.6

3.8

Zinc

US$/t

2,981

2,529

2,979

Kt

1,247

1,400

1,213

4.5

4.0

3.3

Uranium

US$/lb

51

85

119

t

4,809

5,478

7,217

0.8

1.2

2.0

Notes: a Export data covers both crude oil and condensate; b Lithium carbonate equivalent; 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 | March 2024

15

Resources and Energy Quarterly | March 2024

16

SummaryGlobal industrial production and manufacturing activity recovered in late2023 and early 2024, due to improvements in global goods demand.

The outlook for global growth in 2024 improved slightly, with the balanceof risks remaining slightly tilted to the downside. As inflation returns totarget levels, central banks will likely adopt less restrictive stances,
allowing growth to pick up in 2025.



2.2

Despite better-than-expected growth in the December quarter 2023, key
downside risks challenge China’s growth outlook, including ongoingissues in the real estate sector.

World economic outlook

Declining inflation and resilient growth expected to support a soft landing
The International Monetary Fund (IMF) forecasts the world economy togrow by 3.1% in 2024, rising modestly to 3.2% in 2025. This represented
an upgrade of 0.2 percentage points for 2024 compared to the IMF’s
October 2023 outlook, reflecting stronger than expected consumption in
the United States, China and emerging economies in 2023. With higher
confidence of a soft landing, the IMF stated the balance of risks is lessnegative than in October, however it is still tilted to the downside.
Growth in advanced economies is expected to slow to 1.5% in 2024,
picking up in the latter half of the year and rising to 1.8% in 2025. While
US consumption has continued to be stronger than expected, European
economies slowed substantially in 2023 under pressure from high energy
prices and tighter monetary policy. As inflation eases further towards
central bank targets, easing monetary policy will support a lift inconsumption and industrial activity — particularly in Europe.
Emerging economies (notably China and India) experienced stronger
growth than expected in 2023 and are expected to continue thismomentum throughout the outlook, with growth rising from 4.1% in 2023 to4.2% in 2025.

Resources and Energy Quarterly | March 2024

Figure 2.1: GDP growth forecasts
10%8%
Annual growth rate

2.1

6%
4%
2%
0%
-2%
-4%
-6%

2005
2009
2013
Emerging economies

2017
World

2021
2025
2029
Advanced economies

Source: IMF (October 2023, January 2024)

Inflation eased more than anticipated in most major economies in 2023.
Effects of tightened monetary policy including weaker consumption growth,
retail sales, and investment intentions were seen across major economies,
particularly in Europe and Japan, weighing on growth for manufacturingexporters — including China, Japan and South Korea. Signs in late 2023
and early 2024 suggest goods consumption in major economies appears
to have turned a corner, with surveys pointing to improvements in global
manufacturing sector output and new orders.
Over the 5-year outlook, the IMF expects global economic growth to ease
to 3.1%, below the historical average of 3.8% over 2000‒2019. Growth inadvanced and emerging economies is expected to diverge over theoutlook period, with major emerging markets China and India accounting
for a major share of global economic growth by 2029. Growth in advanced
economies is projected to ease over the outlook towards long-run potential
growth of 1.7% by 2028, with slower growth reflecting demographic
profiles and economic maturity.

17

Downside risks to global growth remain as global core goods prices areeasing but core services remain elevated relative to pre-pandemic levels.
Ongoing labour market tightness may slow further disinflation, keeping
monetary policy tight for longer. Fiscal policy stances are also expected totighten across the advanced and emerging economies to rebuild
budgetary room given rising sovereign debt burdens. If inflation in major
economies eases to central bank targets sooner than expected, this could
result in an earlier return towards neutral monetary policy, presenting an
upside risk for global growth.
The sharp rise of artificial intelligence (AI) presents an opportunity forsupply-side reforms as productivity and incomes are expected to improvewith the growth of AI over the medium term. Advanced economies whereservices and cognitive-intensive roles are key drivers of the economy arelikely to benefit from the technology faster than emerging economies.
Global industrial production and trade diverges while demand remains low
Global industrial production (IP) increased by 1.6% year-on-year in the
December quarter 2023 (Figure 2.2). Positive annual growth reflects lower
energy prices in many major economies as well as rebounding industrial
activity in China, following a weaker 2022. Global IP growth was weakthroughout much of 2023 due to downturns in the industrial sectors ofmajor producers such as Europe and Japan.
Resources and Energy Quarterly | March 2024

Forward indicators of manufacturing activity indicate a recovery from a
prolonged contraction is in prospect. The JP Morgan Global Manufacturing
Purchasing Managers Index (PMI) measured 50.3 in February 2024,
indicating the first expansion in 18 months. The rise was driven by
expansions in major producers such as China, the United States, India
and South Korea. Improvements in global manufacturing activity havecome through increasing output, with new orders also rising above 50 for
the first time in 20 months. The downturn in new export orders continued
but the rate of decline eased, raising optimism in the manufacturing sector.
Figure 2.2: World industrial production, trade and manufacturing
30%

57.5

20%

55.0

10%

52.5

0%

50.0

-10%
Jan-21

Jul-21

Jan-22

Jul-22

Industrial production
Manufacturing PMI (rhs)Jan-23

Jul-23Jan-24

Index (50 = neutral)

The IMF emphasised both upside and downside risks to global growth
stemming from uncertainty over the outlook for China, as its property
sector downturn continues. Additional property sector reforms and largescale investment may boost subdued confidence and household
consumption over the outlook. However, structural challenges and local
government financing constraints pose risks for China’s growth outlook.

Global merchandise trade volumes declined by 1.9% year-on-year in 2023
(Figure 2.2). Softer goods demand weighed on a wide array of goods,
except passenger vehicles which surged in 2023. The WTO expects arecovery of trade volume to 3.2% in 2024, however rising trade distortions
and geopolitical fragmentation are expected to weigh on global trade going
forward. The IMF noted 3,200 new restrictions on trade were imposed in
2022 and about 3,000 in 2023, up from about 1,100 in 2019.

Annual percent change

The IMF expects growth in China’s economy to ease from 4.6% in 2024 to3.4% by 2028. China’s growth is projected to slow as potential growth fromits traditional growth engines of construction (property and infrastructure)and manufacturing exports yield diminishing returns over time, and theeconomy transitions towards services (see September 2023 Resources
and Energy Quarterly).

47.5

Merchandise trade

Notes: PMI data is up to February 2024; IP and trade data only available to December 2023.
Source: Bloomberg (2024); CPB Netherlands Bureau for Economic Policy Analysis (2024).

18

Headline inflation measures have continued to decline over recent months
in many major economies; however, progress to return inflation to target
levels has been slowed recently by persistence in services inflation.
US headline inflation measured 3.2% in February 2024, moderating lessthan expected despite lower energy and food prices (Figure 2.3). US
services inflation rose marginally to just below 5.0% year-on-year, raisingconcerns over the pace of further disinflation.
Eurozone headline inflation maintained its moderating trajectory in
February 2024 to 2.6%, albeit recording a slightly higher result than its low
point of 2.4% in November 2023. Headline inflation has declined
significantly throughout 2023 due largely to falling energy prices, howevercore inflation (excluding food and energy prices) appears to be easing at a
slower pace, falling to 3.1% in February 2024.
In January 2024, the IMF forecast global headline inflation would fall from
6.8% in 2023 to 5.8% in 2024 and 4.4% in 2025. Compared to the October
2023 outlook, the forecast for 2025 was revised down marginally, while theforecast for 2024 was unchanged. Inflation is expected to fall more quickly
in advanced economies due to tighter monetary policy and less exposureof these economies to commodity price and exchange rate shocks.
The Hamas-Israel conflict and the escalation of geopolitical tensions in the
Middle East presents upside risks to inflation through energy commodity
prices and shipping prices. The Middle East produces about 35% of theworld’s oil exports and 14% of gas exports, and hosts key transit routes forenergy commodity shipping such as the Persian Gulf and the Red Sea.
Attacks on commercial shipping vessels in the Red Sea (which controls
11% of global trade) have also caused diversion of shipping around theCape of Good Hope, driving up global shipping prices. Shipping transiting
the Red Sea has dropped by more than half since early December, andfurther escalation of the conflict may lead to a rebound in global goods
price inflation. This shipping disruption has occurred at a time whenanother key transit corridor (the Panama Canal) is running at low capacity

Resources and Energy Quarterly | March 2024

due to drought: daily transits through Panama Canal were down to 20 slots
in January 2024 from its normal capacity of 38‒40.
The potential for inflationary shocks through global commodity or shipping
prices is elevated over the outlook period, due to heightened geopoliticalrisks, fragmentation of world trade and greater potential for weatherrelated shocks such as drought or flooding.
Figure 2.3: CPI inflation in the United States, China and Europe
12%
Annual percentage change

Inflationary pressures easing but remain vulnerable to further shocks

10%
8%
6%
4%
2%
0%
-2%
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
United States
China
Euro Area

Source: Bloomberg (2024)

2.3

Major trading partners’ economic outlook

The outlook for Australia’s major trading partners remains weak, with their
GDP growth in 2024 forecast by the RBA to be around 3.1%, then 3.0% in
2026, well below its pre-pandemic decade average. Slower growth inAustralia’s major trading partners is expected to slow demand forAustralia’s exports. That said, the IMF expects robust economic growth inChina and the US, as well as ongoing expansion in India. Growth fromthese key markets should support growth in their trade partners’
economies, underpinning Australian resource and energy export earnings
over the outlook period.
19Three key export markets for Australia (China, India and Southeast Asia)
are projected to add 313 million people to their urban populations from2020 to 2030 (Figure 2.4). This will be a major driver of increased energy
consumption within these regions, as well as metal consumption for
infrastructure and property construction. While China’s property sector has
slowed and may drive less commodity demand growth than otherwise, its
urban population is still expected to continue growing — albeit at a slower
rate than previously.
A significant structural shift in commodity demand is also expected toresult from the technological change arising from the energy transition.
This will drive a shift in the commodity mix required for energy generationfrom traditional energy commodities (such as coal) to those used in clean
energy technologies (such as lithium and copper).
As economies continue to grow, urbanise and develop new industries(such as in the clean energy value chain), this will drive new growth indemand for Australia’s resource and energy commodities, as well as shifts
in the weighting of Australia’s major trading partners (such as China andIndia) as sources of demand for specific commodities (Figure 2.5)
In the medium-term this will be driven largely by global investment efforts
to construct clean energy infrastructure and value chains as governments
and business work towards 2030 emissions targets. Demand forAustralian resource commodities is expected to be assisted by policies
such as the US Inflation Reduction Act which will provide incentives for
manufacturers to use Australian critical minerals.

Resources and Energy Quarterly | March 2024

1200
1000
Million people

Long-term demand for resource and energy commodities has historically
been driven by fundamental drivers such as population (total resource
demand), income growth (consumption intensity), urbanisation (commodity
intensity) and technological change (changes in commodity mix).

Figure 2.4: Urban population projections for key export markets

800
600
400
200
0

1980

1990
China

2000
India

2010
2020
Southeast Asia

2030

Source: UN (2018, 2022)

Figure 2.5: Changing concentration of commodity demand
A. China

70%

B. India60%
Share of global total

Box 2.1: Commodity demand prospects will be underpinned byurbanisation and investment in Australia’s major trading partners

50%
40%
30%
20%
10%
0%

2000

2020

2030

Notes: ‘Metals’ here refers to steel, copper, aluminium, nickel and zinc.
Source: IMF (2024); UN (2022); Wood Mackenzie (2024)

20

China’s recent growth exceeded expectations, but risks remain
China’s economy grew by 1.0% in the December quarter 2023, with GDP
5.2% higher year-on-year (Figure 2.6). Strong household consumption
growth was the key driver of China’s economic growth in 2023, as services
demand recovered following the lifting of pandemic restrictions in early2023. Policy measures to boost investment in infrastructure andmanufacturing supported the rebound. However, the IMF expects China’s
growth to slow over the coming years, as consumption growth fades andthe property sector remains weak.
While the rebound in consumption demand appeared to fade through the
middle of 2023 — leading to bearish forecasts for China’s economy —recent indicators point to strengthening consumption early in 2024,
particularly in services. The official index of services production increased
by 5.8% year-on-year in January-February 2024, led by growth inaccommodation and food services (12%), and information and technology
services (10%). Retail sales of consumer goods rose by 5.5%, driven by
growth in online sales of physical goods by 14%.
Figure 2.6: China – contributions to quarterly real GDP

Annual percent change

8
6
4
2
0
Jun-21

Dec-21
Consumption

Jun-22
Investment

Dec-22Jun-23Net exports GDP

Notes: Consumption is made up of both household and government sectors.
Source: Bloomberg (2024); National Bureau of Statistics of China (2024)

Resources and Energy Quarterly | March 2024

Year-to-date fixed asset investment (FAI) increased by 4.2% year-on-year
in January-February 2024, supported by 6.3% growth in infrastructure and9.4% growth in manufacturing investment. Particularly strong growth wasreported for investment in high-tech manufacturing, rising by 10% year-onyear. Private FAI was up by 0.4% during January-February 2024, weighed
down heavily by declining investment from private property developers.
This has translated to a higher share of FAI from state-owned enterprises.
China’s industrial production rose by 7.0% year-on-year in JanuaryFebruary 2024, the fastest rate in 2 years. Growth was driven by continued
strength in utilities output (7.9%) and manufacturing (7.7%). Notable yearon-year increases were reported for automobile production (9.8%) andelectric vehicle charging stations (41.8%). This followed strong growth inautomobile industry output throughout 2023, especially EV’s and hybrids.
The Caixin Manufacturing Purchasing Managers’ Index (PMI) rose to 50.9
in February 2024, a fourth straight month of growth. Output improved withmodest growth in new orders. New export orders grew for the second
consecutive time in 7 months, and overall sales rose the most in 5 months.
Business sentiment hit a 9-month high, linked to projections of higher
world demand.

10-2

In February 2024, China’s inflation rose to 0.7% year-on-year following 4
consecutive months of deflation. The rebound in price growth was driven
by food price deflation easing to an 8-month low as the prices of pork andfresh vegetables lifted. China’s core inflation — excluding food and energy
prices — rose to 1.2% in February 2024, remaining below policy targets.

Dec-23The persistent downturn of China’s property sector — which accounts foraround 30‒35% of China’s steel demand and 20% of total GDP — hascontinued to act as a drag on China’s economic activity, with conditions
remaining weak despite various monetary and fiscal policy support
measures announced in 2023. Investment in real estate development
declined by 9.0% year-on-year in January-February 2024 and newproperty starts (by floor space) were on average 20% lower year-on-year
in 2023. New home sales in 30 major cities fell by 33% year-on-year in
January 2024.

21

With more than half of large private developers in China either defaulting
or under severe financial stress, Chinese authorities are actively adopting
new policy measures to stabilise the property sector, supporting its overall
economic growth target of 5% in 2024.
The Chinese Communist Party conference in December 2023 called for a“new model” to increase the state’s share of its property market, from 5%
currently to 30%. One of the programs underpinning its plan is “Project
Whitelist”, a policy launched by the housing ministry in January andapproved by banks in February. The project involves CNY123.6 billion(US$17.2 billion) and local governments to compile a list of property
projects eligible for financial support and collaborate with banks to fulfil thefinancing needs of these projects. Another program involves the state topurchase existing distressed projects and newly build more subsidised
housing for low-and-middle-income families, aimed to add 6 million
affordable housing units over the next five years.
In February 2024, the People’s Bank of China (PBoC) cut its key mortgage
rates – five-year loan prime rate — by 25 basis points, and injected CNY1
trillion into the banking system by cutting the reserve requirement ratio forbanks. Key Tier 1 cities — Beijing and Shanghai — introduced lower
mortgage down payment requirements for first and second homes in
December 2023, and cut interest rates on outstanding first-homemortgages to support household consumption.
Escalating structural issues continue to weigh on the property sector
rebound, as local government debt levels rise while the population
declines and properties remain oversupplied. The IMF expects
fundamental demand for new housing (measured by urban household
formation) to drop by 50% over the next decade. China’s population
declined for the second consecutive year in 2023 (-0.15%), a sharper
decline than 2022. China’s working age population peaked in 2011, while
the number of people above the national retirement age of 60 is projected
to increase from 280 million to 450 million by 2035. Ageing demographics
is expected to worsen local government budget shortfalls and pressure
China’s current pension system.

Resources and Energy Quarterly | March 2024

A potential new source of growth in China’s economy is its active push to
be dominant in high-end goods manufacturing. China became the world’s
largest car exporter in 2023, driven by its stronghold in the electric vehicle(EV) market. Last year, Chinese EV exports grew by 70%, reaching a
global market share of 35%. Its large domestic market, strong EV andgreen energy supply chain ranging from key battery minerals to processing
technologies, and favourable government policies have contributed to a
distinct cost advantage for Chinese EVs and batteries. Continued
government support is expected as Chinese authorities named EV exports
a “key pillar” of its trade in February 2024.
The IMF expects China to grow by 4.6% in 2024, an upward revision of
0.4% reflecting ongoing investment in infrastructure and manufacturing
and stronger than expected consumption. The IMF projects growth to drop
to 4.1% in 2025 and 2026 and to 3.4% by 2028 in line with a long-term
trend towards lower growth. Uncertainties remain, with its ongoing realestate downturn, local government debts, and headwinds to its export-led
growth — due to bifurcating supply chains and rising trade restrictions.
Japan slowing due to weak real incomes and external demand
Japan’s GDP rose by 1.0% year-on-year in the December quarter 2023,
with annual growth weighed down by two consecutive quarters of decline
over H2 2023. Private consumption — accounting for 53% of GDP — was
the key drag on GDP growth, having contracted for 3 consecutive quarters
to be 0.5% lower year-on-year. Cost of living pressures have weakened
consumers’ real incomes, with post-COVID pent-up demand for services
appearing to fade in the December quarter 2023.
In response to cost-of-living pressures, the government released a ¥17
trillion economic relief package in November 2023 aimed at supporting
consumption (e.g. cost of living relief measures) and business investment(e.g. targeted tax cuts for strategic sectors).
The depreciation of the Yen through much of 2023 contributed to strong
growth in Japan’s exports, however this was not enough to lift Japan’s
industrial sector out of contraction. Slowing growth in goods demand both

22

Japan’s core inflation declined to 2.0% in January 2024, meeting the Bankof Japan (BoJ) inflation target. Supporting expectations for cost pressures
to ease further, Japan’s producer price inflation was reported at 0.2% inJanuary 2024, down from 9.5% in January 2023.
The IMF expects Japan’s economic growth to slow to 0.9% in 2024, aslight downgrade from October 2023, then slow further to 0.8% in 2025.
Growth is expected to slow as factors that supported strong growth in H1
2023 fade, such as COVID-related pent-up demand and the surge in
inbound tourism. While Japan’s exports grew strongly in 2023 due in partto Yen depreciation, further depreciation to the same extent is unlikely
based on the outlook for interest rates in other major currency hubs.
As the effects of past stimulus efforts fade and macroeconomic policy
settings return to neutral, Japan’s economic growth is projected to slow to
0.5% in 2026, then to its long-run potential of 0.4% from 2027 onwards.
South Korea’s industrial outlook has turned positive
South Korea’s GDP grew by 2.2% year-on-year in the December quarter
2023, recovering from 0.9% in the June quarter 2023. Annual growth was
primarily driven by 9.9% year-on-year growth in exports which, combinedwith imports tracking flat, led to a 61% expansion in the country’s tradebalance. Export growth was led by sales of manufactured products,
including vehicles, ships and semiconductors.
Resources and Energy Quarterly | March 2024

130

400

120

300

110

200

100

100

90

0
2013

2015

2017

Vehicle exports

2019

2021

2023

Index (50 = neutral)

500

80

Industrial production (rhs)

Source: Bloomberg (2024)

Figure 2.8: South Korean industrial activity and exports
75%

57.5

50%

55.0

25%

52.5

0%

50.0

-25%

47.5

-50%
Jan-22
IP

Jul-22

Jan-23

Semiconductor exports

Jul-23

Index (50 = neutral)

While the Jibun Bank Japanese Manufacturing PMI remained incontractionary territory in February 2024 — due to weakening demand andcost pressures — firms remained optimistic about the 12-month outlook,citing expected improvements in market demand.

Thousand vehicles

Japan’s industrial outlook remains weak, however there are signs ofimprovement with several important indicators returning to growth as 2023
ended. Vehicle exports improved over the year (up by 11% year-on-year in
November 2023), as did growth in machinery orders (6.1% in December2023) and industrial output (0.6% in December 2023) (Figure 2.7).

Figure 2.7: Japan industrial production and vehicle exports

Annual percent change

domestically and in Japan’s major trading partners, was a key issue for its
commodity-intensive industrial sector throughout 2023.

45.0
Jan-24

Manufacturing PMI (rhs)

Source: Bloomberg (2024)

23

The IMF forecasts South Korea’s economic growth to be 2.3% in 2024 and2025, supported by robust growth in goods exports and investment.
Growth is then forecast to ease to 2.2% in 2026 and to 2.1% by 2028.
Resilient US labour market and consumption supporting growth
The US economy grew by 3.1% year-on-year in the December quarter
2023, driven by robust personal and public consumption growth. This was
driven by continued growth in both goods and services consumption.
While 2022 and H1 2023 were characterised by weak goods consumption
growth — as consumers preferenced services following the end of COVID
restrictions — goods consumption picked up towards the end of the year,
growing by 5.1% in real terms in December 2023 (Figure 2.9).
US labour market resilience and remaining savings buffers have continued
to support strong consumption. The US labour market has softenedslightly, but less than was expected. The unemployment rate held steadyat 3.7% in January 2024, only marginally higher than the average of 3.5%
in H1 2023. While official employment growth slowed further over the endof 2023 and into early 2024, an alternative measure (nonfarm payroll
employment) instead indicated an acceleration in employment growth,
adding 353,000 jobs in January 2024 — above the average rise of
220,000 over H2 2023. Wage growth has also rebounded, up from 5.2% inSeptember 2023 to 6.8% in December 2023.

Resources and Energy Quarterly | March 2024

US industrial production tracked flat year-on-year in January 2024, as
declines in manufacturing (down by 0.9%) and mining output (down by1.2%) associated with cold weather, were balanced by higher utilities
output (up by 9.0%) for heating purposes.
The US industrial outlook appears to be recovering in early 2024. The US
Manufacturing PMI stayed in contractionary territory at 47.8 in Februarywith both manufacturing output and new orders returning to contractionamid seasonal headwinds. Notable improvement was reported in newexport orders returning to expansion after 8 months of contraction. Output
is likely to improve further in coming months, given cold weather impacts in
February are expected to subside.
Figure 2.9: Real US consumption of goods and services
6,000

12,0005,500

11,0005,000

10,000

4,500

9,000

4,000

8,000

3,500

7,000

3,000
2013

2015
2017
Goods consumption

2019
2021
2023
Services consumption (rhs)

US$ billion, 2012 prices

South Korea’s industrial production increased in December 2023 to be
6.2% higher year-on-year (Figure 2.8). Having been in contractionary
territory since mid-2022, South Korea’s manufacturing PMI returned to
expansion in late 2023 and rose further to 50.7 in February 2024.
Improvement in February was led by increasing output and the second
consecutive expansion in new orders since June 2022. Exports ofsemiconductors increased by 56% year-on-year in January 2024,
rebounding from a prolonged downturn which commenced in August 2022.

Supported by investment policies such as the Infrastructure Investment
and Jobs Act, Inflation Reduction Act and the CHIPS & Science Act, US
private non-residential investment and construction spending continued to
grow strongly over H2 2023. Investment growth has been led by spendingin power and manufacturing, with private investment in manufacturing
structures rising in real terms by 69% year-on-year in December 2023.

US$ billion, 2012 prices

South Korea’s industrial sector and goods exports appear to be on the
upswing, having been weighed down in 2022–23 by the downturn in the
global technology cycle and falling global goods demand.

6,000

Notes: Consumption data is monthly, reported in annualised terms.
Source: Bloomberg (2024)24

Growth is forecast to ease to 1.7% in 2025 as monetary policy lags, fiscal
tightening and softening of labour markets slow aggregate demand. US
GDP growth is then projected to stabilise at around 2.1% from 2026
onwards, as monetary policy is returned to a neutral stance and long-term
investment policies support continued capital accumulation.
Eurozone economies face slower growth, manufacturing downturn
Eurozone GDP growth was flat over the December quarter 2023, bringing
annual GDP growth to 0.1% year-on-year. Among the larger economies
Spain grew by 0.6% over the quarter, while Italy’s quarterly growth picked
up to 0.2%. France’s economy did not grow over the quarter, while
Germany’s economy contracted by 0.3% to be down 0.2% year-on-year.
Europe’s manufacturing sector has been in a prolonged downturn since
July 2022, driven by the rapid surge in energy prices (Figure 2.10).
Europe’s industrial outlook remains weak, however there are signs that theworst of the downturn may be over. In February 2024, the Eurozone
manufacturing PMI recorded a contractionary reading of 46.5, howeverbusiness sentiment in Europe’s manufacturing sector improved as
declines in output slowed to a 9-month low and new orders to 11-month
low respectively.

Resources and Energy Quarterly | March 2024

180

70

160

60

140

50

120

40

100

30

80
Jan-21
Jul-21
Jan-22
Jul-22Euro area energy prices
Europe manufacturing PMI (rhs)

Index (50 = neutral)

Figure 2.10: European energy price index and PMIs

Index

In January 2024, the IMF upgraded its forecast for US economic growth in
2024 by 0.6% to 2.1% due to ongoing strength in US consumption andongoing labour market tightness. The IMF also revised down its forecasts
for US inflation, which is now expected to average 2.2% in 2024 and 1.9%
in 2025 — downward revisions of 0.5% in both years. Combined withdeclining US inflation (both headline and core) and ongoing increases in
US labour productivity growth (2.7% in the December quarter 2023),
markets and the US Federal Reserve are convinced the US tightening
cycle has concluded. In their December economic projections, the Federal
Open Market Committee’s median expectations suggested at least 75
basis points of interest rate cuts in 2024. The recent strong monthly
increase in US core inflation (0.4% in February 2024) has cast doubts overthe pace of further declines in services inflation, however the US Fed isbroadly expected to commence its cutting cycle in 2024.

20
Jan-23
Jul-23Jan-24
Europe composite PMI (rhs)

Source: Bloomberg (2024); Eurostat (2024)

In its January update, the IMF forecast Euro Area growth at 0.9% in 2024,
revised down by 0.3% from October 2023. Ongoing manufacturing
weakness led to more downgrades to German growth (now 0.5% in 2024,
up from -0.2% in 2023), while weaker-than-expected services activity
drove downgrades for France (1.0% in 2024) and Spain (1.5% in 2024).
The near-term economic outlook for Europe remains weighed down by
ongoing weakness in the industrial sector, with the services sector also
falling into contraction in H2 2023. The Eurozone Composite PMI wasreported at 47.9 in January 2024, an 8th consecutive monthly contraction.
The cumulative lags of tight monetary policy in the region are expected tocontinue slowing economic activity until monetary policy begins easing,with real incomes expected to drive a recovery in consumption over H22024 as the energy price shock subsides and inflation eases. The IMF
then expects Euro Area growth to pick up further to 1.7% in 2025, driven
by continued recovery in consumption and industrial activity. Over theremainder of the outlook period, economic growth is expected to slow from
1.7% in 2026 toward a long-run potential growth of 1.3% by 2029.

25

Exchange rate assumption revised lower
Since the start of 2024, the Australian dollar has weakened both relative to
the US dollar and in trade-weighted terms (Figure 2.9). The AUD/USD
move arose due to market expectations for US interest rates to remain atcurrent levels for longer than was expected in late 2023.
Assumption adjustments were made in line with changes in market
consensus on the exchange rate outlook. The market consensus(surveyed by Bloomberg) is for the Australian dollar to appreciate against
the US dollar over the outlook period, as interest rates decrease quicker in
the US than in Australia. In February 2024, the median consensus for the
AUD/USD exchange rate was an average of US$0.68 in 2024, US$0.72 in
2025 and US$0.74 in 2026. The AUD/USD exchange rate is assumed torise to US$0.75 by mid-2026.

Resources and Energy Quarterly | March 2024

1200

10,000

1000

8,000

800

6,000

600

4,000

400

2,000

200

0

Million people

12,000

1998

2003

2008

2013

Per capita GDP

2018

2023

2028

0

Working age population

Notes: Working age population is calculated as people aged 15-64
Source: IMF (2024); UN (2022)

Figure 2.12: Australian trade-weighted index and AUD/USD
70

0.9

65

0.8

60

0.7

55

0.6

50
2018

2019

2020
AUSTWI

2021

2022

2023

US$

Compared with many major economies, India has a relatively young
population and its working age population is expected to continue growing
strongly over the outlook period — this will drive higher output (from a
growing labour force) and domestic consumption (Figure 2.11). From 2026
to 2029, India’s GDP growth is expected to stabilise at a long-run potential
rate of about 6.3%. Long-run growth is expected to be driven by largescale infrastructure investment, population and productivity growth.

2017 International dollars per person

India’s GDP growth was 8.4% year-on-year in the December quarter 2023,
exceeding market expectations of 6.6% growth. GDP growth was driven
by strong private consumption expenditure — especially for services — aswell as continued strength in fixed capital formation. India’s manufacturing
PMI remained expansionary in February 2024, reaching a 5-month high of
56.9. Accelerated expansion was driven by robust demand, both domestic
and international, causing companies to scale up production. Strength indemand and new business enquiries led business optimism about the
coming year to its highest since late 2022. The IMF forecasts India’s
economic growth to slow to 6.5% in 2024 and 2025, revised up by 0.2% in
both years due to stronger-than-expected domestic demand seen in 2023.

Figure 2.11: Per capita GDP and working age population in India

Index (May 1970 = 100)

India’s GDP growth to be strong over the medium term

0.5
2024

AUDUSD (rhs)

Source: RBA (2024)

26

Table 2.1: IMF annual GDP growth projections for major trading partners
2023

2024a

2025a

2026a

2027a

2028a

2029a

3.1

3.1

3.2

3.2

3.1

3.1

3.1

China c

5.2

4.6

4.1

4.1

3.7

3.4

3.4

Japan

1.9

0.9

0.8

0.5

0.4

0.4

0.4

South Korea

1.4

2.3

2.3

2.2

2.2

2.1

2.1

India d

6.7

6.5

6.5

6.3

6.3

6.3

6.3

ASEAN-5 e

4.9

5.3

5.2

5.1

5.0

5.0

5.0

Eurozone

0.6

1.2

1.9

2.0

1.8

1.7

1.7

United States

2.5

2.1

1.7

2.1

2.1

2.1

2.1

World b

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 (2024); Bloomberg (2024)

Table 2.2: Exchange rate and inflation assumptions
2023

2024a

2025a

2026a

2027a

2028a

2029a

0.66

0.68

0.72

0.75

0.75

0.75

0.75

4.1

2.2

1.9

2.2

2.1

2.1

2.1

2022–23

2023–24 a

2024–25 a

2025–26 a

2026–27 a

2027–28 a

2028–29 a

7.0

4.0

3.2

2.8

2.5

2.5

2.5

AUD/USD exchange rate
Inflation rate b
United States

Australia

Notes: a Assumption; b Average CPI growth over the specified year (fiscal or calendar).
Sources: ABS (2024) Consumer Price Index, 6401.0; Bloomberg (2024); Department of Industry, Science and Resources (2024); RBA (2024); IMF (2024)

Resources and Energy Quarterly | March 2024

27

Resources and Energy Quarterly | March 2024

28

Resources and Energy Quarterly | March 2024

29



3.2

World production and consumption

Global steel production stabilised in 2023 following large falls in 2022
World steel production was flat in 2023, with output of 1.9 billion tonnes —the same as in 2022 (Figure 3.1). The 2023 result did not see theanticipated demand recovery after geopolitical tensions, energy priceshocks and COVID lockdowns weakened the global economy throughout
much of 2022.
Overall, world steel demand continues to be affected by the high inflationand interest rate environment in most advanced economies which has
contributed to weaker industrial output over the past year (Figure 3.2). An
expected stabilisation and gradual pickup in growth in ex-China global
manufacturing over 2024, combined with further stimulus-related
infrastructure projects, is expected to support stronger steel demand.
Protracted weakness in Chinese property demand throughout 2023 wasoffset by increased steel demand from exporters of manufactured products
as well as some infrastructure investment. Weak profitability amongst most
Chinese steel mills continues to weigh on the sector.
Resources and Energy Quarterly | March 2024

2,500
2,500
2,500
2,000
2,000
2,000
1,500
1,500
1,500
1,000
1,000
1,000
500
500
500
00 0
2007
2007
2007

2011
2011
2011

2015
2015
2015

2019
2019
2019

2023
2023
2023

2024
to to
2024
2029z
2029z

Note: z projections
Source: World Steel Association (2024); DISR (2024)

Figure 3.2: World manufacturing PMI and industrial output
20%

60

10%

55

0%

50

-10%

45

-20%
2017

2019
World IP

2021

2023

PMI readingWorld steel production was flat in 2023 following large falls in 2022. An
expected stabilisation and then gradual pickup in global industrial
output, combined with further stimulus-related infrastructure projects,
should see annual growth of nearly 2% in steel production in 2024 and2025.
World steel production is projected to reach 2.1 billion tonnes by the endof the outlook period (to 2029). Growth will be supported by new
capacity — either underway or planned — with projects in the pipeline
in Asia, North America, Europe and the Middle East.
Global steel consumption is forecast to grow 1.4% year-on-year in 2024.
The weakness in China’s property sector over the past couple of years
is expected to persist this year. Less restrictive monetary policies inadvanced economies should see demand recover in 2025 and 2026.
The global energy transition will support the continued consumption ofsteel.

Figure 3.1: Global annual steel production

MilliontonnesMilliontonnesMilliontonnes

Summary

Annual percentage change

3.1

40

World Manufacturing PMI (rhs)

Notes: JPMorgan Global Manufacturing Index; a reading above 50 indicating an overall
increase compared to the previous month, and below 50 an overall decrease
Source: World Steel Association (2024); S&P Global (2024); Bloomberg (2024)

30

Over the outlook period, world steel production is projected to grow by
1.5% a year to reach 2.1 billion tonnes by 2029. Growth in world steel
production over the outlook period will be supported by growth in new
capacity — either underway or planned — with projects in the pipeline inAsia, North America, Europe and the Middle East.
As the world’s largest exporter of key commodities required for steel
production, Australia is well placed to benefit from the increased demand
projected in global markets over the outlook to 2029 (see Iron Ore andMetallurgical Coal chapters).
Global industrial production expected to rebound in 2024 and 2025

Figure 3.3: World industrial and steel production
16
Annual percentrage change

Although steel output has weakened in recent months, world steel
production is expected to record year-on-year growth of 1.9% in 2024.

12
8
4
0
-4
-8
2005

2008

2011

2014

2017

Industrial production

2020

2023

2026

2029

Steel

Global industrial production growth was 0.9% year-on-year in 2023.
Growth is expected to pick up noticeably over the next two years — toaround 3% a year — as the steel-intensive manufacturing, infrastructure
and civil construction sectors recover (Figure 3.3).

Infrastructure construction to drive global steel demand to 2029

The downturn in global construction activity seen since late 2022 is
expected to flatten out and gradually recover beginning in the second halfof 2024. With private sector residential and commercial activity dampenedby tighter credit conditions, global construction continues to be driven
primarily by infrastructure. The Middle East, Asia Pacific and Americas
registered the strongest conditions in 2023, while construction activity
continued to deteriorate in Europe. However, the IMF and most market
analysts expect substantial falls in interest rates in major economies overthe next two years, which should support a broader recovery inconstruction activity.

Construction — representing about 50% of world steel demand — isexpected to see solid growth over the outlook period. This will be spurredby considerable levels of infrastructure investment pledged across many
major nations in recent years. This includes the US$1.2 trillion Bipartisan
Infrastructure Framework in the US, as well as India’s US$1.3 trillion
National Infrastructure Pipeline.

Global manufacturing activity is showing tentative signs of recovery, with
the JP Morgan Global Manufacturing PMI moving into neutral territory witha reading of 50 points in December 2023. This followed more than fivequarters of contraction. The improved result stemmed from an increase inglobal manufacturing output and a slowing in the rate of decline in neworders. Data broken down by country showed that output rose in China,
India and Brazil, and fell more slowly in the US, Japan and the Eurozone.
Resources and Energy Quarterly | March 2024

Source: World Steel Association (2024); Wood Mackenzie (2024); DISR (2024)

Global steel consumption is projected to grow by 1.3% a year over theoutlook period to 2029. Growth is expected to be highest in regions suchas South and South-East Asia (particularly India), the Middle East, andNorth America (particularly the US and Mexico) (Figure 3.4).

Global steel production is forecast to grow by around 1.5% annually to2029. This includes up to 120 million tonnes (Mt) from new capacity —either underway or planned over the next couple of years — with largecapacity projects slated for Asia, North America, Europe and the Middle
East. By process, Blast Furnace-Basic Oxygen Furnace steelmaking(favouring iron ore and metallurgical coal as inputs) is expected to makeup just under half of new global supply, and more than 75% of new31

50

Annual percentage change

Figure 3.4: World steel demand growth by country/region
India

Americas25

Rest of world
Projected
growthEast Asia
2023 to(exc.
China)
Europe2029*
0Figure 3.5: China’s residential property sector pipeline

Rest of Asia

Global-25

0 Recent growth
2016 to 2022*

25

80

30

60

20

40

10

20

0

0

-10

-20

-20

-40

-30
2019

China

-25

40

2020

2021

2022

2023

2024

Annual percentage change

capacity in Asia. Decarbonisation initiatives will increasingly impact global
steel industry over the outlook (discussed below).

-60

New home sales (rhs)
Fixed Asset Investment (real estate)
Under construction
50

Notes: * Growth is total growth in percentage terms over the period; Rest of Asia ex. China,
Japan, South Korea, Taiwan, and India.

Notes: China’s property data combines January and February monthly data.
Source: NBS (2024); Bloomberg (2024)

Figure 3.6: China credit impulse
25

China’s property completions improve, but new starts remain weak
China’s property sector downturn has yet to stabilise. New home sales
were down 26% year-on-year in December 2023, and floor space underconstruction was down 12% in January-February (Figure 3.5). Fixed asset
investment in real estate was down 8.1% year-on-year in December 2023.
Despite monetary policy easing over the past year, there is yet to be ameaningful pick up of credit growth in the broader economy. Bloomberg’s
China Credit Impulse (measuring new loans compared with broader GDP)
indicate that loans have stagnated over the past year as investor caution
continues (Figure 3.6).

Annual percentage change

Source: World Steel Association (2024); DISR (2024)

20
15
10
5
0
-5
-10
-15
2009

2012

2015

2018

2021

2024

Source: NBS (2024); Bloomberg (2024)

Resources and Energy Quarterly | March 2024

32

Confidence among homebuyers will take time to stabilise and remains a
key downside risk, undermining government efforts to stimulate property
demand. Whether the property downturn has reached the bottom remains
to be seen.
Structural factors including a slowdown in urbanisation rates and the peakin China’s population are adding to the challenges the sector faces (seeMacroeconomic outlook). However, one positive sign is the turnaround inproperty completions, with floor space of completed residential buildings
up by 16% in December (year-on-year), compared with a fall of 14% a
year earlier.

Figure 3.7: China annual steel production
1.2

Billion tonnes

1.0
0.8

Substantial increases in fixed asset investment in infrastructure andmanufacturing have been critical in supporting steel demand in China in
2023 (see Macroeconomic outlook). Infrastructure spending is expected toprovide additional support to China’s economy over the outlook period.
The government approved issuance of an extra 1 trillion yuan worth ofsovereign bonds targeting post-disaster recovery, and reconstruction
should support steel demand. Legislators also renewed authorisations tofrontload some local government bond issuance in 2024.
Strong growth in exports has also played a key role in supporting China’s
steel sector, by partly offsetting the effects of property sector weakness.
Chinese steel exports were up 35% in 2023 — a seven-year high — driven
by surging export volumes in the second half of the year. However,China’s rising exports have increased trade tensions with a number of
trading partners, with 5 countries commencing trade remedy investigations
against Chinese steel products in 2023 and the potential for further actions
this year — including from the US and the EU.

0.4

Overall, China’s steel production in 2024 is expected to experience a mild
fall, down by 0.5%. This trend is expected to continue over the rest of theoutlook period, with projected falls of 0.4% a year to 2029.

0.2

Rebound in ex-China steelmaking expected after weak 2023

0.6

0.0

2007

2011

2015

2019

2023

2024 to2009z

z = projections
Source: World Steel Association (2024); Department of Industry, Science and Resources(2024)In December 2023, China’s monthly steel output plunged by 13.5% yearon-year to bring 2023 total production to slightly below the figure for 2022
(Figure 3.7). Chinese steel mill margins remain weak. The challenging
conditions faced by Chinese steel mills over the past two years havecontinued into 2024 due to weak steel prices and high prices for key inputs
including energy and metallurgical coal.

Resources and Energy Quarterly | March 2024

Ex-China global steel production is estimated to have fallen by around
0.1% in 2023. Overall steel demand was affected by the high inflation andinterest rate environment in the US and EU in particular. Higher energy
and input costs, as well as moderating global demand, have caused
manufacturing and industrial production to weaken in many major
economies during 2023. However, industrial production has showntentative signs of stabilising in the EU and Japan in recent months, andSouth Korea’s industrial production has moved into positive growth after
substantial falls last year (Figure 3.8).
After falling steadily throughout most of 2023 as demand for steel fell,
global steel prices — for both reinforcing bar (‘rebar’) and flat steel
products such as hot-rolled coil (HRC) — are now steadying, particularly in
China and southern Europe. Improving prices will help lift operating
33

conditions for steel mills struggling with high input costs. By contrast, US
prices for HRC eased in early 2024 following the sharp rises in the final
quarter of 2023. The substantial price differential between US rebar prices
and other markets has continued into early 2024 (Figure 3.10).

commercial construction also declined. Inflows of new business at
Eurozone construction firms fell rapidly in January, and the ongoing
downward trend points to further weakness in business conditions
extending well into 2024.

Figure 3.8: Industrial production — EU, US, Japan and S Korea

Slowdowns in construction activity were steepest in Germany, withGerman construction firms recording the largest fall in activity since April
2020. Germany’s economy has been hit particularly hard, facing both amanufacturing recession and a property crisis.

Annual percentage change

15%
10%

Steel demand from the European automotive sector is unlikely to return to
2015-19 levels in 2024. The automotive industry continues to facechallenging conditions in 2024, including the weak overall economic
climate, supply chain shortages and disruptions from the shift from ICE toelectric vehicles, including preparing for the petrol car ban by 2035.

5%
0%
-5%
-10%
-15%
Jan-2022EU

Jul-2022

Jan-2023

US

Japan

Jul-2023

Jan-2024

South Korea

Source: Bloomberg (2024)

European steel outlook remains highly uncertain
European steel production and consumption fell sharply in 2023, as
businesses reduced stocks and steel-intensive sectors struggled withfalling demand and high energy costs. The European Central Bank’s
aggressive monetary policy tightening cycle continues to dampen theEurozone construction sector, with the delayed effect of tightening
monetary policy expected to slow the onset of the rebound in steel
demand over the first half of 2024.
The HCOB Eurozone Construction PMI fell for the 21st consecutive monthin January 2024, to reach 41.3, the largest fall in activity since thepandemic-affected months of April and May 2020. Downturns were evident
in all three construction subsectors (housing, commercial andinfrastructure). Housing recorded the biggest fall, but infrastructure andResources and Energy Quarterly | March 2024

EU steel output fell by an estimated 7.4% year-on-year in 2023 (andremained 16% below pre-COVID 2019 levels). Over the outlook period to2029, EU steel production is forecast to grow modestly (at just over 1% ayear), though will remain below its pre-pandemic peak. Most of the EU’s
current or planned steel capacity developments are aimed at replacement(rather than additional) supply, with a focus on the shift toward EAF-based,
lower-emissions facilities.
Decarbonisation initiatives to increasingly impact global steel industry
The decarbonisation of steel production and supply chains will affectgrowth and trade patterns over the outlook period to 2029. Most existing
steel makers and iron ore miners have committed to net zero emissions by
2050. However, overcoming the substantial technological, energy andfeedstock challenges required to achieve this transformation will take bothtime and substantial capital investment. There are already many pilot
plants under construction around the world, especially hydrogen-based
DRI operations, most of which are expected to begin over the next two
years.
As producers and miners prepare for the impact of the introduction of the
EU’s Carbon Border Adjustment Mechanism (CBAM) and other carbon
pricing initiatives, there has been a rise in collaboration and strategic34

A report from EU steel producers on embedded emissions of steel imports
to the EU is due in 2024. Although cost penalties in the initial years of the
CBAM are relatively modest, as they increase the impact on trade patterns
will increase. In 2023, the EU and the UK imported around 30 Mt of steel
from non-EU nations — the largest being China (15%), India (13%),
Turkey (12%) and Korea (12%). Most of the imported steel is produced inblast furnaces and will therefore be subject to carbon taxes. Over the next
few years, before decarbonisation initiatives have affected substantial
shares of production, high-cost producers are likely to seek out alternative
export markets or look to use some of the excess steel domestically. Lowcost steel producers, by contrast, will be better placed to absorb the costs
to maintain access to EU markets. Further information on the EU CBAM isprovided in the Aluminium, Alumina and Bauxite chapter.
EU sanctions on Russian exports are scheduled to take effect in 2024.
Following the initial ban on finished steel from Russia, a ban on billet
imports will take effect in April. The EU imported 4-5 Mt a year of Russian
steel prior to the Russian invasion of Ukraine but has since turned toChina and India for that supply; these nations provided about 10 Mt in
2023.
India/Southeast Asian steel output to grow impressively in outlook period
Indian steel output expanded rapidly in 2023, to reach 140 Mt, a rise of
12% year-on-year (Figure 3.11). This was driven by rising demand fromstrong levels of construction activity in all three sectors (residential,
infrastructure and commercial).
Resources and Energy Quarterly | March 2024

Figure 3.9: Rebar steel prices
1,200

US$ per tonne

1,000
800
600
400
200
0
2018

2019
US

2020

2021

China

2022

2023

2024

Southern Europe

Source: Bloomberg (2024)

Figure 3.10: HRC steel prices
2,000

1,500

US$ per tonne

alliances around the world. Examples include the partnership between
Liberty Steel and AD Ports Group to import magnetite ore from Australia
and Vale and H2 Green Steel’s iron ore pellet supply agreement.
BlueScope Steel and BHP and Rio Tinto have agreeing to jointly
investigate the development of the country’s first ironmaking electric
smelting furnace pilot plant. The project aims to demonstrate that
production of molten iron from Pilbara ores is feasible using renewable
power when combined with Direct Reduced Iron process technology. The
Australian Government also recently awarded a grant to Liberty to replace
the existing blast furnace at Whyalla with a low carbon EAF.

1,000

500

0
2018

2019
US

2020
China

2021

2022

2023

2024

Southern Europe

Source: Bloomberg (2024)

35

India’s economic outlook remains healthy, with the demand for steel
expected to maintain its high growth momentum — driven by the
manufacturing and construction sectors. India’s manufacturing PMI
strengthened in February, with steady growth reported in output, neworders and foreign sales. Indian Government data from late 2023 indicate
a pipeline of over 1700 projects in road transport, railways, energy andwater, with an anticipated completion cost of around US$360 billion.
India is projected to record some of the strongest growth in steel output
globally over the outlook period (Table 3.1). Substantial steel production
capacity is expected to be added over the next few years, with theGovernment aiming to double steel capacity to 300 Mt by 2030.
A considerable increase in total steel output is also expected in South-East
Asia, with new production capacity expected from sizeable projects in
Vietnam, Philippines and Malaysia. The World Steel Association predicts
that steel production capacity in South East Asia will increase by 91 Mt by2030. Major incoming projects to the region include the Panhua Group’s
new 10 Mt per annum (Mtpa) facility in the Philippines’ Misamis Province,
Sarawak Iron and Steel’s 10Mtpa facility in Malaysia, and Hebel Bishi
Steel Group’s 3Mtpa facility in Indonesia.
Steel output in Japan weakens while Korea’s output recovers
Japanese steel output contracted by 1.9% year-on-year in 2023. Risingcosts and labour shortages dampened growth in construction activity.

However, in 2024, manufacturing steel demand is expected to show
moderate growth, helped by the recovery of auto production. Over theoutlook to 2029, Japan’s steel production is expected to be flat (Table 3.1).
As noted above, South Korea’s export-oriented economy has recovered
strongly in recent months from the large falls in industrial production
experienced in the first half of 2023. South Korean steel output is forecast
to grow at around 1.0% a year over the outlook period (Table 3.1).
US manufacturing production recovers
US steel production increased by only 0.2% year-on-year in 2023. This
result reflected weak industrial production and construction, particularly
residential property, weighed down by tight monetary conditions.
The outlook for US steel demand in 2024 remains positive but contains
downside risks. The potential for rate cuts in the second half of the year
provides cause for optimism for construction as credit conditions ease.
The outlook for manufacturing has also improved, with the US
Manufacturing PMI recording the strongest reading since September 2022
driven by a sharp pickup in domestic orders. Over the rest of the outlook
period to 2029, the Inflation Reduction Act and Infrastructure Investment
and Jobs Act are expected to add to steel demand and support
infrastructure growth. Overall, US steel production is projected to record
1.6% annual growth over the outlook period to 2029 (Table 3.1).

Figure 3.11: Other major producers — annual steel production
Million tonnes

200
150
100
50
0

European Union

India

Japan
2021

United States
2022
2023

Russia2024 to 2029z

South Korea

Other Asia

Middle East

Note: z projections
Source: World Steel Association (2024); DISR (2024)

Resources and Energy Quarterly | March 202436

Table 3.1: World steel consumption and production
Crude steel
consumption

Million tonnes
2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

China

963

958

953

948

945

942

939

-0.4

European Union

147

152

155

157

160

163

166

2.1

India

130

138

149

159

169

179

189

6.5

United States

102

103

107

110

113

115

118

2.4

Other Asia

111

116

119

122

125

129

133

3.0

Japan

59

59

59

60

61

62

63

1.1

Middle East

59

60

62

64

66

68

69

2.8

South Korea

54

55

55

56

57

58

58

1.2

Russia

45

45

45

46

48

49

50

1.6

World steel consumption

1,893

1,919

1,947

1,974

2,000

2,025

2,050

1.3

Crude steel production

2023

f

2024

f

2025

z

2026

z

2027

z

2028

z

2029

CAGRr

1,019

1,015

1,011

1,007

1,002

997

992

-0.4

European Union

126

132

133

134

135

135

136

1.3

India

140

149

157

166

174

181

187

5.0

Japan

87

89

88

88

88

87

86

-0.2

United States

81

83

85

85

86

87

88

1.6

Russia

76

77

77

77

77

77

78

0.5

South Korea

67

69

70

70

70

70

71

1.0

Other Asia

62

70

79

82

88

93

98

7.9

1,888

1,924

1,957

1,983

2,010

2,037

2,063

1.5

a

China

a

World steel production

Notes: a Asia ex. China, India, Japan, South Korea and Taiwan; f Forecast; r Compound annual growth rate; z Projection
Source: World Steel Association (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

37

Resources and Energy Quarterly | March 2024

38

Resources and Energy Quarterly | March 2024

39



4.2

Australian export volumes increased by 1.1% (year-on-year) to
893 million tonnes in 2023. As additional greenfield supply comes
online from established and emerging producers, export volumes are
forecast to increase by 1.6% annually over the outlook period to 2029.
Lower prices projected over the outlook period will lower Australia's
iron ore export earnings (in real terms) from $136 billion in
2023–24 to $107 billion in 2024–25, and to $83 billion by 2028–29.

PricesIron ore price have been volatile in the March quarter
Iron ore prices have experienced bouts of strength in recent months, on
the back of positive market sentiment following a series of Chinese
government measures to support China’s economy. After falling to a low ofaround US$98 a tonne in mid-2023, the benchmark iron ore spot price(basis 62% Fe fines CFR Qingdao) recovered to average over
US$125 a tonne in January-February 2024 (Figure 4.1).
A rally in iron ore prices through the December quarter 2023 and early2024 came despite weakness in Chinese steel production (down 13.5%
and 6.9% year-on-year in December and January respectively).
In mid-November, China’s portside iron ore inventories fell to around 20%
below historic averages (Figure 4.2). However, since then, inventories
have rebuilt to levels around the historic average as mills have restocked.
In part this may reflect cyclical factors, as mills stock up and boost output
ahead of the peak construction season following the Chinese New Year.

Resources and Energy Quarterly | March 2024

250

25

200

15

150

5

100

-5

50

-15

0
2016

2018

2020

2022

China steel production (rhs)2024Year on year per cent change

Spot iron ore prices strengthened in early 2024, after steady rises inthe second half of 2023 driven by positive sentiment associated withthe policy stimulus provided to the Chinese economy. Prices then fell
to seven-month lows in March reflecting rising concerns about a rapid
build-up of Chinese iron ore inventories amid sluggish growth in steel
output in early 2024.

Figure 4.1: Iron ore price, monthly

US$ a tonneSummary-25

Iron ore priceNotes: China import Iron ore fines 62% Fe spot (CFR Tianjin port)
Source: Bloomberg (2024) China import prices

Figure 4.2: China’s weekly iron ore port stocks
180
160
140
120
Million tonnes

4.1

100
80
60
40
20
0
2017

2018

2019

2020

Weekly port stocks

2021

2022

2023

2024

5 year average

Source: Bloomberg (2024)

40

Despite recording flat steel production in 2023, China’s iron ore imports
grew by 6.6% to a record 1,180 million tonnes in 2023 (Figure 4.3). This
included higher imports from countries such as Brazil, South Africa andCanada. Australian exports of iron ore to China rose by 1.5% in 2023.

Figure 4.3: China’s iron ore imports
1,400
1,200
1,000

Million tonnes

However, since then iron ore prices have fallen sharply, to seven-monthlows in early-March. This reflected rising concerns about a softer-thanexpected growth outlook for China, particularly its property sector. The
rapid build-up of iron ore inventories amid sluggish growth in steel output
in early 2024 is also putting downward pressure on prices.

800
600
400

China’s monthly steel demand began losing momentum over H2 2023,
resulting in rising steel inventories across China. The weakness in steel
demand builds on the large falls in Chinese steel use observed in 2022.

New infrastructure investment in China — resulting from substantial levelsof funding allocated over the past year — as well as new measures by the
Chinese government to alleviate weakness in the domestic property
sector, should provide support for construction activity, and hence Chinese
steel and iron ore demand over the next few years (see Steel chapter).
Ex-China steelmaking stabilised in 2023 following the sharp falls in 2022.
The outlook for 2024 is healthy, with growth forecast to exceed 4.5% asEuropean steel mills make up some of the production lost when highenergy prices in 2022 led to widespread plant idling and production
stoppages in Europe. The outlook period should see a modest rise in ironore imports by major purchasers in Europe and North America, as well as
East and South-East Asia and the Middle East. This pickup should provide
support for iron ore demand and prices.
Risks to the global iron ore demand outlook remain broadly balanced.
Inflation is moderating towards target levels in most advanced nations,with market expectations of interest rate cuts from the end of 2024.

Resources and Energy Quarterly | March 2024

0

2013

2015

2017

Australia

2019

2021

Brazil

Other

2023

2025

2027

2029

Total (Projected)

Source: Bloomberg (2024)

Figure 4.4: Iron ore price spreads between grades
175
150
125

Per cent difference*

Chinese steel mill margins are low/negative due to weak steel prices andhigh input (iron ore, metallurgical coal and power) prices. As a result,spreads for premium 65% pellet and premiums for high-grade iron ore
fines remain low, as mills seek to reduce operating costs (Figure 4.4).

200

100
75
50
25
0
-25
-50
2017

2018

2019

2020

Discount 58% fine ores
Premium 62% Lump ores

2021

2022

2023

2024

Premium 65% pellet

Notes: *Difference to 62% benchmark iron fines CFR; all grades reflect Chinese import prices
Source: Bloomberg (2024)

41

The IMF’s January 2024 0.4% upgrade to the China GDP growth forecast
for 2024 indicates the potential for stronger underlying demand for steel.
However, further deterioration in China’s property sector remains asubstantial downside risk, particularly if property prices continue to fall andconfidence among Chinese homebuyers remains low.
Rising supply and easing demand to lower prices over the outlook period
China is projected to experience modest falls in steel output over theoutlook period to 2029. This is expected to soften the rate of growth inglobal iron ore demand in the coming years, putting downward pressureon iron ore prices.
China’s stated aim to shift its economy away from investment-led toconsumption-led growth is expected to be a key driver of this downward
trend in prices. China’s declining population and the tapering in urban
population growth in recent years is resulting in a structural downshift indemand for new residential and infrastructure-related construction.
Rising steel demand and production capacity in regions such as emerging
Asia and the Middle East will see ex-China iron ore demand increase over
the outlook period. This includes over 100 million tonnes of integrated(Blast Furnace-Basic Oxygen Furnace) steelmaking capacity expected tocome online in the next few years in Asia alone.
Turning to global iron ore supply, the world’s two largest producers —Australia and Brazil — are expected to continue to collectively grow export
volumes by 3% per annum over the outlook period to 2029. This follows aramp up of greenfield projects for major Australian miners, and major
expansions planned by Brazilian producers including Vale and CSN.
New supply from emerging producers in Africa will also contribute to thegrowth in global trade of iron ore (see World trade section).
From an estimated average price of around US$105 a tonne (FOB) in
2023, the benchmark iron ore price is projected to steadily fall to an
average of about US$68 a tonne in real terms by 2029 (Figure 4.5). These
declines are not expected to result in significant Australian capacity being
closed or cut back.
Resources and Energy Quarterly | March 2024

4.3

World trade

China iron ore imports reached record levels in 2023
Combined shipments from Australia, Brazil, South Africa and Canada —representing more than 80% of global seaborne supply — were estimatedat around 1,370 million tonnes in 2023, a rise of 2.6% from 2022.
Over the outlook period, global trade is expected to grow by 2.1%
annually, with new supply coming online in Australia, Brazil and Africa.
Australia is projected to continue to ramp up greenfield projects fromestablished producers Rio Tinto, BHP and Fortescue, as well as emerging
producers such as Mineral Resources Limited and Atlas Iron. Australia’siron ore exports are projected to reach 983 million tonnes by 2029 (seeAustralia section for more detail).
Total iron ore shipments from Brazil increased by 21 million tonnes in
2023. Vale, which accounts for over 80% of Brazil’s iron ore production,
expects to produce 310-320 million tonnes in 2024. This aligns with the
315 million tonnes produced last year. However, the company plans toincrease capacity by a further 50 million tonnes a year by 2026.
Brazil is expected to grow iron ore exports by around 6% annually over theoutlook period. This will include Vale’s S11D expansion, as well as newand expanded output by a number of other producers, such as CSN’s
Casa de Pedra mine, and IndoSino’s Amapa high grade concentrate.
Outside of Australia and Brazil, iron ore exports are projected to
be bolstered by additional supply from Canada and India and new projects
coming out of Africa, including the 150 million tonne per annum plus
Simandou mine in Guinea which is targeting first production in 2025–26.
CMRG to play increasing role in contract negotiations
In late 2023, China’s state-owned company China Minerals ResourcesGroup (CMRG) commenced talks with the world’s four largest iron ore
mining companies — Rio Tinto, BHP, Vale and Fortescue. Reports
indicate CMRG is seeking preferential terms on transport, grades anddelivery arrangements, as well as price.

42

CMRG was established by the Chinese Government in July 2022 with theaim of enhancing China’s ability to ensure the supply of important mineral
resources — including the establishment of a single, central purchasing
platform for iron ore. CMRG has a broad remit, with responsibilities
ranging from exploration and mining of mineral resources, management of
supply chain services and investment activities.
Over the outlook period, CMRG is expected to play an increasing role incontract negotiations and price setting in the global iron ore market. In
2023, CMRG started negotiations on iron ore supply on behalf of a numberof China’s major steelmakers.

Figure 4.5: Iron ore price outlook, quarterly (real)
250

US$/tonne

200

To support the project, Baowu raised US$1.4 billion from a bond issue in
China in January 2024. In 2023, Rio Tinto announced it had reachedagreement with the Guinean Government and Winning Consortium
Simandou to develop the 600 kilometre rail line required to transport theiron ore to a new deepwater port on Guinea’s Atlantic coast.
The Simandou mine is divided into 4 blocks, with 2 blocks controlled by
Rio and Aluminum Corp of China, and the remaining 2 blocks owned by
the Winning Consortium Simandou, backed by Chinese and Singaporean
companies. The Guinean Government aims to complete infrastructure andcommence commercial production in late 2025 or early 2026.
India’s iron ore imports to increase to meet rising domestic steel demand
In 2023, India's iron ore and pellet exports more than doubled to reach an
estimated 37 million tonnes. This growth reflected the removal of large
export duties imposed in 2022. However, as India’s steelmaking capacity
continues to grow in the year ahead — to meet the rising demand frommanufacturing, infrastructure and residential and commercial construction— the quantity of iron ore available for export will be reduced.

150
100
50
0
2017

year. Rio Tinto plans to invest US$6.2 billion in the mine, rail, and port
project, in collaboration with a number of other companies. Final
investment approval from Rio Tinto’s Chinese partners, which includes
Baowu and Chinalco, is pending.

2019

2021

2023

2025

2027

2029

Notes: China import iron ore fines 62% Fe spot (FOB)
Source: Bloomberg (2024); Department of Industry, Science and Resources (2024)

Rio Tinto board gives go-ahead for Simandou mine
Progress on Guinea’s Simandou 150-200 million tonne mine continued in
the March quarter 2024, with the announcement that Rio Tinto’s board
approved the project. Rio Tinto expects infrastructure work to begin thisResources and Energy Quarterly | March 2024

There remains considerable uncertainty about the likely trajectory ofIndia’s iron ore exports and imports over the next few years. India’s ironore imports are forecast to rise rapidly over the outlook to 2029, albeit froma low base. Much will depend on how quickly iron ore production capacity— and associated rail and other infrastructure — can be brought online.
India has historically been seen as a price-sensitive iron ore exporter, withdomestic miners incentivised to export in times of high seaborne prices.
The forecast easing in prices over the outlook period suggests India’s ironore exports are likely to grow relatively slowly over the outlook to 2029.

43

Australia

Export volume growth to slow over the five-year outlook period
Australia’s iron ore export earnings were $136 billion in 2023 (2023-24
prices), a 9.5% increase from 2022. The increase reflected higher iron ore
prices over the period, with the unit export price in 2023 around 8% higher
compared with the previous year. In volume terms, Australia exported
893 million tonnes of iron ore in 2023, up by 1.1% (Figure 4.6). This
follows the ongoing ramp up of BHP’s South Flank, Rio Tinto’s Gudai-Darriand Fortescue’s Eliwana operations. Over the five year outlook, Australia’siron ore production volumes are projected to increase by 1.9% a year involume terms, to reach an estimated 1,069 Mt by 2028-29 (Table 4.2).
BHP’s iron ore output was around 281 million tonnes in 2023 (on a 100%
ownership basis), down 1.3% year-on-year. Lower production was due tothe continued tie-in activity for the Rail Technology Programme and theimpacts of the ongoing ramp up of the Central Pilbara hub. The company
left its production guidance for 2023–24 unchanged at 250-260 million
tonnes (equating to 282–294 million tonnes on a 100% ownership basis).
This includes the further ramp up of South Flank, which BHP expects toreach nameplate capacity by the end of the June quarter 2024, as well as
its port debottlenecking project due for completion in 2024. The company
is also exploring options for growing output to 330 million tonnes perannum in the second half of this decade.
Rio Tinto shipped around 332 million tonnes of iron ore in 2023, thesecond highest level on record. The result reflected productivity
improvements across the Pilbara system and the rapid ramp up of the
Gudai-Darri mine to its nameplate capacity of 43 million tonnes a year.
Rio Tinto’s 2024 production guidance remains at 323-338 million tonnes.
Rio Tinto is seeking to lift capacity of the Gudai-Darri mine to 50 million
tonnes a year through incremental productivity gains. The capacity gain issubject to environmental, heritage and other relevant approvals.
Rio Tinto is also projecting continued expansion of its iron ore production
over the outlook period to 2029. In June 2023, the company announced it

Resources and Energy Quarterly | March 2024

had awarded $1 billion in construction contracts for its $3 billion Western
Range joint venture with Baowu Steel Group. This project will sustain
production from its existing Paraburdoo hub, and is expected to produce
25 million tonnes per year.
The company also approved a $110 million pre-feasibility study inDecember to progress development of the Rhodes Ridge prospect (in ajoint venture with Wright Prospecting). The study is expected to becompleted by the end of 2025 and will consider an initial plant capacity of
up to 40 million tonnes per annum, with potential first output toward theend of this decade.

Figure 4.6: Australian iron ore exports by company
1,000
800
Million tonnes

4.4

600
400
200
0

2016

2017
2018
Rio Tinto

2019
BHP*

2020
FMG

2021
Other

2022

2023

Notes: * Based on company’s reporting of production, not shipments
Source: ABS (2024) International Trade, Australia, 5368.0; Company reports

Fortescue's total iron ore shipments were around 196 million tonnes in the2023 calendar year, 2% higher year-on-year. Fortescue’s production
guidance for the 2023–24 financial year remains at 192–197 million
tonnes, which includes approximately 2-4 million tonnes of production fromIron Bridge. The Iron Bridge shipment guidance has been revised down

44

Weaker prices to see Australia’s export earnings fall over the outlook
Australia’s iron ore export earnings are estimated to reach $136 billion in
2023–24, reflecting higher production volumes and stronger prices.
Weaker prices and a higher AUD/USD exchange rate are forecast to leadto lower iron ore earnings over the outlook period. Total export earnings
are forecast to decline to $107 billion in 2024–25, falling to around $83
billion by 2028–29 (both in real terms) (Figure 4.7).

1,250

200

1,000

160

750

120

500

80

250

40

0
2012–13

Exploration moderated in December quarter 2023
A total of $171 million was spent on iron ore exploration in the December
quarter 2023 (Figure 4.8). This was 13% lower compared to the previous
quarter, and 2.2% 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 triggered by thehistorical high iron ore prices (of above US$200 a tonne) in the first half of
2021.

Compared with the March 2023 REQ, Australian iron ore earnings in
2027–28 (in nominal terms) have been revised up by around $8 billion,
reflecting forecasts of slightly higher prices and a minor rise in volumes.

2018–19
Volume2021–222024–25

2027–28

0

Value (rhs)

Source: ABS (2024) International Trade, Australia, 5368.0; Department of Industry, Scienceand Resources (2024)

Figure 4.8: Australian iron ore exploration expenditure
400
350
300
$ millions

Revisions to the outlook
Export earnings in 2023–24 have been revised up from the December
2023 REQ reflecting higher forecast prices and a lower-than-expectedexchange rate. Earnings of $136 billion rather than $131 billion are now
forecast for 2023-24. Export earnings in 2024–25 have also been revisedup, from $102 billion in the December 2023 Resources and Energy
Quarterly to $111 billion in this edition.

2015–162023-24 A$ billion

In January 2024, Mineral Resources reported the Onslow Iron projectremains on target for the first ore-on-ship delivery by June 2024. The
project is forecast to ship around 35 million tonnes of iron ore per year,with an expected mine life of at least 30 years.

Figure 4.7: Australia’s iron ore export volumes and values

Million tonnes

from 5 million tonnes due to lower-than-expected throughput of the Raw
Water Pipeline, which is undergoing work to improve its performance.

250
200
150
100
50
0
2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024

Source: ABS (2024) Catalogue 8412.0

Resources and Energy Quarterly | March 2024

45

Table 4.1: World trade in iron ore
Million tonnes
2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

1,620

1,633

1,672

1,699

1,739

1,788

1,832

2.1

China

1,180

1,118

1,092

1,072

1,061

1,060

1,053

-1.7

Japan

102

104

104

104

103

102

101

-0.2

European Union

108

112

113

114

113

114

114

1.0

South Korea

72

74

75

75

72

75

76

1.0

Rest of Asia

53

61

77

84

94

104

117

14.2

India

4

18

31

44

52

72

89

70.7

Australia

893

905

937

952

981

983

983

1.6

Brazil

367

390

413

440

467

494

521

6.0

South Africa

59

60

61

62

63

64

64

1.4

Canada

56

58

60

62

62

62

62

1.7

India

37

38

39

40

41

42

43

2.5

World trade
Iron ore importsaIron ore exports

Notes: a Excludes China, Japan, South Korea, Taiwan and India; s Estimate; f Forecast; r Compound annual growth rate, z Projection
Source: World Steel Association (2024); International Trade Centre (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

46

Table 4.2: Iron ore outlook
Million tonnes
World

Unit

2023f

2024f

2025z

2026z

2027z

2028z

2029z

CAGRr

– nominal

US$/t

105

95

84

77

75

75

75

-5.4

– real b

US$/t

107

95

82

74

71

69

68

-7.3

Australia

Unit

2022–23f

2023–24f

2024–25z

2025–26z

2026–27z

2027–28z

2028–29z

CAGRr– Steel c

Mt

5.6

5.4

5.5

5.5

5.4

5.5

5.5

-0.4

– Iron ore g

Mt

957

962

999

1,029

1,051

1,068

1,069

1.9

Mt

1.21

1.00

1.00

1.07

1.03

1.03

1.05

-2.5

– nominal value

A$m

1,356

1,192

1,182

1,207

995

815

730

-9.8

– real value i

A$m

1,411

1,192

1,146

1,139

916

732

639

-12.4

Mt

895

900

919

947

967

983

983

1.6

– nominal value

A$m124,131

135,692

110,504

98,976

92,69594,246

94,493-4.4– real value

A$m

129,120

135,692

107,104

93,35385,29784,60982,761-7.1

Prices a

Production

Exports
Steel cIron orehiNotes: a Spot price, 62% iron content, fob Australian basis; b In 2024 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 Compound annual growth rate; z Projection
Source: ABS (2024) International Trade in Goods and Services, Australia, 5368.0; Bloomberg (2024); World Steel Association (2024); company reports; Department of Industry, Science andResources (2024)

Resources and Energy Quarterly | March 2024

47

Resources and Energy Quarterly | March 2024

48

Resources and Energy Quarterly | March 2024

49

SummaryAustralia’s metallurgical coal export earnings are expected to decline to$56 billion in 2023–24, easing further and then stabilising between $35
and $40 billion (in real terms) over the second half of the outlook period.



Metallurgical coal prices are falling slowly as supply disruptions
gradually diminish. Prices are expected to ease from US$277 a tonne in
2024 to US$185 a tonne (in real terms) by 2029.
Export volumes are expected to increase from 161 Mt in 2023–24 to
175 Mt by 2028–29, as mines in NSW and Queensland ramp up (seeAustralia section). Another La Niña introduces volatility to the outlook.



5.2

World trade

Global demand for metallurgical coal reached 317 million tonnes in 2023,
growing by 8% from 2022. India and China drove the majority of thisgrowth, with China drawing in rapidly growing coal flows from Mongolia via
recently upgraded rail links. In 2023, India overtook China as the world’s
number one importer of seaborne metallurgical coal, though China stillretains top spot for overall (land and sea) metallurgical coal imports.
Demand from other markets was broadly stable through 2023, with South
Korea, Taiwan, and Europe totals similar to their 2022 volumes. Demand
from Japan was subdued, falling to 40 million tonnes in 2023 from 43
million tonnes in 2022.
World steel output is expected to grow at 1.5% per year over the outlook
period, providing a strong baseline for metallurgical coal use in themedium term. World metallurgical coal demand is projected to rise from
317 million tonnes in 2023 to 331 million tonnes by 2029.
Numerous Asian countries continue to progress ambitious steel plans, anddespite some delays associated with the pandemic and various
geopolitical problems, it is likely that the pace of steel production in theregion will pick up over time. Metallurgical coal imports are thus expected
to grow in a range of Asian nations including India, with other areas
including the European Union also holding up relatively strongly (Figure
5.1).
Resources and Energy Quarterly | March 2024

Chinese metallurgical coal imports are peaking
Total (seaborne and land) Chinese imports of metallurgical coal rosestrongly in 2023 but may be peaking. Over the five years to 2022, China
imported an average of 66 million tonnes of metallurgical coal per year. In
2023 imports rose to 103 million tonnes. Most of this extra volume camefrom Mongolia via the upgraded rail link between the two nations.
China has imposed import tariffs of 3% on metallurgical coal, in order toprotect its domestic industry. Indonesia and Australia are exempt fromthese tariffs under Free Trade Agreements. Russia and Mongolia are notexpected to be exempt, but import volumes from these countries areunlikely to be affected given the limited alternatives.
Figure 5.1: Metallurgical coal imports
100
80Million tonnes

5.1

60
40
20
0
2019
2025f

China

Japan
2020
2026z

South
Korea
2021
2027z

Taiwan

India

2022
2028z

2023
2029z

EU27
2024f

Notes: f Forecast z Projection
Source: McCloskey (2024); Department of Industry, Science and Resources (2024)

China’s seaborne imports of metallurgical coal will continue to be
influenced by its domestic steel production and by government industry
policy. China imposed cuts on steel production in 2021 and 2022 to meet
decarbonisation goals, but subsequently relaxed them in 2023. The targets
could stay relaxed in 2024 to mitigate the impact of slower economic
growth. Many of China’s steel mills are undergoing upgrades to use ultra50

low emissions technology: this should improve efficiency and reduce theimpact of stricter emissions policies.

currently two new projects and one expansion project planned formetallurgical coal, with all expected to come online by 2025.

China’s steel output is projected to decline modestly over the outlook
period, which should flow through to metallurgical coal imports. Seaborne
metallurgical coal imports are expected to fall from 64 million tonnes in2023 to 47 million tonnes by 2029.

Figure 5.2: Metallurgical coal exports

India’s imports of metallurgical coal grew by 25% to an estimated
73 million tonnes in 2023. India has been investing heavily in steel
production capacity in recent years; the Government is looking to double
steel production capacity to 300 million tonnes by 2030. Hence, steel
production (and consumption) is expected to increase significantly over theoutlook period (by 1.3% per year and 6.5% per year, respectively).
As its steel production has expanded, India has surpassed China as theworld’s largest importer of seaborne metallurgical coal in 2023. Growth isexpected to continue through the outlook period, driven by India’s
manufacturing and construction sectors. While India is also increasing its
production of metallurgical coal, this increase is not expected to keep pacewith demand. Seaborne metallurgical coal imports are expected toincrease from 73 million tonnes in 2023 to 89 million tonnes in 2029, withmost of this additional supply drawn from Russia and Australia.

5.4

World exports

World exports are expected to decline over the outlook period, albeit froma high baseline in 2023. Global trade in 2023 reached 349 million tonnes,
almost 12% above 2022. World exports are expected to fall to 333 million
tonnes by 2029, with a mixed profile among individual nations (Figure 5.2).
US metallurgical coal exports expected to remain stable
Metallurgical coal exports from the US were strong in 2023 at 43 million
tonnes. Seaborne metallurgical coal exports from the US are expected to
be flat over the outlook period, with a small decline to 42 million tonnes by2029. The US has a relatively small project pipeline for coal: there are

Resources and Energy Quarterly | March 2024

160
Million tonnes

India’s demand is expected to grow

200

120
80
40
0

Australia
US
2019
2020
2025f
2026z

Canada2021
2027z

Mongolia
2022
2028z

Russia2023
2029z

Mozamb.
2024f

Notes: f Forecast z Projection
Source: IEA (2024); Department of Industry, Science and Resources (2024)

The combined production capacity for these projects is just under 8 million
tonnes per annum. The US government is investing in upgrading transport
infrastructure which should help resolve previous supply chain disruptions.
Labour force shortages continue to be a challenge for US producers,
posing particular issues for new and expanding mines.
Safety concerns may hamper Mongolian coal exports in the short term
Mongolia’s exports of metallurgical coal more than tripled in 2023, risingfrom just 14 million tonnes in 2022 to 48 million tonnes. Improved rail links
to China were the main driver, helped by record prices from 2022.
With prices expected to soften over the outlook period, volumes are
expected to drop back to 35 million tonnes by 2025 and remain aroundthat level thereafter. Mongolia has three new metallurgical coal projects in
its pipeline and one expansion project. Together, these could expand
production capacity by 18 million tonnes per annum over the longer term.

51

Canadian mines expected to maintain output

5.3

Canada currently has eleven new metallurgical coal projects and one
expansion project in its pipeline. These projects are expected to comeonline between now and 2027, and will act to replace mines reaching endof life. Canada has a high bar for project approvals with complex
regulatory structures and significant influence at the local and community
level.

Metallurgical coal prices set to decline further

Exports of Canadian metallurgical coal are expected to decline over theoutlook, falling from 29 million tonnes in 2023 to 26 million tonnes by 2029.
Exports out of Mozambique are growing, supported by improved transport
Mozambique’s exports are expected to be steady at 4 million tonnes per
year through the outlook period. Mozambique remains a high-cost
producer with low processing yields. A good portion of production capacity
sits above the 90th percentile total cash cost. When prices fell in 2020 (dueto the pandemic), some of Mozambique’s high-cost miners exited themarket. With prices expected to decline over the outlook period, risks for
Mozambique exports remain weighted to the downside.
Russian mines reapproaching capacity but tariffs may hurt production

The Australian prime hard coking coal price averaged US$294 a tonne in
2023. While this was significantly lower than the 2022 average of US$360
a tonne, prices continued to experience volatility as a result of supply side
issues (Figure 5.3). Prices appeared to be stabilising around the middle ofthe year, but climbed back up in September when supply from Australia’s
BMA’s Peak Downs mine in central Queensland was suspended after two
truck sliding incidents.
Prices held at high levels towards the end of the year due to additional
supply disruptions — including Cyclone Jasper and the associated longqueues at Queensland ports. Vessel queues remained high in January2024, but showed some signs of easing in February. Prices are expected
to broadly trend downwards in 2024, averaging US$277 a tonne for theyear. Prices will likely experience volatility in the latter half of 2024 due tothe likelihood of a new La Niña cycle and associated disruptions.

Figure 5.3: Metallurgical coal prices — Australian vs US, FOB
700

Russia’s metallurgical coal exports were strong in 2023, increasing to
44 million tonnes compared to 37 million tonnes in 2022. The majority ofthis increased output was exported to India and China.

Over the outlook period, Russian seaborne metallurgical coal exports are
expected to experience a small decline, dropping from 44 million tonnes in2023 to 42 million tonnes by 2029. Exports will be impacted by lower
prices and miners’ difficulties finding funds to invest in new/existing mines.
Resources and Energy Quarterly | March 2024

600
US$ a tonne

Russian exports to Europe dropped to almost zero in 2023, with exports toJapan experiencing the largest drop outside of Europe. Other countries,
including Malaysia, South Korea, Turkey and Vietnam, increased theirimports from Russia. Russia implemented exchange rate-linked export
duties in October 2023 in a bid to increase government revenue. Theseduties were initially expected to remain in place through 2024 but were
removed in January 2024 in a bid to keep exports competitive.

Prices

500
400
300
200
100
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Australian prime hard coking
US Low Vol

Notes: ‘Low Vol’ is low volatility coking coal
Source: McCloskey (2024); Department of Industry, Science and Resources (2024).

52

Prices for metallurgical coal fluctuated sharply again in 2023, mostly due
to disruptions in Australian supply (linked to safety incidents, cyclones, anddelays due to port queues). Over the outlook period, prices will be driven
by the length and severity of weather disruptions from La Niña. The last La
Niña cycle lasted three years, if a similar length occurs supply could
experience disruptions out to 2026. There is also upside risks frompotential escalation in the Russia-Ukraine conflict which could further
reduce Russian exports. In real terms, prices are expected to fall to
US$185 a tonne by 2029.

5.4

Australia

Metallurgical coal production has only partially recovered
Australian metallurgical coal production and exports have been
constrained in recent years by bad weather and logistical problems (Figure5.4). But demand factors also played a role, including relatively soft steel
production among some regional importers, and sustained low exports to
China even following the removal of trade restrictions.
Recovering global supply will bring seaborne metallurgical coal prices
down. Falling prices (and production issues) have affected Bowen Coal’s
Bluff project, which has now paused having previously been restarted.
Other mines continue to produce at the lower end of their production
guidance ranges. Further price falls could potentially affect the outlook for
new projects, though key prospects such as Olive Downs and Maxwell are
expected to continue ramping up in the near-term.
Capital spending also remains subject to concerns over environmental
factors and social licence. These pressures have been mainly directedagainst thermal coal, but metallurgical coal is also being affected.
Labour force shortages in coal mining has eased slightly. According to
ABS labour force data, total persons employed in coal mining in 2023
averaged 47,000. This is a minor improvement on the previous year of
44,300, however is still below the pre-pandemic average in 2019 of
53,000.

Resources and Energy Quarterly | March 2024

Supply constraints are expected to ease to some degree over the outlook
period. Some supply constraints reflect disruptions caused by weather andlogistics, and so are inherently short-term and capable of rapid resolution.
However, others such as labour and capital shortages could be sustained,with potential to worsen over the next five years.
There are a range of Australian projects which could commence, ramp up
or restart production. These prospects include Bowen’s Bluff mine, Burton
and Broadmeadow East projects, Pembroke’s Olive Downs complex,
Anglo American’s German Creek (where output is already ramping up),Fitzroy’s Ironbark No. 1, Vitrinite’s Vulcan mine, Malabar’s Maxwell mine,
Q Coal’s Cook project, Sojitz’s Crinium mine, and Futura’s Wilton andFairhill deposits. Whitehaven’s large Winchester South deposit remains a
prospect, with potential for development late in the outlook period.
Although the fundamentals remain favourable, there are risks to navigate.
Higher electric arc furnace (EAF) and green steel production may harm thedemand for metallurgical coal from steel mills using blast furnaces. The
pace of the roll-out of this technology at an economical scale in major steel
producing nations remains unclear. Prices represent another risk — they
are currently on an easing path which could leave them below the level
required to incentivise increased output. Australia accounts for just overhalf of global export volumes and has cost and scale advantages overother producers. It thus retains an important role in balancing global
markets.
At this stage, assuming profit margins can be sustained, capital and labour
shortages are not considered sufficient to prevent growth in output. Mostof the potential capacity is expected to proceed, although with potential forfurther delays as markets find their equilibrium. Higher production in New
South Wales and (especially) Queensland is expected to lift Australia’s
exports from a weather-affected 156 Mt in 2022–23 to 175 Mt by 2028–29.
Metallurgical coal export earnings are expected to ease from $64 billion in
2022–23 to $35 billion by 2028–29 (real terms, Figure 5.6), with higher
volumes only partly offsetting the impact of falling prices.

53

Figure 5.4: Australia’s metallurgical coal export volumes, monthly

Exploration expenditure for thermal and metallurgical (Figure 5.4) has
been trending upwards since March 2022 when prices began to risesignificantly. In 2023, coal exploration expenditure in Australia reached$320 million, a 33% increase on the previous year, and the highest
investment figure since 2014. Expectations are that this investment islikely focused on metallurgical coal which is expected to see sustained
demand over the outlook.

20

10

Figure 5.6: Australian coal exploration expenditure and prices

5

2019
China

2020
2021
2022
South Korea
TaiwanIndia

2023
Rest of world
US$/t

Source: ABS (2024) International Trade, Australia (trade tables subscription)

Figure 5.5: Australia’s metallurgical coal exports
210

84

180

72
60

120

48

90

36

60

24

30

12

0

2018–192020–212022–23

Volumes2024–25

2026–272028-29

0Real values (rhs)

Source: ABS (2024) International Trade, Australia 5454.0; Department of Industry, Scienceand Resources (2024)

Resources and Energy Quarterly | March 2024

100

400

80

300

60

200

40

100

20

0
2015
2017
2019
Exploration spending (rhs)
A$ billion

Million tonnes

150

500

2021
2023
HCC spot price (lhs)$mMillion tonnes

15

0
2018
Japan

Coal exploration expenditure has steadily increased

0

Newcastle 6,000kcal
Notes: exploration for all coal types
Source: ABS (2024); McCloskey (2024)

Revisions to the outlook for Australian metallurgical coal exports
The export earnings forecast for 2023–24 and 2024–25 have been revised
up from the December 2023 Resources and Energy Quarterly due to an
upward revision to prices. The forecast has been revised up by around $4
billion in 2023–24 and $9 billion in 2024–25. In terms of the medium-term
forecast, export projections have been revised up by around $5-7 billion
for 2025–26, 2026–27 and 2027–28. This reflects a stronger priceexpectation compared to the March 2023 edition of the REQ.

54

Table 5.1: World trade in metallurgical coal
Unit

2023

2024f

2025 f

2026z

2027z

2028z

2029z

CAGRr

Mt

349

334

335

340

339

335

333

-0.8

China

Mt

64

59

51

53

53

50

47

-4.8

India

Mt

73

77

81

84

86

87

89

3.3

Japan

Mt

40

40

40

39

39

38

38

-0.9

European Union

Mt

36

36

36

36

36

36

36

0.0

South Korea

Mt

34

34

34

33

32

32

32

-1.3

Australia

Mt

151

173

176

181

180

176

174

2.4

United States

Mt

43

42

43

44

44

43

42

-0.3

Canada

Mt

29

28

28

27

27

26

26

-1.8

Russia

Mt

44

41

41

42

42

42

42

-0.7

Mongolia

Mt

48

40

35

35

35

35

35

-5.1

Mozambique

Mt

4

4

4

4

4

4

4

0.0

World trade
Metallurgical coal imports

Metallurgical coal exports

Notes: f Forecast; z Projection.
Source: IEA (2024) Coal Information; IHS (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

55

Table 5.2: Metallurgical coal outlook
World

Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

– nominal

US$/t

289

282

231

208

210

210

206

-5.5

– reald

US$/t

295

282

226

200

198

194

186

-7.4

– nominal

US$/t

292

277

226

208

210

210

205

-5.7

– reald

US$/t

298

277

221

199

198

194

185

-7.7

Australia

Unit

2022–23

2023–24f

2024–25 f

2025–26z

2026–27z

2027–28z

2028–29z

CAGRr

Productions

Mt

167

173

178

181

188

182

180

1.3

Export volume

Mt

156

161

174

177

184

177

175

2.0

– nominal value

A$m61,922

55,71549,49841,74742,061

41,24640,228-6.9– real valuei

A$m64,411

55,71547,97539,37638,70437,02835,233-9.6

Contract pricese

Spot pricesg

Notes: d In 2024 US dollars. e Contract price assessment for high-quality hard coking coal. i In 2023–24 Australian dollars. f Forecast. g Hard coking coal fob Australia East Coast ports.
z Projection.
Source: ABS (2024) International Trade in Goods and Services, Australia, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

56

Resources and Energy Quarterly | March 2024

57

Resources and Energy Quarterly | March 2024

58

SummaryAustralia’s thermal coal export earnings are expected to ease from $36
billion in 2023–24 to around $21 billion by 2028–29 (in real terms) as
prices continue to fall.



Thermal coal spot prices are expected to fall slowly over coming years,
from US$133 a tonne in 2024 to US$105 a tonne (in real terms) by 2029.
Contract prices are expected to fall from around US$200 a tonne (inJFY 2023–24), converging on spot prices.



6.2

Export volumes are expected to hold steady at around 205 million
tonnes (Mt) per annum through the outlook period, with mine depletions
and ramp-ups likely to be roughly balanced (see Australia section).

World trade

Thermal coal markets have been relatively stable over the March quarter
2024. The 6,000 kcal Newcastle price has averaged $US127 a tonne
across January and February, compared with $US135 a tonne in the
December quarter 2023. In the near term, seaborne thermal coal imports
are expected to be subdued by high inventories across several markets
and by decreased demand from China — impacted by Chinese New Yearholidays. There is also the high likelihood of a La Niña weather event
reappearing in 2024, bringing with it heavy rainfall likely to be generally
unfavourable to coal production and transport in Australia and Indonesia.
Trade in thermal coal is expected to broadly decline over the next five
years, though with significant variance between nations (Figure 6.1). The
pace of this decline is still uncertain with industry experts predicting a wide
range of scenarios driven by varying energy transition plans and the paceof renewables uptake. Slowing demand is expected to remove some pricepressure over time.
World demand for thermal coal is still expected to be dominated by Asia.
China and India are expected to remain the largest importers of seaborne
thermal coal over the next five years. However, a noticeable rise in China’s
domestic thermal coal production and the expansion of renewable power
generation, is expected to result in a decrease in its seaborne imports.

Resources and Energy Quarterly | March 2024

Long-term changes in thermal coal usage are linked to the scale ofexisting and proposed coal plants. There are currently 6,550 coal plants inoperation, with over 75% in Asia. A quarter of ex-Asia coal plants are
expected to shut in the outlook period, against just 3% in Asia.
Figure 6.1: Thermal coal imports
400
350
Million tonnes

6.1

300
250
200
150
100
50
0

China

Japan

India

2019

South Taiwan
Korea
2020
2021

2025f

2026z

2028z

2027z

Other EU27 RoW
Asia
2022
2023
2024f
2029z

Note: f Forecast z Projection. RoW is Rest of the World.
Source: McCloskey (2024); IEA (2024) Coal Market Report; Department of Industry, Scienceand Resources (2024)

The majority of coal plant projects in the pipeline are also concentrated in
Asia, with China accounting for 63% of the total projects (by number),India for 10%, and Indonesia accounting for 6%. Much of the planned
capacity in China is replacement capacity or capacity intended to support
renewables. Demand for coal in India is expected to rise over the next five
years, but higher domestic output is forecast to meet most of this demand.
Other Asian markets expect to see higher or steady demand over theoutlook period include Japan, South Korea, Vietnam, and the Philippines.
As the share of coal plants in Asia continues to grow, the policy andadministrative decisions of governments in the region will become
increasingly important to coal markets.

59World imports

Global seaborne imports of thermal coal are expected to fall at an averageannual rate of 2.6% per year over the outlook period. Volumes traded are
expected to decrease from an estimated 1,120 million tonnes in 2023 to957 million tonnes by 2029, with China and Europe being the largest
contributors to the decline.
China’s seaborne thermal coal imports are peaking
China’s imports of seaborne thermal coal remained elevated in the
December quarter of 2023, rounding out a record-breaking year. In 2023,
China imported 372 Mt of seaborne thermal coal, a 62% increase on theprevious year and significantly higher than the historic average. The
primary reasons for this high demand include easing prices for low-grade
thermal coal, energy security concerns (see next paragraph), and theremoval of import tariffs. Temporary falls in domestic production — linked
to safety issues in some Chinese mines — is also boosting imports.
Energy security continues to drive high coal inventory in China, withinventory totalling 533 million tonnes in December 2023 (Figure 6.2). Thisis a historically high level and around 1/6 of China’s total annual coal use.
China removed coal tariffs in May 2022 to safeguard against the supply
risks resulting from Russia’s invasion of Ukraine. However, these tariffs
were reinstated on 1 January 2024. The tariff does not apply to Australia
and Indonesia, due to existing free trade agreements, but it will affectRussia, Mongolia, South Africa, Colombia, US, and Canada.
China’s imports of thermal coal are expected to drop
China’s energy security concerns — and the associated push to increase
domestic coal production and diversify its domestic energy sources — isexpected to lower seaborne imports over time. While views vary on how
quickly this will occur, the rapid expansion of renewables suggests a faster
decline in coal imports than previously expected.
Emissions reduction is playing a growing role in China’s energy policy. In
2023 alone, China expanded its solar capacity by over 55% to 610GW.

Resources and Energy Quarterly | March 2024

Figure 6.2: Chinese coal inventoryDec-23
533

600
500
400

Mt

6.3

300
200
100
0
Feb-19Feb-20Feb-21

Feb-22

Feb-23

Source: Bloomberg (2023)

China’s president Xi Jinping has pledged to reach net zero by 2060 and to
reduce coal consumption in the 2026 to 2030 period. Despite this pledge,
however, China is still building significant amounts of coal fired power
generation capacity. Around 63% of the world’s coal plant pipeline projects
are in China. Much of this is replacement capacity for aging and inefficient
coal plants. Some is also expected to be used for flexible and dispatchable
purposes when renewables are offline. This will make seaborne thermal
coal demand from China more variable, and driven by unexpecteddemand requirements. This variability may lead to times when China’s
domestic production of thermal coal overtakes demand in certain months,
moving China into a net export position when this occurs.
Over the outlook period, China’s seaborne thermal coal imports is
projected to drop from 372 million tonnes in 2023 to 161 million tonnes in
2029, representing an average annual fall of 13% per year.
India’s imports will be supported by rising industrial and consumer use
India’s seaborne thermal coal imports were high in the December quarter
2023, at about 52 million tonnes (Figure 6.3). Relatively low hydro andsolar output combined with elevated winter demand drove imports up.

60

India remains one of the few markets expected to increase thermal coaldemand over the next decade. The degree to which this increase will flow
through to the seaborne market will depend on India’s ability to increase
domestic production and the capacity of associated rail networks toreliably ship at the necessary scale. India has ambitions to improve its
Rail-Sea-Rail networks to more efficiently move coal from production
centres to consumption regions.

Japan, South Korea, and Taiwan imports are expected to decline
Elsewhere in Asia, imports have shown mixed trends (Figure 6.4). Japan’s
seaborne thermal coal imports fell by 10% in 2023 to 127 Mt. Part of thisdecrease is attributed to milder weather and increased use of nuclear
power. Imports rose again in January to cover winter demand.
Figure 6.4: Japan, South Korea and Taiwan's thermal coal imports
14

Figure 6.3: India’s thermal coal imports, monthly

12

20
18

10
Milloin tonnes

Million tonnes

16
14
12
10
8
6

8
6
4
2

4
2
0
2018

2019

Indonesia

South Africa

2020

2021

United States

2022
Australia

2023
RussiaOther

Source: McCloskey (2024)

Over 80% of India’s thermal coal demand is for power generation. India’s
current electricity generation mix constitutes coal (73%) followed byrenewables (23%). According to the IEA, India adds a city the size of
London to its urban population every year, resulting in millions of newconnections to the electricity network.
The IEA’s World Energy Outlook 2023 forecasts that, under the Stated
Policies scenario, India’s coal powered generation will increase by 16% by2030 compared with 2022. Although India’s production is expected to riseover time, it is not expected to keep pace with demand, and so a moderate
lift in seaborne imports is still expected over the outlook period.

Resources and Energy Quarterly | March 20240
Dec-20Japan

Dec-21
South Korea

Dec-22
TaiwanDec-23

Source: McCloskey (2024)

The Japanese government has committed to achieving net zero by 2050,
and in December 2023 announced an end to new domestic construction of
unabated coal-fired power plants. Most of Japan’s coal fired power plants
are expected to continue operations over the outlook period. However
there are very few power plants in the pipeline — one in the pre-permit
stage, and one under construction.
Japan’s imports of seaborne thermal coal are expected to ease slowly
over the outlook, reducing from 127 Mt in 2023 to 119 Mt by 2029.
Following the outlook period, the pace of decline is expected to accelerate.

61

South Korea’s previous policy of phasing out nuclear energy changed
following the election of President Yoon Suk-yeol in 2022. South Korea
now has a target of increasing the share of nuclear power generation fromthe current 27% to 30% by 2030.
Growing nuclear energy deployment is expected to see South Korean
imports of seaborne thermal coal decline modestly over the outlook, from
97 Mt in 2023 to 93 Mt in 2029.
Taiwan aims to reduce the share of coal used in electricity generation from
43% in 2022 to 30% in 2030. Renewables currently play a relatively smallrole in Taiwan’s electricity generation (9% in 2022), but the country is
looking to increase this to 20% by 2030, with offshore wind being a key
focus. Unlike Japan and South Korea, Taiwan plans to phase out nuclear
as an energy source by 2030, but may keep plants on standby to provide
emergency capacity.
Taiwan has pledged to get to net zero by 2050. About a fifth of its coalplants have the potential to retire over the outlook period, with no newplants currently in the pipeline. Taiwan’s seaborne imports of thermal coalare expected to decline from 59 Mt in 2023 to 52 Mt in 2029.
South Asia and South-East Asia are the two regions expected to increaseseaborne thermal coal imports substantially over the outlook period(Figure 6.5). Stable seaborne import demand is expected from nations
such as Malaysia and Thailand, whereas nations such as the Philippines,
Vietnam, Bangladesh, and Pakistan are expected to increase imports.
The most significant gain is expected in Vietnam. This is despite Vietnam
progressively reducing plans for new coal power plants in favour of gas
and renewables. Vietnam had reached an agreement with G7 nations to

Resources and Energy Quarterly | March 2024

receive $15.5 billion in commercial loans at market rates over 3 years to
reduce coal capacity and reach peak emissions by 2030 — 5 years earlier
than planned. However, there are still 15 coal power plants in the pipeline.
Not all are expected to ultimately proceed, but Vietnam’s seaborne thermal
coal imports are still projected to rise from 23 Mt in 2023 to 57 Mt in 2029.
Figure 6.5: South and South-East Asia thermal coal imports
250
200
Million tonnes

South Korean imports of thermal coal were down 6% in 2023 due toincreased nuclear and solar generation. South Korea is aiming to reduce
thermal coal’s share in power generation — from 33% in 2022 to 15% by2036 and to zero by 2050. Almost a quarter of the coal-fired power plants
in South Korea have potential to retire within the outlook period, with few
likely to be replaced.

150
100
50
0

2013

Vietnam

2015

Philippines

2017

2019

Malaysia

2021

Thailand

2023

2025

Bangladesh

2027

2029

Pakistan

Other

Source: IEA (2024) Coal Information; Department of Industry, Science and Resources(2023); McCloskey (2024)

Other countries with plans to expand coal power plants include thePhilippines, Bangladesh, and Pakistan. These countries are also yet toclearly commit to net zero targets, although all have published plans to
reduce emissions. The Philippines has pledged to have emissions peak by
2030, Bangladesh intends to achieve a 22% reduction in emissions by
2030 (and has reduced the number of coal plants in construction), andPakistan aims to reduce emissions by 50% by 2030.
Overall, the South/South-East Asia regions are expected to increaseseaborne thermal coal imports from 131 Mt in 2023 to 203 Mt in 2029.

62

6.4

World exports

Seaborne thermal coal demand grew by almost 7% to an expected peak in
2023, while exports grew by 5%. As this peak passes, weak global
demand is expected to see exports fall from 1,099 Mt in 2023 to 1,034 Mt
in 2029, with less dominant exporters bearing the brunt (Figure 6.6).
Figure 6.6: Thermal coal exports
600

Million tonnes

500

The decline in exports can be attributed to several factors. Indonesia haslarge reserves of thermal coal, but much of it is at lower calorific values.
Additionally, Indonesia’s primary export market is China. With declining
demand from China and the world more broadly, demand is likely to shift
to coal with higher calorific value. Some of Indonesia’s supply is expected
to be diverted to the domestic market, with increases in domestic demand
expected to outpace production.
Russian coal exports are falling following Russia’s invasion of Ukraine

400
300
200
100
0

expected to experience a slight decline over the outlook, dropping to507 Mt by 2029.

Indonesia Australia

RussiaColombia

2019

2020

2021

2022

South
Africa
2023

2025f

2026z

2027z

2028z

2029z

US
2024f

Notes: f Forecast z Projection.
Source: McCloskey (2023); IEA (2024) Coal Information; ABS (2024); Department ofIndustry, Science and Resources (2024)

Weather disruptions present an ongoing risk to seaborne thermal coalsupply. More frequent instances of extreme weather — including heatwaves that lead to demand spikes — and storms, floods and droughts
affect the stability of coal supply.
Indonesia’s exports are peaking
Indonesia maintained its position as the world’s top exporter of thermal
coal in 2023, with exports totalling 521 Mt — a 12% increase compared tothe previous year. Indonesia’s exports of seaborne thermal coal are

Resources and Energy Quarterly | March 2024

Following sanctions from the European Union, China became Russia’s
largest export market. In 2023, Russia exported 75 Mt of coal to China, a
60% increase on the previous year. However, this trend could be affectedby China’s decision to reinstate coal import tariffs on non-FTA countries.
The tariffs took effect on 1 January 2024 and are expected to impact
Russian exports, though the scale of impact is not clear yet. Thermal coaltrade between Russia and China dipped in January 2024, but Chinese
coal imports often decline at this time due to Chinese New Year.
The outlook for Russian exports depends heavily on the demand profileand trade relationships of four countries — China (47% share of Russian
exports in 2023), Türkiye (17%), South Korea (15%), and India (6%). With
demand from China expected to soften over the outlook period, and theSouth Korean Government advising buyers to reduce Russian imports,
Russian thermal coal may need to find new buyers.
Following the invasion of Ukraine, Russian coal producers had to discounttheir coal sharply in order to induce China and India to switch fromIndonesian and Australian cargoes. North Asian nations such as Japanand South Korea took fewer Russian cargoes and more Australian thermalcoal. In December 2022, the average Newcastle 6,000 kcal price was
US$407 per tonne, compared to US$169 per tonne for the Russia East
(Vostochny) 6,000 kcal — a discount of 58%. Markets have since settled
back: in 2024, the Newcastle 6,000 kcal price so far has averaged US$127

63

per tonne compared to the Russia East (Vostochny) 6000 kcal price of
US$118 per tonne, a discount of only 7% (Figure 6.7).
Russian seaborne thermal coal supply is expected to decline over theoutlook period, falling from 133 Mt in 2023 to 119 Mt in 2029.
Figure 6.7: Russia vs Australia price comparison

US$ per tonne

400

Columbian exports are expected to fall as emissions policies take effectSeaborne thermal coal exports from Colombia are expected to decline
over the outlook period. President Gustavo Petro, elected in 2022, initially
imposed a ban on new coal mines and expansion projects. These wereoverruled by the Constitutional Court, but the environment ministry has
issued another decree to stop granting open-pit mining licenses.
Combined with the Colombian government’s decarbonisation goals, thecountry’s depleting reserves are expected to reduce exports from 56 Mt in
2023 to 39 Mt by 2029.
South African exports are facing cost pressures

300

Exports from South Africa are expected to decline over the outlook period.
Following the European Union’s ban on Russian coal, South Africa was
the primary source to fill this gap. Exports of South African thermal coalincreased fourfold when comparing 2022 to 2021. South African thermal
coal exports to the European Union and United Kingdom fell by almost athird in 2023, on the back of high stockpiles and weakened demand.

200

100

0
Jan-20Jan-21
Newcastle

Jan-22

Jan-23Jan-24

Russia East (Vostochny)

Source: McCloskey (2024)

US exports remain hampered by weather conditions and high costs
Seaborne thermal coal exports from the US are expected to decline over
the outlook period, but from a high base year in 2023. Exports jumped by
23% in 2023 to 44 Mt — the highest export volume in the last 5 years. US
exports helped fill the gap left by lower Russian supply.
Lower domestic demand and international demand — along with tougher
regulations on coal production — are expected to lead to a steady drop in
US production. Export volumes are expected to drop back down to 39 Mt
by 2029.

Resources and Energy Quarterly | March 2024

South African exports are expected to decline as global demand drops
further and reserves deplete. Exports are forecast to fall from 74 Mt in
2023 to 59 Mt in 2029.

6.5

PricesPrices have stabilised following a sustained decline
Price volatility for most thermal coal types has eased as prices correctedfrom the extraordinary peaks of 2022 (Figures 6.8 and 6.9). The average
price for 6,000kc NAR thermal coal dropped to US$135 a tonne in the
December quarter 2023 and eased further in early 2024, averaging
US$127 a tonne. In the absence of further disruptions from global conflicts
and extreme weather, prices are expected to decline gradually, as fallingdemand slightly outpaces falling supply. However, with the high likelihoodof a La Niña cycle developing in the latter half of 2024, prices arevulnerable to volatility, though high global inventories (especially in China)
should provide some buffer. In 2029, 6,000kc NAR thermal coal is
expected to average US$105 a tonne in real terms.

64Prices are not expected to decline to below US$100 a tonne over theoutlook period. A range of structural price pressures, such as low capital
availability, labour shortages, rising freight costs, and increased insurance
premiums, are likely to persist. The 90th percentile cash cost has been
increasing over the last few years, from US$70 a tonne in 2019 to US$92
a tonne by 2023.
These issues will likely see prices remaining elevated compared to their
historical averages. However, there is some capacity to bring down costs
through productivity improvements. Technological advancements such as
automation of high-risk jobs, electrification of mine sites, and emissions
reduction technology all have the capacity to reduce operating costs –although capital costs may increase over the short term. The advancementof artificial intelligence could also assist in areas such as exploration,transportation, and safety.
Prices may also experience increased volatility over the outlook period,
beyond that expected from La Niña. Thermal coal has traditionally been
the base fuel source for electricity generation, with energy fromrenewables dependent on availability, and gas often filling the gap
between the two. As the transition to clean energy accelerates, the shift
will likely involve nuclear, renewables, and batteries supplying base power,with carbon-intensive fuels like coal and natural gas providing dispatchable
power.
In this scenario, demand for coal could become more volatile and a higher
share of transactions could move away from long term contracts towards
spot markets.

Figure 6.8: Thermal coal prices — Australian vs Indonesian
450
400
350
300
250
200
150
100
50
0
2014

2016
2018
Indonesia 4,700 NAR
Newcastle 6,000kc NAR

2020
2022
2024
Newcastle 5,500kc NAR

Source: McCloskey (2023). NAR = Net as received.

Figure 6.9: Prices for thermal and low-grade coking coals
700
600
US$ a tonne

Prices remain subject to mostly upside risks over the foreseeable future.
Any escalation of Russia’s invasion of Ukraine could remove Russian
supply from the market. Escalations in the Hamas-Israel conflict will likely
not have an immediate effect on prices, as only about 3% of global supply
is shipped through the Red Sea region. However, an escalation would
likely increase the price of oil and flow through into LNG contract pricing,which could in turn lead to a lagged rise in coal prices.

500
400
300
200
100
0
Feb-21

Feb-22

Newcastle basis 6,000kc NAR
Australian semi-soft cc
MCC2 Australian mid-vol PHCC

Feb-23

Feb-24

Newcastle 5,500kc NAR
Australian LV PCI

Source: McCloskey (2024)

Resources and Energy Quarterly | March 2024

65

Australia

Figure 6.10: Australia’s thermal coal exports

Australian thermal coal exports finished 2023 on a strong note, with
18.9 Mt exported in December. This is the highest monthly total since July
2021, and suggests that disruptions to coal mining and transport
infrastructure have been largely resolved. Australian thermal coal exports
are expected to hold steady at between 205 Mt and 210 Mt through theoutlook period, with downside risk from La Niña (Figure 6.10).
Demand factors remain relatively favourable in the near-term. Thermal
coal exports to China have recovered fully since the removal of informal
import restrictions in early 2023. Trade sanctions imposed on Russia overits invasion of Ukraine has raised the demand for Australian coal by former
importers of Russian coal. Demand prospects over the longer term areless certain, affected by global energy transition.
The diversion of supply from domestic markets to export markets present
an upside risk to the forecast. In 2022, Australia used approximately 20%
of its thermal coal production for domestic use. The Australian Energy
Market Operator's draft 2024 Integrated System Plan forecasts coal-fired
power generation will exit the east-coast energy market in 2036-37. As
power stations close (e.g., in NSW, Eraring 2,880 MW is currently
scheduled to close in 2025, Vales Point 1,320 MW in 2033, Bayswater
2,640 MW in 2033) and where residual coal from their supplying minesand enabling infrastructure is available (such as rail or road networks toports), a flow of coal would be available to export markets. This presents
an upside possibility to the export forecast from 2026.
Australia no longer has a substantial pipeline of new thermal coal projects
under construction. This low pipeline partly reflects a decline in the qualityof untapped deposits, and partly reflects issues with access to finance andinsurance, social licence, and emissions reduction commitments.
Some proposals are nonetheless expected to add to coal supply. These
include the ramp-ups at Bravus’s Carmichael mine in Queensland, and at
Malabar Resources & New Hope Coal’s Maxwell mine.

Resources and Energy Quarterly | March 2024

Million tonnes

Australian thermal coal export volumes have recovered

250

75

200

60

150

45

100

30

50

15

0

A$ billion

6.6

2018–192020–212022–23

Volumes2024–25

2026–272028-290

Export values (real), rhs

Source: ABS (2024); Department of Industry, Science and Resources (2024)

Whitehaven’s under-construction Vickery restart continues to face legal
challenges but remains in prospect, and New Hope’s New Acland mine isprogressing with its Stage 3 expansion. Australia Pacific Coal’s Dartbrookunderground mine is expected to restart.
Further out, Yancoal’s proposed Mt Thorley mine is under feasibility study,
and has potential to begin production at the end of the outlook period.
On balance, it is expected that thermal coal export volumes will holdsteady over the coming years, with new supply offsetting a gradualdepletion of output from existing mines. Thermal coal exports are expected
to begin declining very late in the outlook period (and more rapidly beyondit) as a rising number of mines begin to deplete.
With export volumes holding steady at just over 200 Mt through theoutlook period (Figure 6.10), it is expected that price changes will be theprimary influence on export earnings. Falling prices have already produceda sharp correction from the surging revenues of 2022–23, and are
expected to bring earnings down gradually further, from $36 billion in
2023–24 to $21 billion by 2028–29.
66

Revisions to the outlook for Australian thermal coal exports
On balance, export earnings have been revised up since the December
2023 REQ: broadly unchanged in 2023–24 and increasing by around $1
billion in 2024–25. This reflects an upwards revision in prices from thepotential supply disruptions of La Niña.
Export earnings have been revised up by around $2 billion in 2025–26 andby around $3-5 billion in subsequent years, when compared with long-term
forecasts from the March 2023 edition of the REQ. This reflects a higher
expectation for baseline thermal coal prices over this period.

Resources and Energy Quarterly | March 2024

67

Table 6.1: World trade in thermal coal
Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

Mt

1,120

1,096

1,096

1,031

1,008

966

957

-2.6

Asia

Mt

968

927

931

894

880

845

835

-2.4

China

Mt

372

306

291

240

220

175

161

-13.0

India

Mt

178

186

193

200

203

206

207

2.6

Japan

Mt

127

126

125

123

120

119

119

-1.1

South Korea

Mt

97

96

96

95

93

93

93

-0.6

Indonesia

Mt

521

518

516

513

507

507

507

-0.4

Australia

Mt

202

202

203

206

205

206

205

0.2

Russia

Mt

133

130

128

125

122

119

119

-1.7

Colombia

Mt

56

53

50

47

44

44

39

-6.0

South Africa

Mt

74

68

64

60

60

60

59

-3.6

United States

Mt

44

42

40

40

40

39

39

-1.9

World trade
Thermal coal imports

Thermal coal exports

Notes: f Forecast z Projection
Source: International Energy Agency (2024); IHS Markit (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

68

Table 6.2: Thermal coal outlook
World

Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

– nominal

US$/t

200

139

132

126

129

129

127

-17.0

– realc

US$/t

200

136

127

119

119

117

112

-18.0

– nominal

US$/t

173

133

128

116

119

119

117

-6.3

– reale

US$/t

176

133

125

111

112

109

105

-8.2

Australia

Unit

2022–23

2023–24f

2024–25f

2025–26z

2026–27z

2027–28z

2028–29z

CAGRr

Production

Mt

216

252

253

251

252

251

253

2.7

Export volume

Mt

182

208

203

204

206

205

207

2.1

– nominal value

A$m65,50036,27030,11827,60026,192

27,41924,217-15.3– real valueh

A$m

68,132

36,27029,191

26,032

24,102

24,61521,210-17.7

Contract pricesb

Spot pricesd

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 2024 US
dollars; f Forecast; h In 2023–24 Australian dollars; z Projection
Source: ABS (2024) International Trade in Goods and Services, Australia, Cat. No. 5368.0; IHS (2024); NSW Coal Services (2024); Queensland Department of Natural Resources and Mines(2024); Company Reports; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

69

Resources and Energy Quarterly | March 2024

70

Resources and Energy Quarterly | March 2024

71

7.1
•

Summary
Australia’s LNG export revenues are expected to decline from$72 billion in 2023–24 to just under $45 billion by 2028–29, as volumes
edge down and prices ease. Export volumes are expected to hold close
to 80 Mt annually during the outlook period but may decrease in thelatter years as producing reserves start to deplete.

•

Gas prices eased from the records of 2022 but have subsequently risen
slightly as conflicts in Ukraine (in particular) and Gaza continue.

•

New supply from the US and Qatar should help to bring prices down inthe second half of the outlook period. Prices are forecast to ease fromaround US$16/MMBtu in 2024 to just under US$11/MMBtu by 2029 (inreal terms).

7.2

World trade

Gas markets have shifted into a slower growth cycle

Figure 7.1: Growth in LNG output through the outlook period
2023

2026

2029
0

100
US

Qatar

200
Australia

300

400

Malaysia

500
Indonesia

600 MtOthers

Source: Department of Industry, Science and Resources (2024)

Growth in gas demand — previously broad-based — is beginning tonarrow in its scope, with European growth expected to peak sooner thanpreviously expected. This will see gas demand growth concentrating in key
markets in South Asia, Africa and the Middle East.

Gas markets remain tightly balanced, with the European pivot towards
seaborne imports holding US production at near-capacity. Risks remain
concentrated in the early part of the outlook period, as markets seek tomanage events in Ukraine and the Middle East. Attacks on shipping in the
Red Sea have not yet affected LNG shipments significantly, withcompanies redirecting shipments to alternate routes. However, thepotential for further spill-over from the conflict in Gaza remains. Ukraine
has recently launched strikes on oil refineries and transportation
infrastructure inside Russia, and could strike gas infrastructure in the sameway. Russia continues to export over 40 million tonnes of LNG per year
despite the curtailment of some trade flows with Europe, and disruptions tothese exports could materially affect trade flows and prices. However, nosuch attacks have happened at the time of writing.

Gas markets have become less flexible following the disruption of pipeline
flows between Russia and Europe in 2022 and 2023. However, markets
have been able to adapt through various reforms (see World Imports
section). The new structure of global gas markets appears to be durable,
albeit with lower rates of growth, and less flexibility (notably around
European import sources) than before.

LNG supply growth is likely to be modest in 2024, but more rapid in
subsequent years. Prices are expected to remain relatively high in early
2024, affected by potential supply disruptions and the possibility of higher
weather-related demand. However, from 2025, new supply from the US (inparticular) and Qatar should reduce these pressures and result in steadylowering of prices (Figures 7.2 and 7.3).

Gas markets have stabilised over the last few quarters, with the priceshocks that flowed from the fallout over the Russian invasion of Ukraine
now largely abated. However, the scale of those price shocks is likely tohave a long-term effect on gas markets. Growth in gas markets has been
structurally slower for the past two years, and this trend is expected tocontinue. Gas consumption is expected to grow at an average rate of 1.6%
per year over the outlook period, compared to 2.5% per year over the five
years to 2021 (Figure 7.1).

Resources and Energy Quarterly | March 2024

72

World imports

European imports are likely to peak earlier than previously expected
European LNG imports began 2024 relatively strongly (Figure 7.4), despite
significant inventory in late 2023 and mild winter weather conditions.
Imports are expected to rise from 123 Mt in 2023 to 152 Mt by 2026,
before holding largely steady through the second half of the outlook
period. Near-term growth reflects falling domestic gas output as well as theongoing EU pivot away from coal-fired power.
European gas markets are currently managing long-term issues withflexibility. Part of this is due to the cessation of Russian pipeline supply.
However, longer term factors have also played a part. Europe has become
steadily more import-dependent over time, with the share of imported gas
rising from 40% of its gas consumption in 1992, to 80% by 2022. Domestic
production has not kept pace with demand, and is expected to decline
further as output from the Groningen field in the Netherlands ceases andoutput from other smaller fields declines. Some offset is expected fromnew fields in Denmark, Romania and Türkiye, but there is little prospect ofany significant rebound in Europe’s domestic gas production during theoutlook period.
Europe has become highly dependent on US seaborne LNG, which is now
near-capacity. High inventories and ex-US import sources (including Africa
and Azerbaijan) present the only significant flexibility available toEuropean gas markets in the near-term, though higher US output after
2025 should eventually mitigate this.
Pivots towards renewable energy have had mixed effects. Rising use ofwind power has locked in gas as a balancing source, cutting European
discretion to lower LNG use. However, recent French re-investment in
Resources and Energy Quarterly | March 2024

80
60
Million tonnes

7.3

Figure 7.2: Global LNG demand growth forecasts, 2020–29

40
20
0
-20
-40

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Japan

South Korea

China

EuropeSouth Asia

Rest of world

ASEAN

Notes: 2020, 2021 and 2022 figures based on historical data.
Source: Department of Industry, Science and Resources (2024), Nexant ECA (2024)

Figure 7.3: Global LNG supply growth forecasts, 2020–29
50
40
Million tonnes

The global transition to low-emissions energy will also have implications
for gas markets. While highly uncertain as to trajectory, gas is expected toreduce over the longer term as major global economies target net-zero. In
the near to medium term, demand is expected to remain strong as gas
replaces higher emission fossil fuels as a bridge to renewable energy.

30
20
10
0
-10
-20
-30

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

United States
Qatar

RussiaMalaysia

Australia
Indonesia

AfricaRest of worldNotes: 2020, 2021 and 2022 figures based on historical data.
Source: Department of Industry, Science and Resources (2024); Nexant ECA (2024)

73

Europe succeeded in filling its winter inventories to near 100% in 2023: anotable achievement, though one which may be difficult to replicate if
future winters are less mild. Improved energy efficiency has also assisted,with energy saving measures curbing demand during the 2023 winterperiod by up to 10 Bcm. The next two years will provide challenges toEuropean energy markets, but growing global gas supply, in conjunction
with greater energy efficiency, should provide some mitigation in thesecond half of the outlook period.

Figure 7.4: European LNG imports, 2020–24
12
10Million tonnes

nuclear energy will act as a direct substitute for gas, potentially loweringgas market pressures late in the outlook period.

China’s imports are expected to be increase late in the outlook period

China has built up its investment in domestic gas and oil production
significantly over the last three years, aiming to draw more from its large
gas reserves and constrain its import growth over the longer term.

Resources and Energy Quarterly | March 2024

40

Jan Feb Mar Apr May Jun
2024

2023

Jul

2022

Aug Sep Oct Nov Dec
2021

2020

Source: Kpler (2024)

Figure 7.5: China’s monthly LNG imports, 2020–2024
98
7Million tonnes

Growth may also be driven by Chinese Government policy. The use of gas
in the industrial sector has long been encouraged by the Chinese
government, though progress on this front was stalled by the gas pricesurges of 2022. With prices now easing and policy pressures ongoing,
substitution of gas for coal can be expected to resume and potentiallyaccelerate over time. The Chinese Government is also encouraging
additional investment in gas production under its 60:40 policy, which
includes a target to meet 60% of its gas usage from domestic sources.

62

China’s LNG imports started 2024 on a relatively strong note (Figure 7.5)
following some uncertainty in recent quarters. In annual terms, LNG
imports are expected to increase from 72 Mt in 2023 to 92 Mt by 2029,
with growth picking up towards the end of the outlook period.
A slowing GDP growth outlook in China has weighed on prospects for gas
demand in the near-term. While short-term growth in gas consumption
remains constrained, demand is expected to grow a little more rapidly inthe second half of the outlook period, as city gas networks expand in partsof the country currently serviced by older and smaller coal plants.

8

6
5
4
3
2
1
0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2024

2023

2022

2021

2020

Source: Kpler (2024)

74

Japan’s LNG imports are peaking as nuclear power plants restart
Japan’s LNG imports began 2024 at relatively low levels (Figure 7.6), withan increasing share of the country’s energy demand being provided by
nuclear power. Although many nuclear plants remain in hiatus,reconnections have picked up pace over the last two years. This trend is
expected to persist through the outlook period, with potential for a further
5 GW of nuclear power to be reconnected by 2029.
Gas and coal consumption are also being checked by rising renewableenergy deployment and tightening efficiency standards. Japan’s 6thStrategic Energy Plan projects a 60% growth in the share of renewableenergy in the power mix over the 9 years to 2030, with the share of
nuclear power rising from 6% to 22%. It is not clear that these targets will
be wholly met, but falling gas consumption is now virtually certain.

Figure 7.6: Japan’s monthly LNG imports, 2020-2024
98Million tonnes

Japan’s Ministry of Energy, Trade and Industry expects the share of total
electricity generation supplied by gas to fall from 38% in 2022 to 27% by2030. LNG imports to Japan are forecast to remain around current levels
in line with long term contracts, edging down from 73 Mt in 2023 to 67 Mt
by 2029.
South Korean imports are expected to hold largely steadySouth Korean LNG imports have not changed significantly in recent years,
holding at fairly typical levels in early 2024 (Figure 7.7). In annual terms,
South Korean LNG imports are expected to edge up from 42 Mt in 2022 toaround 45 Mt in 2029, falling just short of the 2021 level of 46 Mt. While
South Korea is pivoting away from coal, most of the gap is expected to bemade up through nuclear power and renewables rather than LNG.
Recent surges in gas prices have encouraged a shift towards nuclear
power generation in South Korea. The country’s latest Basic Energy Plan
includes a target to expand nuclear energy from 25GW in 2022 to 29 GW
by 2026. The plan encompasses a mix of new nuclear plant constructions
and extensions to the lifespan of existing plants, and represents a major
departure from the previous government’s nuclear phase-down policy.

7
6
5
4
3
2
1
0

nuclear power rising from 6% to 22%. It is not clear that these targets will
be wholly met, but falling gas consumption is expected as part oftransition.

Jan Feb Mar Apr May Jun
2024

2023

Jul Aug Sep Oct Nov Dec

2022

2021

2020

Source: Kpler (2024)

Gas and coal consumption are also being checked by rising renewableenergy deployment and tightening efficiency standards. Japan’s 6thStrategic Energy Plan projects a 60% growth in the share of renewableenergy in the power mix over the 9 years to 2030, with the share of

Resources and Energy Quarterly | March 2024

Korean nuclear companies are experienced in plant construction whichshould assist implementation of recent changes in South Korean nuclear
policy. On balance, expansion of competing energy sources is expected tostem any significant rise in LNG imports through the outlook period, andwill likely result in falling imports beyond it.
Taiwan’s LNG imports are growing as other energy sources wind backTaiwan’s LNG imports grew by almost a third over the four years to 2023,
reaching 28 Mt in the year. Growing gas power generation is forecast to
push Taiwan’s LNG imports up further, to 42 Mt by 2029. Taiwan iscurrently engaged in long-term decommissioning of its remaining nuclear
power plants, with an aim to substitute gas-fired power and renewables.

75

In Vietnam, the Government has released a new Power Development Plan
which includes a target build of 22.4GW of LNG-fired capacity by 2030.
This extra capacity will require significant investment and a successful
rollout of numerous projects currently at early stages of development.
Rapid development of these projects may depend on additional policy
interventions, including clearer pricing mechanisms and increased tariffs
for gas suppliers. Vietnam opened its Thi Vai terminal (with a capacity of
1 MMtpa) in 2023, and experience gained in the construction process
could support other proposed constructions in the country.
Imports to the Philippines dropped following the price surges of 2022, buthave since recovered, supported by the recent construction of two
terminals — the Floating Storage Unit I (with a capacity of 5 MMtpa) andthe First Gen Batangas (with a capacity of 3.8 MMtpa).
Rapid import growth is also expected in Indonesia, Malaysia and Thailand,
where policies remain supportive and infrastructure is under development.
Efforts to lift domestic gas output are evident in several ASEAN nations,with regional energy companies, including Petronas (Malaysia), thePhilippines’ Department of Energy and PTTEP (Thailand) announcing
plans to drill new wells. This extra supply is likely to help meet regional
demand, taking further pressure off gas markets from the 2030s.
Recent growth in LNG imports among ASEAN countries (Figure 7.8) is
expected to continue through the outlook period. However, price changes
could undermine demand given the price sensitivity of many buyers in theregion.
Resources and Energy Quarterly | March 2024

6
5Million tonnes

India has been scaling up LNG imports in recent years, albeit with aninterruption in 2022 when price-sensitive Indian gas users pulled back in
response to surging prices. Imports have since risen again, and are
expected to scale up further through the outlook period. LNG imports havebeen supported by strong economic growth and reforms to open up India’s
domestic gas market. Most domestic gas use is linked to India’s growing
industrial sector, but a broadening of use to the household sector is
expected over the next five years.

Figure 7.7: South Korea’s monthly LNG imports, 2020-2024

4
3
2
1
0

Jan Feb Mar Apr May Jun
2024

2023

Jul Aug Sep Oct Nov Dec

2022

2021

2020

Source: Kpler (2024)

Figure 7.8: ASEAN monthly LNG imports, 2020-2024
2.0

Million tonnes

LNG use is rising elsewhere in Asia, with big investments underway

1.5

1.0

0.5

0.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2024

2023

2022

2021

2020

Source: Kpler (2024)

76

World exports

The US is set to become a dominant global exporter
The US became the world’s largest LNG exporter in 2023, and has begun
2024 on a strong note (Figure 7.9). US export growth is expected toaccount for almost half of global growth in LNG exports over the next five
years, with US exports reaching over 150 Mt by the final year of theoutlook period.
Rising exports reflect a divergence between US production — which is
growing rapidly — and US demand — which has peaked. Domestic use ofgas is expected to ebb slightly over the next five years as renewabledeployment expands and gas-powered generation corrects slightly fromthe historical highs of 2022 and 2023. Retrofits, deployment of new heatpumps, and improved energy efficiency in the residential sector are all
expected to trim gas demand. Renewables are expected to ultimately
become the largest source of electricity supply in the US, overtaking gasfired generation in the second half of the outlook period.
US gas production is expected to grow, supported by significant additional
supply from the Permian Basin as well as from shale projects elsewhere.
Output from the Plaquemines LNG Phases 1 and 2 (27 bcm/yr), Golden
Pass LNG (21 bcm/yr) and the Corpus Christi Liquefaction Stage 3(13.7 bcm/yr) projects, should all boost output, and the expansion ofpipeline capacity to Mexico will help to move the new output to emerging
markets.
The US Government has announced a temporary pause in approving new
LNG export capacity, which may limit the growth of LNG exports in the
future. The pause is limited in its scope, with the US Department of Energy(DoE) noting that it would apply only on ‘exports to non-Free Trade
Agreement countries’, and only on pending approvals at certain stages of
the approvals process. The DoE released a public statement on January
26th noting that its policy is for a ‘temporary pause on pending
applications’, and is not a ban, The DoE noted that any decisions would
consider ‘current authorized exports compared to domestic supply, energy

Resources and Energy Quarterly | March 2024

security, greenhouse gas emissions including carbon dioxide andmethane, and other factors’.

Figure 7.9: US LNG exports, 2020–2024
98
7Million tonnes

7.4

6
5
4
3
2
1
0

Jan Feb Mar Apr May Jun
2024

2023

Jul Aug Sep Oct Nov Dec

2022

2021

2020

Source: Kpler (2024)

Nearly all additional LNG output over the next five years is alreadyapproved and thus not subject to the policy. Only a relatively narrowportion of potential LNG production over the outlook period could be
affected given development timeframes.
European demand is likely to absorb the bulk of US LNG exports over the
next two years. However, US exports are expected to pivot towards South
Asia and other emerging markets as its export capacity rises further.
Qatar is set to bring sizable new capacity online from 2025
Qatari LNG exports are expected to be largely steady (at just under 80 Mt
annually) until 2025. Exports are then expected to rise in the second halfof the outlook period, reaching 125 Mt in 2028 and 2029. New capacity is
expected to come from Qatar’s substantial North Field Expansion project,which has commenced construction after receiving final investment

77

3.5
3.0

Planned projects in Russia’s west (including the Bovanenkovo field
expansion and the Tambey field opening) are also on the backburner due
to a lack of access to parts and the recent loss of export opportunities.
Restrictions on flows of machinery and equipment to Russia have delayedinvestments in significant quantities of new capacity, but the new Arctic
LNG train 1 is completed and is expected to support Russian exports in
2024. The expansion of pipeline gas to China is also expected to benefit
producers in Russia’s eastern regions, primarily those in Siberia.

1.5
1.0

0.0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2024

2023

2022

2021

2020

Notes: Russia has two LNG facilities: Yamal in Europe and Sakhalin in Asia. Russia can only
economically redirect European imports to Asia during the Northern Hemisphere winter.
Source: Kpler (2024)

Figure 7.11: LNG spot and contract prices, 2019–29

US$ a mmBtu

The effects of the war on Russian gas production have been uneven.
While piped gas exports to Europe have dropped away, other LNG exports— including pipeline and seaborne exports to Asia — have proven more
resilient. This has resulted in uneven impacts for upstream producers.
Risks have grown for ageing, price-sensitive gas fields (notably those in
Russia’s Nadym Pur Taz region). Any closure or hiatus at these facilities
would structurally reduce Russian gas production over the coming years.

2.0

0.5

Russian gas exports face challenging conditions and downside risks
Russian natural gas output faced difficult conditions in 2023 as European
importers broke ties following the Russian invasion of Ukraine. LNG
exports held up reasonably well in 2023 (Figure 7.10), but overall gas
production is expected to remain subdued for at least the next two years.

2.5

60

120

45

90

30

60

15

30

0
2019

2021

2023

ANEA LNG spot price
Brent crude oil (rhs)

2025

2027

2029

US$ a barrel

Qatari exports currently face some issues with transit due to recent attacks
on shipping in the Red Sea. Around 8% of global LNG trade passes
through the transit corridor. LNG transit dropped sharply — from 74
vessels in December 2023 to 20 in January 2024. Qatari shipments of
LNG to Europe fell by almost half in January 2024 (compared to January2023), though this is likely to be largely a result of simple delays andlonger shipping times. Disruptions in the area are not expected to affectQatar exports significantly, and no decline in Qatari shipments is expected
over 2024 as a whole.

Figure 7.10 Russian monthly LNG exports, 2020-2024

Million tonnes

approval in 2023. A further 6 LNG trains are also under construction at
Ras Laffan, which should boost transit capacity over the coming years.

0

Indicative oil-linked contract priceSource: Bloomberg (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

78

The war in Ukraine remains the primary risk to Russian LNG production
and gas exports. Russian LNG flows continue to pass through Ukraine andTürkiye, but much of this trade will reach the end of its contract period in
December 2024. The prospects for contract renewal are uncertain andmay depend in part on developments in the war.
Ukraine has recently conducted significant strikes on Russian oil refineryand transport infrastructure. Similar strikes on Russia’s exposed gas
facilities and pipelines have not occurred at the time of writing, but the war
presents an ongoing risk to LNG markets.

7.5

Prices

Policy influence is not limited to energy transition. Some gas-using
countries have imposed price caps in the wake of recent price surges, andsome gas producers (such as Australia) have enacted measures tosupport their domestic supply. The sensitivity of many economies tomovements in gas prices means that gas will continue to face strong
scrutiny in the years ahead, and the eventual peak in European gas use is
now expected in 2025: earlier than previously thought. However, gas still
has a sustained (but slowing) growth cycle ahead, and easing prices
should support its competitiveness. Price risks remain weighted to theupside, but with greater balance over time as new supply begins to outstrip
growth in demand.

Prices have risen on conflicts, but are gradually easing again

7.6

Gas markets have reorganised following the Russian invasion of Ukraine
and consequent collapse of Russian gas exports to Europe. However,prices are expected to remain elevated in 2024, and could lift further if theupcoming northern winter is less mild than in 2023. As conflicts continue in
Ukraine and Gaza, prices are forecast to increase from US$14.20/MMBtu
in 2023 to around US$16.20/MMBtu in 2024 (in real terms).

Australia’s LNG export volumes face growing pressure as gas projects age

Prices are expected to stabilise in the short-term — under the influence ofhigh inventories in Europe — and fall in the longer term due to expanding
LNG production from the US and Qatar. New LNG supply is expected tobring prices down to around US$10.8/MMBtu by 2029 (in real terms).
This price forecast is subject to complex risks. At present, the primary risks
are geopolitical, but technological change and the transition to lowemissions energy will likely increasingly affect gas markets. The
emergence of new emissions reduction policies around the world has
potential to either encourage of discourage investment in gas supply, since
gas is a fossil fuel but also an essential mechanism for firming up lowemission energy sources such as solar and wind. Some economies(including Japan) are transitioning from gas towards nuclear power, whileothers (such as Taiwan) are doing the opposite. Energy policies are likely
to become increasingly complex — and increasingly influential — as theoutlook period progresses.

Resources and Energy Quarterly | March 2024

Australia

Australia has 10 LNG facilities at present, whose combined output
supports domestic LNG use and generates LNG exports summing toaround 80 million tonnes annually. However, this gas production is likely tocome under growing pressure in the late 2020s. Gas exploration has been
persistently low for the last five years (Figure 7.13) and there is a risk thatthe current pipeline of gas projects under development becomesinsufficient to offset declining reserves. Several projects are likely to startrunning short of reserves in the next 5-10 years, including the large NorthWest Shelf project in Western Australia. There is potential for the NorthWest Shelf to be supported by third party gas, which operator Woodsideand its partners are attempting to secure. However, falling reserves willaffect a wider array of projects over time, and higher domestic gas use(driven by the closure of domestic coal plants) could put pressure on
supply.
Progress at the Pluto LNG facility should help to shore up exports during
the outlook period. The first three (of 51) Pluto 2 train modules haverecently arrived at the site. When assembled, the full production train willbe the second at the Pluto LNG facility and will have a 5mtpa capacity.
The connected Scarborough field is also under development, with thirteen

79Australian LNG export earnings are expected to fall to A$72 billion in
2023–24, easing further to A$45 billion by 2028–29 (in real terms). Thisdecline is largely a result of falling prices, with export volumes projected to
be broadly steady over the next five years.
Oil prices will remain a significant influence on Australia’s LNG earnings.
Around 80% of Australian LNG exports are sold under long-term contracts
that link the price of LNG to the Japanese Customs-Cleared Crude (JCCC)
oil price (with a 3-6 month lag, depending on contractual arrangements).
Oil-linked LNG contract prices are forecast to average US$13/MMBtu inthe 2023 to 2025 period, based on an oil price of US$83 per barrel (Figure7.11). These prices are expected to ease slightly through the outlook.
Revisions to the outlook
Australian LNG export earnings forecasts have been revised down by justunder $1 billion for 2023–24 and revised up by a similar amount in2024–25. This reflects recent geopolitical events which have influenced
prices slightly since the December 2023 Resources and Energy Quarterly.
Export earnings projections for the subsequent two years of the outlook
period have not changed significantly since the March 2023 edition.
However, the earnings projection for 2027–28 has been revised up byaround $3 billion.

80

80

60

60

40

40

20

20

0

2014–15 2016–17 2018–19 2020–21 2022–23 2024-25 2026-27 2028-29

VolumeA$ billion

100

0Value (rhs)

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

Figure 7.13: Petroleum expenditure, extraction and exploration
60

6

50

5

40

4

30

3

20

2

10

1

0

2010–11 2012–13 2014–15 2016–17 2018–19 2020–21 2022–23
Extraction
Exploration (rhs)

A$ billion

Australia LNG earnings have fallen, and are expected to ease further

100

Million tonnes

Australian LNG export volumes are expected to be mostly steady (at justunder 80 Mt annually) over the outlook period, with a brief rise in 2026–27
when the Pluto 2 train commences operation. However, growth at this site
will be offset by falling output at other facilities, and overall exports are
expected to start falling late in the outlook period — and more rapidly
beyond it — if no other significant developments occur (Figure 7.12).

Figure 7.12: Australia’s LNG exports by value and volume

A$ billion

wells to be built. Woodside has noted that the Scarborough project is‘more than 55% complete’, with output from Pluto 2 expected in 2026.

0

Notes: Extraction expenditure consists of all expenditure on buildings and structures, plantand 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 | March 2024

80

Table 7.1: Gas outlook
World

Unit

2023

2024 f

2025 f

2026 z2027 z2028 z2029 zCAGR r– nominal

US$/bbl

86.7

86.3

79.3

73.0

71.8

71.3

71.1

-3.2

– reali

US$/bbl

88.6

86.3

77.8

70.1

67.6

65.7

64.2

-5.2

– nominal

US$/MMBtu

13.9

16.2

13.1

12.7

12.3

12.2

12.0

-2.4

– real

US$/MMBtu

14.2

16.2

12.8

12.2

11.6

11.2

10.8

-4.4

LNG trade

Mt

e

403.2

425.5

455.6

498.0

535.9

548.9

566.9

5.8

Gas production

Bcm

4,038

4,132

4,214

4,327

4,375

4,431

4,480

1.7

Gas consumption

Bcm

4,036

4,132

4,223

4,301

4,357

4,405

4,446

1.6

Australia

Unit

2022–23

2023–24 f

2024–25 f

2025–26 z

2026–27 z

2027–28 z

2028–29 z

CAGR rProduction

Bcm

164

164

157

157

162

159

159

-0.5

– Eastern market

Bcm

58

57

54

52

52

51

51

-2.0

JCCC oil pricea

Asian LNG spot priceh,ib– Western market

Bcm

91

87

86

84

87

85

82

-1.7

d

Bcm

15

17

17

17

20

21

22

6.6

LNG export volume

Mt

82

80

78

78

82

79

79

-0.4

– nominal value

A$m92,23771,54065,39455,35856,40353,77051,153-9.4

A$m

95,94471,54063,382

52,21351,901

48,27144,802-11.9– nominal value

A$/GJ

21.4

17.1

15.8

13.5

13.1

12.8

12.2

-9.0

– real value

A$/GJ

22.3

17.1

15.3

12.7

12.0

11.5

10.7

-11.5

– nominal value

US$/MMBtu

15.2

11.9

11.6

10.4

10.3

10.2

9.7

-7.3

– real value

US$/MMBtu

15.8

11.9

11.2

9.8

9.5

9.1

8.5

-9.9

– Northern market– real valuefe

LNG export unit value

h

f

i

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 BayuUndan 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 isequivalent 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 2023 and2029 or 2022–23 and 2028–29; s Estimate; z Projection.
Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024); Company reports; Nexant (2024) World Gas Model.

Resources and Energy Quarterly | March 2024

81

Resources and Energy Quarterly | March 2024

82

Resources and Energy Quarterly | March 2024

83

Summary The Brent crude oil price is projected to fall from an average US$84 abarrel in 2023 to US$66 a barrel (in real terms) by 2029. The fall will be
driven by both weak demand and gains in non-OPEC production.
 Australia’s crude and condensate production is projected to fallsteadily, from 282,000 barrels a day in 2023–24 to about 215,000
barrels per day by 2028–29, as North-West Shelf output falls.
 Australia’s crude and condensate export earnings (in real terms) areprojected to fall from A$13.2 billion in 2023–24 to A$6.9 billion by
2028–29, as prices fall and output declines.

8.2

World consumption

Growth in global oil demand to slow throughout the outlook period
Global oil consumption is largely driven by demand from the transport
sector, with industrial use having a secondary, but still substantial, role
(Figure 8.1). Petrol and diesel, primarily used in road transport, account formost of global oil consumption, while jet fuel and kerosene — primarily
used for air travel — makes up a relatively small proportion of usage. LPG,
ethane and naphtha are primarily used in industrial processes, including
the production of chemicals used to make polymers.
The International Energy Agency (IEA) estimates that annualised growth inglobal oil usage eased to 1.8 million barrels a day (mb/d) in the December
quarter 2023. This was a fall from 2.8 mb/d in the September quarter 2023
and marked a return to pre-pandemic baselines.
Global oil consumption is forecast to rise by 1.1% (CAGR) between 2024
and 2029, plateauing over the final few years. Growth in oil consumption
throughout the outlook period is projected to be led by a rise in the
demand for LPG, naphtha and jet fuel and a decrease in the overall
consumption of petrol. Overall demand for crude is projected to reach 106
mb/d by the end of the outlook period. Demand changes through 2023 and2024 will have been primarily driven by Chinese transport fuel andpetrochemical demand, as well as other non-OECD demand, while OECD
demand is forecast to be steady.
Resources and Energy Quarterly | March 2024

Figure 8.1: Global oil consumption by refined petroleum product120
Millions of barrels per day

8.1

100
80
60
40
20
0

2016 2017 2018 2019 2020 2021 2022 2023 2024

Gas/Diesel Oil & Motor Gasoil
Jet Fuel & Kerosene

Naptha, LPG & EthaneotherSource: International Energy Agency (2024)

Jet fuel and petrochemical demand drives growth
According to the IEA, the largest increase by product use will be in jet fueldemand. During the COVID-19 pandemic jet fuel demand fell by 40%
between 2019 and 2020, and has since been slowly recovering. The
Airports Council International’s (ACI) forecasts that global air travel is toreach and then surpass pre pandemic levels in 2024. However, jet fuelconsumption is only likely to surpass 2019 levels in 2027, due toimprovements in aircraft fuel efficiency. Unlike road transport, low-carbon
alternatives are unlikely to substitute large volumes of petroleum jet fuelover the outlook period. Low carbon — green hydrogen-based —alternatives are being developed but are unlikely to be produced insignificant quantities during the outlook period, and batteries do notprovide the energy density needed to power commercial flight.
Global polymer demand is expected to rise steadily over the outlook
period, driving up oil demand. Aircraft and vehicles are increasingly
replacing metal components with plastics to reduce weight — and thus
improve fuel efficiency — while sensors and other electronic components
in EVs also use additional plastics to produce. Demand from packaging is84

also expected to rise, driven by the ongoing growth of e-commerce. The
OECD’s Global Plastics Outlook: Policy Scenarios to 2060, published in
mid-2022, projects that global plastics use by 2060 will be triple 2019
levels, with the largest growth by application being in vehicles.
EV adoption and efficiency gains to reduce diesel and petrol demand
The share of electric vehicles (EVs) in the global passenger vehicle market
is forecast to exceed 20% by 2029, with strong adoption expected in China(37%) and Europe (22%) (see fig 8.2). The shift in the composition of the
global vehicle fleet towards EVs will accelerate over time.
Figure 8.2: Global passenger vehicle stocks
1,400
Millions of Vehicles

China is the world’s largest consumer of oil, with demand of 16.4 mb/d in
2023. Following the easing of pandemic restrictions, demand for oil in
China has been growing rapidly — increasing from 14.3 mb/d in 2022 to
16.4 mb/d in 2023. However, as China leaves its COVID recovery period,
demand growth is expected to slow.
China is expected to lead petrochemical growth, with 51% of new olefin (aprecursor to synthetic polymer) production capacity to be built in China.
Most of the new Chinese production capacity is expected to use naphtha
as a feedstock.
Domestic aviation in China is strengthening with travel around Lunar New
Year surpassing pre-2019 levels. However, with efficiency gains, thedemand for jet fuel for domestic flights has not surpassed 2019 levels.

1,600
1,200

India to be the largest driver of oil demand

1,000

India’s demand for oil is set to increase across all oil products over theoutlook period. India is the world’s second largest oil user after China andis set to have the largest rise in demand through the outlook period.

800
600
400
200
0

China remains the world’s largest user as post pandemic recovery slows

2015

2017
2019
2021
2023
2025
2027
ICE stocks
Hybrid stocks
ZEV stocks

2029

Notes: Zero-emission vehicles includes battery electric vehicles (BEVs), plug-in hybrid
electric vehicles (PHEVs) and fuel cell electric vehicles (FCEVs), while EVs refers to only
BEVs and PHEVs.
Source: Wood Mackenzie (2024)

As a result of increased EV sales, the global internal combustion engine(ICE) passenger vehicle fleet is forecast to plateau over the next year andthen fall throughout the outlook period. The number of ICE passenger
vehicles is set to plateau in 2024 at 1.3 billion vehicles and then fall to 1.2
billion vehicles by 2029, a reduction of 4.7%.

Resources and Energy Quarterly | March 2024

Road transport is one major area of growth in India and is set to contributeto a rise in oil demand. While EV adoption is expected to be strong — withover 3.5 million zero emission vehicles by 2029 — it is outpaced by ICE
vehicle growth from 60 million in 2023 to 75 million by 2029.
Domestic air travel in India remains relatively low and is reflective of India’s
GDP per capita. As the economy continues to grow and GDP per capita
increases, we can expect to see an increased demand for air travel — andtherefore increased demand for jet fuel.
OECD demand set to decline
OECD demand is set to decline over the outlook period; the IEA forecaststhat OECD oil demand is set to decline slightly (by 0.12 mb/d) in 2024 andis then expected to continue to fall further through the outlook period. The
reduction in demand is to be led by a combination of relatively weakeconomic growth, EV adoption and efficiency gains.

85World production

World supply continues to rise, driven by production in the Americas
In the outlook period, world oil supply will continue to slowly rise before
plateauing, reaching 106 mb/d by 2029. This rise in production is likely to
be largely driven by the Americas, particularly Guyana, the US and Brazil.
US supply has been increasing and hit record production of 13.2 mb/d in
the December quarter 2023. However, poor weather conditions in thenorthern Atlantic have recently cut North American output by 0.9mb/d.
Production is expected to recover over the outlook period.
New supply is also expected from Guyana. After a series of discoveries
beginning in 2008, offshore production in Guyana began in 2019, andprojects currently in the pipeline are expected to continue to bring
additional capacity online. Over the outlook period, Wood Mackenzie
forecast Guyana’s output to rise by 0.5 mb/d to about 1.3 mb/d by 2029.
About 66% of Guyana, including much of its oil reserves, is territory
disputed by Venezuela. In recent months, Venezuela has increased its
military presence on the border, further increasing chances of regional
conflict that would threaten Guyanese oil supply.
Venezuela possesses the world’s largest proven oil reserves, and oil
exports in 2013 were almost 2.4 mb/d. However, supply fell to 0.75 mb/d in
2023 in part due to US sanctions. Conflict with Guyana and possible
military action may see sanctions reapplied and further falls in oil supply asa result.
Brazil joins OPEC+ and Angola leaves
OPEC+ (The Organisation of Petroleum Exporting Countries + other oilproducing counties) agreed to voluntary cuts of 2.2 mb/d following theNovember OPEC+ meeting, The cuts were then extended till the middle ofthe year in the February meeting. The meeting also saw Brazil join OPEC+
and Angola announce it was leaving the organisation. Angola left following
a dispute with OPEC, citing a desire to stabilize production at over 1 mb/d.
Angola is one of Africa’s largest oil exporters, currently exporting 1.1 mb/dand is no longer subject to quotas.

Resources and Energy Quarterly | March 2024

Brazil currently has not made commitments to curtail output after joining
OPEC+. Petrobras — Brazil’s state run publicly traded oil company — hasstated that, as a publicly traded company, it cannot participate in quotas.
Brazil has been a major driver of increased supply that has come online
over the last year. Further, Petrobras intends to increase its planned
investments up to $102 billion over the next 5 years. This funding would
allow Petrobras to lift its production from 2.8 mb/d to 3.2 mb/d. The funding
program also includes funds for green energy and fertiliser projects.
Saudi Arabia has suspended its plans to increase its production capacityby 1 mb/d up to 13 mb/d by 2027. The target to increase production was
originally announced in 2020. Given that Saudi Arabia has already madeproduction cuts of almost 25% of its total production capacity, thesuspension of this additional capacity is unlikely to impact overall supply.
In the December quarter 2023, OPEC crude oil spare capacity wasestimated at 20% (Figure 8.3) and is expected to be higher in the March
quarter 2024 as the cuts announced in November are fully implemented.
Figure 8.3: OPEC spare crude oil capacity, as a percentage of total
30%
Percent of total OPEC capacity

8.3

25%
20%
15%
10%
5%
0%
Mar-19Mar-20
Saudi Arabia
Iraq

Mar-21
Mar-22
Iran
UAE
KuwaitMar-23
Other Opec

Notes: Spare capacity is the estimated capacity which can produce within 90 days.
Condensate excluded.
Source: Wood Mackenzie (2023), International Energy Agency (2024), Department ofIndustry, Science and Resources (2024)

86

Russia redirects oil exports
Since the invasion of Ukraine in the March quarter of 2022, Russian oil
exports have diverted away from OECD countries, with India becoming thelargest consumer for Russian seaborne crude oil exports (Figure 8.4). The
G7, EU and Australia all imposed the price caps on seaborne exports ofRussian crude oil and refined petroleum products from 4 December 2022
Figure 8.4: Russian seaborne crude oil and condensate exports

5,000
kilobarrels per day

On some occasions, sanctions on Russian cargoes have caused cargoships to be prevented from docking or rerouted entirely. In January 2024,
10 million barrels of Russian crude were stranded outside of Seoul due topayment issues and sanctions. Russia has also experienced similar issues
with receiving payments for its exports to India.
Discounts on Russian crude have narrowed substantially in 2023. The IEA
weighted average FOB price for seaborne Russian crude rose to
US$65.42 a barrel in January 2024, above the US$60 price caps imposed
by US, EU and Australia. The difference between the Brent crude oil priceand the IEA weighted average FOB price fell from US$30 a barrel inJanuary 2023 to US$14.84 in January 2024.

6,000

4,000
3,000

8.4

2,000

PricesHigh supply and soft demand

1,000
0

seaborne crude oil exports were shipped by tankers using insurance from
G-7 and EU firms in September 2023.

Mar-19Mar-20Mar-21China
Other Non-OECD
Other OECD
Unknown

Mar-22Mar-23

India
OECD Europe (ex Turkey)
TurkeyNotes: Export volumes are estimated using vessel tracking data and may deviate from
customs data.
Source: Kpler (2024)

Price caps imposed on Russian oil have required new and complex
monitoring and enforcement measures. Russian oil exports are now
largely carried by a fleet of older tankers operating outside of the Western
shipping system, in order to circumvent the insurance bans and pricecaps. The Kyiv School of Economics estimates that 31% of Russian

Resources and Energy Quarterly | March 2024

Demand for transport fuels is expected to grow slowly and then decline
over the outlook period. Most of the growth in oil demand will come fromjet fuel and petrochemical usage (see world consumption section). In
addition, growth of non-OPEC supply will continue to put downward
pressure on prices. Therefore, WTI and Brent prices are projected to
decline steadily through the outlook period, both in real and nominal terms.
By 2029, Brent is expected to fall to US$65 a barrel (in real terms) andWTI to reach US$62 a barrel (in real terms).
Tensions in the Middle East and risk premiums
One caveat to prices steadily decreasing through the outlook are potential
disruptions in the Middle East. These tensions are centred around twoareas: the Red Sea and the Persian Gulf.
Through the December quarter 2023 and early in the March quarter 2024,
tensions in the Red Sea have been escalating, after Houthis began
attacking ships transiting via the Red Sea. Disruptions to Red Sea tradedue to the Houthi attacks has not resulted in a significant impact on the87price of oil. There was an initial drop in the quantity of crude oil transitingfrom east of the Suez Canal to Europe, however, January 2024 volumes
recovered to pre attack levels. Volumes of refined products have been
impacted in both directions, however, the long-term impacts are yet to be
seen. Global volumes traded have not significantly changed since the startof the conflict; this can largely be attributed to a realignment of contracts
and the rerouting of ships around the Cape of Good Hope.
The other area that presents a risk for disruptions is the Persian Gulf, as
US-Iranian tensions rise. In January 2024, Iran seized an oil tanker that
the US had previously seized in 2023. The Persian Gulf contains ports
where some of the largest exporters of oil transit their oil supply. In 2023,
20 mb/d (or 29%) of global seaborne supply transited via the Persian Gulf
and out of the Gulf of Oman into the Red Sea. If tensions do escalate in
the Persian Gulf an additional risk premium may be applied to the oil price.
Figure 8.5: Price outlook
140
120

8.5

Australia

Delays over investment decision causing uncertainty over outlook
Australian crude oil and condensate export earnings fell by 8% year-onyear to $3.1 billion in the December quarter 2023, as prices fell back fromthe elevated levels triggered by the Russian invasion of Ukraine in 2022.
The value of refined oil product export values fell by 2.7% year-on-year.
Australian crude oil and condensate output fell by 10% in 2023, to 284
kb/d from 316 kb/d in 2022. The fall was due to lower output in the
Carnarvon Basin, which is approaching end of life. This includes fields
such as the North-West Shelf and Greater Enfield. Output is forecast to fall
further over the outlook period — to 227 kb/d in 2028–29 — as Carnarvon
Basin fields deplete further.
Export values are projected to fall by 12.4% (CAGR) to $6.8 billion (in realterms) by 2028–29, as production and prices both fall throughout theoutlook period (Figure 8.6).

100
US$ a barrel

Due to the aforementioned events, some risk premium has already been
applied to oil prices, however, this has been tempered by strong supply. If
the chances of disruptions increase, an increased risk premium will likely
be applied to the price of oil. Any increase in the price likely will betempered by any spare OPEC capacity at the time, as that capacity may
return to production in response to any disruptions.

80

A final investment decision for the Dorado oil and gas field is expected thisyear, having been delayed from the second half of 2022. Carnarvon
Energy divested a 10% stake in the project to Taiwan’s CPC Corporationin February 2023. If the project proceeds, it will bring around 90 kb/d ofadditional production capacity online.

60
40
20

Australian refineries to remain open with government support

02020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Brent

West-Texas Intermediate

Source: Bloomberg (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

In 2021, falling demand resulted in the closure of two of Australia’s oil
refineries. The remaining two refineries signed contracts with theAustralian Government to remain open until at least 2027, in exchange fora subsidy on each litre of refined product sold.

88Australia’s two remaining refineries are expected to have their operational
life extended, with plans to extend the Lytton plant announced in April
2022, and plans to extend the Geelong plant announced in January 2023.
Australian refined production is expected to remain at around 250 kb/dover the outlook period.
Australia’s consumption of refined oil products rose by 4.7% year-on-year
in the December quarter 2023. The gain was driven by a 23% lift in usageof jet fuel, and reflects the ongoing recovery in air travel since the openingof Australia’s international borders in November 2021. Consumption of
automotive gasoline rose 0.7% year-on- year in 2023. Rising adoption ofelectric vehicles is expected to reduce demand for petrol over the outlook
period.

400

16

300

12

200

8

100

4

Australia’s petroleum exploration expenditure in 2023 was $1.06 billion, up
slightly on the $0.97 billion in 2023 but still below the highs of 2010-2020.
The increase was driven by an increase in onshore exploration, that rosefrom $591 million in 2022 to $664 million in 2023. Offshore exploration has
remained largely steady.
Revisions to forecasts
Since the December 2023 Resources and Energy Quarterly, the forecast
for Australia’s crude and condensate export earnings has been revised,
due to revisions in the price outlook for oil. Earnings in 2023–24 have beenrevised down to $13.2 billion, while 2024–25 earnings have been revised
up slightly to $11.1 billion in 2024–25.
Since the March 2023 Resources and Energy Quarterly, forecast export
volumes in 2027–28 have been revised down to 218 kb/d from 299 kb/d,and values have fallen to $7.9 billion from $11.4 billion, driven by declining
production volumes due to basin depletion.

2022-23 A$ billion

Thousand barrels a day

Figure 8.6: Australian crude oil and condensate exports

Exploration00
2016–17 2018–19 2020–21 2022–23 2024–25 2026-27 2028-29
VolumeValue (rhs)

Source: Australian Bureau of Statistics (2024); Department of Climate Change, Energy andWater; Department of Industry, Science and Resources (2024).

Resources and Energy Quarterly | March 2024

89

Table 8.1: Oil Outlook
World

Unit

2023

2024f

2025f

2026f

2027f

2028f

2029f

CAGRr

Productiona

mb/d

102

103

105

105

106

106

106

1.0

Consumptiona

mb/d

102

103

105

105

106

106

106

1.1

– nominal

US$/bbl

78

77

72

70

69

69

69

-5.2

– real

US$/bbl

79

77

70

67

65

63

62

-7.4

– nominal

US$/bbl

83

82

76

74

73

73

73

-5.1

– real

US$/bbl84

82

Australia

Unit

2022–23

2023–24

2024–25

2025–26

2026–27

2027–28

2028–29CAGRr

WTI crude oil priceb

Brent crude oil price
b

74
f

71
f

69
f

67
f

66
f

-7.4
f

Crude oil and condensate
Productiona

kb/d

291

285

275

260

245

228

225

-6.3

a

Export volume

kb/d

282

274

270

254

237

218

215

-4.6

– nominal value

A$m

13,193

13,103

11,568

9,646

8,708

7,977

7,880

-9.0

– real valueg

A$m

13,723

13,103

11,212

9,098

8,013

7,162

6,901

-12.2

kb/d

169

183

192

191

189

188

187

0.7

kb/d

93

101

105

104

108

107

105

-0.1

Refinery productiona

kb/d

252

253

248

247

245

244

242

-1.5

Exports

kb/d

6

5

4

4

3

3

3

-14.3

kb/d

856

902

904

905

905

902

897

3.3

kb/d

1,021

1,058

1,059

1,059

1,057

1,053

1,047

2.0

Importsa

LPG Productionac

Refined productsadImportsaConsumptionaeNotes: a 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 ofmarketable products, including imports; h In 2023-24 financial year Australian dollars; r Compound annual growth rate (per cent), for the period from 2023 to 2029 or for the equivalent financial
years.
Source: ABS (2024) International Trade in Goods and Services, Australia, Cat. No. 5368.0; International Energy Agency (2024); US Energy Information Administration (2024); Department ofIndustry, Science and Resources (2024); Department of Climate Change, Energy and Environment (2024).

Resources and Energy Quarterly | March 2024

90

Resources and Energy Quarterly | March 2024

91

9.1





9.2

Summary
Supply disruptions and renewed interest in nuclear power pushed
uranium prices above US$100 a pound in the early part of the March
quarter, effectively doubling the price of a year ago.
Price pressures are expected to persist through the full outlook period,
with the price settling at US$109 per pound (in real terms) by 2029.
Price and volume growth are projected to lift Australian export values
from A$0.8 billion in 2022–23 to A$2 billion by 2028–29.

World Consumption

Global deployment of nuclear power is broadening and accelerating
Globally, uranium is primarily used to generate energy in nuclear reactors.
Reactor construction rates have risen significantly since the early 2000s(Figure 9.1).Reactors typically consume a relatively steady quantity ofuranium over time, replacing a portion of their fuel load each year. New
reactors have a much higher initial demand as they need to be suppliedwith a full fuel load in advance before they commence operation. The paceof reactor construction is therefore a significant driver of uranium demand.
Worldwide reactor demand is estimated to reach a short-term peak of
98 kilotonnes (kt) of U3O8 (unenriched uranium oxide concentrate) in
2024 (including inventory build), of which both US and China are both
expected to account for 21 kt of this each (Figure 9.2). The increase inglobal demand is driven by efforts among a range of countries to achieve
net zero targets, reduce domestic energy prices, and improve their energy
security.
Among these nations is the UK, which aims to scale up its nuclear
capacity from up 6.5 GW to 24 GW by 2050. The UK has several large
reactors mooted for development and is shortlisting six potential suppliersof Small Advanced Modular Reactors (SMRs). France is also scaling up its
nuclear ambitions over the next 5 years, with its largest nuclear powercompanies (EDF, Framatome and Orano) all reporting strong production
and profit results for 2023.

Resources and Energy Quarterly | March 2024

Figure 9.1: Growth in world nuclear power generation built and underconstruction (GWe)
0

10

20

EU countries

Japan

30

40

1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025

US

China

Others

Source: International Energy Agency (2024); World Nuclear Association (2024); Department
of Industry, Science and Resources (2024)

92

Other countries are developing nuclear power for the first time. The UAE
had its first reactors come online in 2023, and Bangladesh is due to haveits first reactor come online in 2024. Türkiye has planned for 4800MWe ofcapacity by 2029.

Figure 9.2: World uranium consumption and inventories (U3O8)
120
100
Thousand tonnes

Nuclear energy ambitions are also growing in Asia. Almost 20 reactors
could come online during the outlook period in China alone. India hasannounced plans to build 18 more reactors by 2031–32. Japan hasreconnected 12 units, with the pace of reconnection accelerating. Around
15 further reactors remain under review for future connection, and theJapanese Government is scaling up plans to pivot away from gas- andcoal-fired power generation.

Increasing prices are unlikely to affect uranium demand
Recent price growth is not expected to constrain demand by nuclear
energy producing utility companies or significantly affect the costcompetitiveness of nuclear energy. The price of nuclear energy is largely
determined by the capital costs of nuclear reactors, with fuel costs only
accounting for only a marginal share.
Analysis by the World Nuclear Association shows that an increase in theprice of U3O8 from $25 to $50 a pound will increase the cost of fuel per
KWh from 0.50 USc/KWh to 0.62 USc/KWh.

Resources and Energy Quarterly | March 2024

40

0

2013

2015

China
United States

2017

2019

2021

European Union
Others2023

Japan
Inventories

2025

2027

2029

RussiaTotal production

Source: International Energy Agency (2043); World Nuclear Association (2024); Ux
Consulting (2023)

Figure 9.3: World uranium output (U3O8)
120
100
Thousand tonnes

If the US is unable to procure sufficient fuel from non-Russian sources it
would be necessary to larger quantities of fuel using the same enrichment
capacity. However, increasing production from the same enrichment
capacity requires increasing the ratio of input uranium to fuel product, andwill put additional pressures on unenriched uranium demand.

60

20

.

The US bans imports of nuclear fuel from Russia
The US has banned the importation of nuclear fuel (enriched uranium)from Russia. Russia is projected to hold 42% of the world’s enrichment
capacity by 2025, while the US is set to consume 23% of global uranium
output. It would feasible for the US to acquire all its uranium fuel fromsources outside of Russia, however this might be difficult because
production may already be committed due to pre-existing contracts.

80

80
60
40
20
0

2013

2015

Kazakhstan
AfricaSecondary supply

2017

2019

2021

2023

CanadaRussiaTotal consumption

2025

2027

2029

Australia
Others

Source: International Energy Agency (2024); World Nuclear Association (2024); Ux
Consulting (2023)

93

The IEA estimates that the levelized cost of energy for nuclear power in
the US is approximately 7.1USc/KWh for a 1100MW reactor.
Uranium-generated power is thus less exposed to changes in the cost of
its fuel source than other forms of energy, and recent price growth foruranium is not expected to add much to the cost of nuclear energy overall.
Therefore, reactor shutdowns, cancellations and a loss of appetite fornuclear, resulting in a fall in the demand outlook due to high uranium
prices are unlikely, and high prices are largely expected to lead to a lift inproduction rather than a reduction in demand (see World Production
section).

9.3

World production

Production is growing, but sulfuric acid shortages are affecting production
Recent uranium price gains reflect an emerging market shortfall linked toyears of global under-investment. World supply has picked up recently, but
shortfalls through to 2030 are still expected (Figure 9.3).
Some of the supply shortfall may be addressed from existing mines,
though ramp-ups are not always smooth. After revising its production
forecasts up for 2024 and 2025, Kazatomprom — the world’s largest
supplier, located in Kazakhstan — has revised them down due to sulphuricacid shortages. This issue could persist into 2025, keeping mined uranium
output in Kazakhstan below capacity. Given that Kazakhstan is the largest
producer of uranium in the world, accounting for 24.7kt from a total of
64.4kt mined world-wide in 2023, any disruptions to Kazatomprom’s
supply chains are likely to exacerbate the supply shortfall.
Canada and Australia are the 2nd and 4th large suppliers or uranium, andboth countries have potential to ramp up supply. Canada previously
reduced its output due to low prices through the 2010s. Inventories andsecondary sources (such as depleted uranium reprocessors) typicallyprovide additional supply as needed, and high prices will provide a strong
incentive to keep overall supply and demand in balance over coming
years. Government and utility stockpiles are projected to be sufficient tosupport uranium demand through the outlook period.

Resources and Energy Quarterly | March 2024

New mine supply is needed to balance the uranium market over the longer
term. This growth will likely be concentrated in Africa, with mines projected
to open in Niger and Namibia during the outlook period. The Tumas
uranium project in Namibia is expected to be first, with a final investment
decision expected in the first half of 2024.
There were fears that the Dasa mine in Niger would be affected by the
recent coup d'état, but the mine has continued to operate, albeit with some
disruptions from border closures. With the period of greatest risk now
passed, the mine is expected to remain open through the outlook period.

9.4

PricesPrices rose sharply in H2 2023, with more growth expected
Uranium prices rose sharply in H2 2023 and continued to rise in early
2024, highlighting the scale of underinvestment (Figure 9.4). High prices
are not expected to significantly affect the cost or use of nuclear power,
and instead will likely motivate substantial efforts on the supply side.
Higher prices will incentivise governments and private holders of uranium
to sell off stockpiles, which remain substantial. Uranium miners will have astronger incentive to maximise output from existing mines and facilities,
many of which have been operating at low capacity for some years.
Over the longer term, prices are likely to encourage more development of
new mine capacity, though, this is not likely to have a significant effect on
supply until after the outlook period. With a primary market shortfall
expected to persist, prices are projected to remain high throughout theoutlook period, with stockpiles and existing mine capacity coming undergrowing pressure.
Price speculation could add to volatility
Higher prices will likely attract greater interest from financial institutions
such as holding funds, which may buy and hold uranium for speculative
purposes. Greater interest from speculative investors will add volatility tothe price outlook, placing upward pressure on prices in the short-term, but
potentially accelerating downward pressure when stored supply is returned
to markets.

94Australia

Figure 9.4: Uranium price outlook (Real terms)
120

Higher prices and volumes are set to boost export earnings

Deep Yellow Limited’s Mulga Rock mine (Western Australia) is expected tocommence production late in the outlook period, following a definitive
feasibility study in 2024 and pending a successful final investment decisionin 2026. Recent price growth may to support exploration and thedevelopment of further new mines in Australia. However, no new capacity
is not expected to appear during the outlook period.
The ramp-up at Honeymoon is expected to push export earnings up toaround $1.2 billion in 2023–24 (Figure 9.5), with further growth insubsequent years. Revenue is expected to reach $2 billion by 2028–29.

100
80
US$/lbAustralia’s uranium exports are currently produced at the Four Mile andOlympic Dam mines, and from Boss Energy’s newly reopened
Honeymoon mine (all in South Australia). Honeymoon recommenced
operations in December quarter 2023 and is currently ramping up,
targeting annual nameplate capacity of 1.2 kt by 2026.

40
20
0

2014

2017

2020

2023

2026

2029

Real uranim contract priceSource: Cameco Corporation (2024) Uranium Spot Price; Ux Consulting (2023) Uranium
Market Outlook

Figure 9.5: Australia's uranium exports

Thousand tonnes

Longer term export earnings forecasts have been revised up significantly
since the March 2023 Resources and Energy Quarterly. Real Export
earnings for 2027–28 have been revised up to $2 billion due to theemergence of a stronger price environment.

2011

Real uranium price

Revisions to the outlook
Since the December 2023 Resources and Energy Quarterly, the forecast
for Australia’s uranium export earnings have been revised up by $91
million to $1.6 billion in 2024–25.

60

9

2400

6

1600

3

800

A$ million

9.5

0
2012–13

2016–17

2020–21

Export volumes

2024–250
2028–29

Real Export values (rhs)

Source: Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

95

Table 9.1: Uranium outlook
World

Unit

2023

2024

2025f

2026z

2027z

2028z

2029z

CAGRr

Production

kt

64.4

70.1

78.7

82.7

87.1

88.3

87.9

5.3

Africab

kt

9.2

10.1

12.2

12.2

13.5

13.9

14.1

7.4

Canada

kt

13.7

16.3

16.3

16.3

16.3

16.3

16.3

2.9

Kazakhstan

kt

24.9

27.1

31.6

32.9

35.8

35.8

34.6

5.6

Russia

kt

3.2

3.1

3.1

3.2

3.1

3.8

4.1

4.3

Consumption

kt

87.0

95.4

92.1

95.1

98.1

97.9

94.6

1.4

China

kt

13.2

14.1

14.6

18.3

21.3

18.8

17.8

5.1

European Union 28

kt

21.2

22.0

20.3

20.3

20.3

20.3

21.0

– 0.2

Japan

kt

2.0

2.0

2.0

2.0

2.0

3.4

2.3

2.2

Russia

kt

6.0

6.0

7.3

6.6

7.6

6.6

6.6

1.5

United States

kt

21.5

21.8

20.8

20.8

20.8

20.8

21.5

– 0.0

Spot price nominal

US$/lb

62.5

98.6

105.2

108.9

113.1

117.7

120.6

11.6

– realc

US$/lb

63.9

98.6

103.3

104.6

106.4

108.5

108.8

9.3

Australia

Unit

2022–23

2023–24

2024–25f

2025–26z

2026–27z

2027–28z

2028–29z

CAGRr

Production

t

5,873

6,024

6,012

6,517

6,717

6,817

7,217

3.5

Export volume

t

4,809

5,478

6,012

6,517

6,717

6,817

7,217

7.0

– nominal value

A$m

812

1,181

1,630

1,913

2,148

2,267

2,335

19.3

– real valued

A$m

844

1,181

1,580

1,804

1,977

2,035

2,045

15.9

Average price

A$/kg

168.7

215.6

271.2

293.5

319.8

332.5

323.6

11.5

– reald

A$/kg

175.5

215.6

262.9

276.8

294.3

298.5

283.4

8.3

Notes: b Includes Niger, Namibia, South Africa, Malawi and Zambia; c In 2024 US dollars; d in 2022–23 Australian dollars; s estimate; f forecast; r Annual growth rate; z Projection.
Source: Department of Industry, Science and Resources (2024); Cameco Corporation (2024); Ux Consulting (2024) Uranium Market Outlook

Resources and Energy Quarterly | March 2024

96

Resources and Energy Quarterly | March 2024

97

Resources and Energy Quarterly | March 2024

98

10.1






Summary

Gold prices averaged US$1,940 an ounce in 2023, supported by strong
demand from investors and central banks. Prices are forecast to remain
elevated throughout 2024 and 2025, before softening in real terms toaverage around US$1,750 an ounce by 2029.
Australian gold production decreased to 294 tonnes in 2023, impacted
by adverse weather events in H1 2023 and lower grades and planned
maintenance in H2 2023. Production is forecast to grow over the longterm as major new projects and expansions come on-stream.
Gold earnings are forecast to decline in real terms, from $28 billion in
2023–24 to around $20 billion in 2028–29, as higher export volumes areoutweighed by the impact of lower Australian gold prices in real terms.

10.2

World consumption

World gold usage decreased in 2023, buoyed by official sector demand
World gold demand decreased by 5.3% year-on-year to 4,440 tonnes in
2023, easing from a 10-year high in 2022. This fall was largely driven by a
15% year-on-year decline in investment demand, with central bankdemand and technology consumption also lower.
Official sector (central banks and other government financial institutions)buying declined by 4.1% year-on-year to 1037 tonnes in 2023. Despite thefall, this still amounted to the second-highest annual total in the WorldGold Council’s (WGC) records. Official sector demand has been strong
since mid-2022, with purchases dominated by emerging market central
banks eager to lift gold reserves.
According to World Gold Council (WGC) data for declared purchases,
China was the largest buyer, adding a reported 225 tonnes (around 10%)
to its gold reserves in 2023. The National Bank of Poland (NBP)
purchased 130 tonnes, raising its gold reserves by 57% year-on-year. The
President of the NBP said the central bank intends to continue building its
gold reserves. Other notable purchases were reported by Singapore andvarious emerging market central banks including India, Libya and Iraq.
Sales by central banks during the year were comparatively small, with

Resources and Energy Quarterly | March 2024

Kazakhstan selling 47 tonnes from its reserves from January-November
and Uzbekistan reporting 25 tonnes sold for the year.
Gold purchases by non-government buyers in 2023 were lower year-onyear, with slight growth in jewellery demand offset by weaker investment
demand — which fell to a 10-year low.
Overall, 244 tonnes of gold flowed out of gold-backed exchange-tradedfunds (ETFs) in 2023, following 110 tonnes of outflows in 2022. (ETF
outflows are counted as reducing gold demand, while inflows are counted
as additional.) Demand for gold ETFs was weak in Western markets(particularly Europe) due to rising bond yields and stronger currencies.
Retail investment in gold bars and coins declined by 3% year-on-year in
2023. Year-on-year declines were partly driven by weaker demand in theWest and by base effects — following strong demand from the Middle East
in 2022. Failing to offset these declines, bar and coin investment demand
was strong in the larger markets of China (up by 28% year-on-year) andIndia (up by 7%), where Rupee depreciation supported record domestic
prices. Demand in China was strong due to base effects — following a
COVID-disrupted 2022 — as well as economic uncertainty and weak
performance from other asset classes (such as property and shares).
Gold jewellery demand rose marginally year-on-year in 2023, despite
record domestic prices in key consumer markets. Jewellery consumption
in China rose by 10% year-on-year to 630 tonnes, supported by elevatedconsumer saving intentions and base effects (given a weak December
quarter 2022). Indian jewellery consumption fell by 6% year-on-year in
2023 as consumers reacted to record high domestic prices. According to
the WGC, Chinese and Indian consumers responded to elevated prices bypurchasing jewellery with lower average weight or gold content.
Demand for gold in technological applications declined by 3.5% year-onyear to 298 tonnes in 2023: a record low in the WGC’s data series. Weakdemand for consumer electronics translated to lower demand for gold inelectronics such as in light-emitting diodes (LEDs), memory chips andprinted circuit boards.

99

Gold consumption forecast to decline over 2024 and 2025
World gold consumption is forecast to decrease by 2.5% a year on
average to 4,200 tonnes in 2025 (Figure 10.1). The decline is expected tobe mainly driven by lower official sector (central banks and otherinstitutions) demand, easing from record levels seen in 2022 and 2023.
Official sector demand is forecast to ease to 700 tonnes in 2025, a 33%
decline from strong levels in 2023 but remain elevated compared tohistorical averages. This forecast decline is premised on the expectationthat some central banks have likely met near-term targets for increasing
gold reserves, following two record years of buying.
Investment demand (gold-backed ETFs or bar/coin holdings) is expected
to recover from low levels seen in 2023, to be 11% higher by 2025. Goldbar and coin demand is expected to continue at recent levels despite gains
in gold prices. Ongoing economic and geopolitical uncertainty, currency
Figure 10.1: World gold demand by sector
5,000

tonnes4,000

Strong growth in investment demand is expected in 2024, driven by flows
into ETFs over H2 2024 as interest rate cuts are expected to commence inadvanced economies. Gold-backed ETFs have been consistently
shedding gold volumes since the June quarter 2022. Continuation andacceleration of monetary easing in 2025 is expected to support further
strong inflows into ETFs in H1 2025, however high prices may lead toselling off (profit-taking) over H2 2025.
Jewellery consumption is forecast to rise by 2.8% to 2,150 tonnes by2025, with growth weighed down by forecast strength in gold prices. India
is expected to lead growth in jewellery consumption, driven by continued
robust economic growth and rising real incomes (as inflation eases).
Gold consumption to grow over the outlook period
World gold consumption is forecast to grow by 2.7% a year from 2026 toreach 4,700 tonnes in 2029. Demand growth in this period is expected tobe largely driven by rising jewellery consumption, with gradual increases
also expected in investment demand and high-tech manufacturing.
Jewellery consumption is forecast to grow by 4.4% a year on average from2026 to reach 2,550 tonnes by 2029. Consumption will be supported byeasing gold prices, improving consumer sentiment and rising incomes —particularly in the key markets of China and India.

3,000
2,000
1,000
0

volatility and poor performance of other assets (such as property andequities in China) in key markets will support physical gold demand.

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Jewellery fabrication
Investment
Central banks & other institutions
Technology

Notes: Jewellery fabrication includes jewellery consumption and the change in jewellery
inventory. Investment includes ETFs, bars and coins. Technology includes gold used in theelectronic, dentistry and other industrial sectors.
Source: Department of Industry, Science and Resources (2024); Metals Focus (2024); WorldGold Council (2024)

Resources and Energy Quarterly | March 2024

Investment demand is forecast to grow 3.4% a year on average from 2026
to reach 1,200 tonnes in 2029. It is likely that central banks’ rate policy
easing campaigns will be nearing completion in 2026; this is forecast todrive some price correction in 2026 as investors in Western markets sellsome holdings (to claim profits). Investment demand will nonetheless growover the outlook period as retail investors take advantage of lower prices
to increase holdings — especially of bar and coin in emerging markets.
Institutional investors are also expected to support demand growth overthe long-term as they increase gold holdings to maintain portfolio balance— assuming equity markets resume long-term growth.

100Official sector demand is forecast to ease further to 600 tonnes by 2029, along-run level that still exceeds historical averages. Buying is projected tocontinue at higher levels than prior to 2022, driven by emerging market
central banks with long-term goals to diversify their reserves with gold.
Historically, economic and geopolitical uncertainty have increased acountry’s propensity to increase gold reserves, as has the presence orthreat of sanctions from major currency nations1. Non-western economies
have actively increased gold holdings in foreign exchange reserves since
sanctions were issued on Russia following the invasion of Ukraine. In
particular, the freezing of Russia’s offshore reserves. With no indication ofwhen the current geopolitical landscape will improve, long-run official
sector gold demand has been revised up to 600-650 tonnes from500 tonnes in the March 2023 Resources and Energy Quarterly.

10.3

World production

World supply increased in 2023
World gold supply increased by 3.1% year-on-year to about 4,900 tonnes
in 2023, driven by both higher mine production and increased recycling.
Global mine production reached 3,644 tonnes in 2023, the second-highest
total on record. Production was on track to exceed the 2018 record (of3,656 tonnes) if major disruptions to several operations had not occurredin the December quarter 2023. Full year production growth was led byincreases in South Africa, Russia and Brazil.
Production in China — the world’s largest gold producing nation — rose
marginally year-on-year to 375 tonnes in 2023. Production in Russia — thesecond largest producer — rose by 2% year-on-year to 332 tonnes, led byincreased high-grade ore output from the large Olimpiada mine.
Production in the United States fell by an estimated 3% year-on-year toabout 168 tonnes in 2023. The decrease was due to lower output frommajor operations in Nevada (such as Bald Mountain and Carlin), as well as
lower production from the Fort Knox mine in Alaska.
1

Production in Canada decreased by 1.5% year-on-year to about
189 tonnes in 2023, with lower production reported in British Columbia andOntario. Production was down by an estimated 5.7% year-on-year at
Newmont’s recently acquired 8.9 tonnes per year Brucejack project (British
Columbia), while production at Agnico Eagle’s 21 tonnes per year Detour
Lake project (Ontario) was down by 13% year-on-year.
In Australia — the world’s third-largest gold producing nation — output
decreased by 2.8% year-on-year in 2023, to 294 tonnes. Australian mine
production fell due to disruptions from heavy rainfall in the first half of theyear, alongside decreasing mine grades and several mine closures (seeAustralia section).
Gold recycling increased by 9% year-on-year to 1,237 tonnes in 2023,
largely due to record gold prices in China and India. Recycling activity
outside of these two key markets was weaker than would have been
expected in a record year of gold prices: the WGC attributes this to recent
years of strong recycling (limiting stocks of jewellery ready for recycling)
and fiscal support for consumers reducing the need for distress selling.
The WGC also suggested another factor could be consumers in countries
with a high degree of economic uncertainty (such as Egypt, Iran andTürkiye) preferring to hold onto their gold as an asset of last resort.
World supply to stabilise after peaking in 2025
Global gold supply is forecast to grow to a peak of 5,050 tonnes by 2025,with increasing world gold mine production supported by further strength inrecycling activity (Figure 10.2).
Gold recycling activity is forecast to rise to 1,275 tonnes in 2025, in linewith a forecast peak in gold prices. World gold mine production is forecast
to rise by 1.9% a year on average by 2025 to 3,780 tonnes, led by gains in
Canada, the US, Chile and Brazil.
In the short-term, Newmont’s 4 tonnes per year Peñasquito mine is
expected to return to full production following lower production in 2023

Arslanalp, S, Eichengreen, B, Simpson-Bell, C 2023, Gold as International Reserves: A
Barbarous Relic No More?, IMF WP/23/14, Washington DC, USA.

Resources and Energy Quarterly | March 2024101(due to industrial action). Gold Fields’ 10.9 tonnes per year Salares Norteproject remains under construction, with first gold recently delayed to April
2024 and steady state production expected in 2025.
Canadian mine output is forecast to rise by 24% from 2023 to 2025, toreach 249 tonnes, driven by significant new projects and expansions.
Gains will include the 11 tonnes per year Côté project and the 10 tonnes
per year Blackwater project, both commencing operations in the next two
years.
From 2025, world gold supply is projected to stabilise at around
4,950 tonnes, as mine production reaches a medium-term peak of
3,875 tonnes in 2027 and recycling volumes ease.
After reaching a peak of 326 tonnes in the middle of the outlook period,
Australian mine production is projected to stabilise; increasing production
from major new projects and expansions will be offset by the impact of
declining grades and mine reserve depletion in existing projects.
Figure 10.2: World gold supply
6,000

4,000

TonnesContinued environmental regulations and industry consolidation in China is
forecast to see output fall in the medium-term, alongside reserve depletionand grade decline in current projects. With that said, China is unlikely tolose its position as the world’s largest producer in the outlook period.

10.4

PricesGold prices rose in 2023, reaching a new record in December
The London Bullion Market Association (LBMA) gold price averaged about
US$1940 an ounce in 2023 — 7.9% higher than in 2022. Price strength
over the year was driven by strong safe-haven demand, given economic
uncertainty, financial stability concerns in the US banking sector andgeopolitical risks (such as the Hamas-Israel conflict). Prices were also
supported by ongoing strength in central bank buying throughout the year.
Expectations of an imminent monetary easing in the US led to rapid
declines in US Treasury yields and the US dollar in the December quarter
2023, driving gold prices to a new record high of US$2,078 an ounce on
28 December. Changing expectations during this time were reinforced by
the US Federal Reserve’s December economic projections surprisingmarkets with a median expectation for 75 basis points of rate cuts in 2024.

5,000

3,000

Falling bond yields tend to increase gold’s appeal to institutional and retailinvestors as a secure asset to hedge against inflation or other risks. This isbecause decreases in the yield of a US Treasury (or other credible
government bonds) decreases the so-called market “risk-free rate”, andhence the opportunity cost of holding gold (pushing prices up).

2,000
1,000
0

Production in Russia is expected to increase over the long-term as thesubstantial Sukhoi Log project comes online in 2027, following extensive
delays. A definitive feasibility study is still forthcoming, however production
capacity estimates centre on 1.6 million ounces (50 tonnes) a year. Sukhoi
Log is one of the largest gold deposits in the world.

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Mine production

Scrap

Source: Department of Industry, Science and Resources (2024); Metals Focus (2024); WorldGold Council (2024).

Resources and Energy Quarterly | March 2024

However, the relationship between real bond yields and gold prices
weakened sharply following the Russian invasion of Ukraine — as prices
were lifted by heightened safe-haven demand for gold (Figure 10.3). Thishas since persisted as a driver, muting the effect of higher interest rates.

102

Gold prices to remain elevated in 2024 after reaching new record highs

Figure 10.3: Gold price and real US 10-Year Treasury yield
-1.5

2000

-1.0

1800

-0.5

Gold prices are forecast to average about US$2,020 an ounce in 2024 —a 6% upward revision compared with the December 2023 Resources andEnergy Quarterly. Prices have been volatile due to changing expectations
for the timing and scale of monetary easing. As of 15 March 2024, the
LBMA gold price remained slightly below its 11 March record price of
US$2,180 an ounce, driven by greater expectations for monetary easing:markets expect US rate cuts to commence in July 2024. This recent surge
to record price levels has been supported by strong investor demand.

1600

0.0

1400

0.5

1200

1.0

1000

1.5

800

2.0

600

2.5

400

3.0

Compared with the December 2023 Resources and Energy Quarterly,
price forecasts have been revised up sharply over the short-term, inrecognition of recent strength in investor demand and ongoing strengthfrom safe-haven and central bank demand.
Some degree of geopolitical risk premium is expected to persist over theforecast period: higher than was expected in the December 2023
Resources and Energy Quarterly, and far more than expected in the
March 2023 Resources and Energy Quarterly.

US$ gold priceMar-12Mar-16Mar-20

3.5
Mar-24

Real US 10 Year Treasury bond yield (inverted, rhs)

Source: Bloomberg (2024); LBMA (2024) Gold price PM

Figure 10.4: Gold price and the US dollar
2,200

90

2,100

95

2,000

100

1,900

105

1,800

110

1,700

115

1,600
Jan-22 May-22 Sep-22 Jan-23 May-23 Sep-23 Jan-24
US$ gold price
USD inverted (rhs)

120

index

Once monetary easing commences, gold prices are then expected toreceive a further boost leading into 2025, as the US dollar eases andinvestors gain greater clarity on the pace and scale of further rate cuts.
Gold prices are forecast to average US$2,030 an ounce in 2025,
supported by monetary easing and continued strength in demand fromboth investors and central banks.

200
Mar-08

US$ a troy ounce

Prices are forecast to remain steady throughout 2024, centred around a
scenario where monetary easing commences in the US and other major
economies over the second half of the year. In this scenario, investor
demand is expected to remain particularly strong over the first half of theyear as bond yields and the US dollar ease in anticipation of rate cuts.

%

2200

US$ a troy ounceGold prices have continued to hold up remarkably well despite downward
pressure from various sources such as high real yields, a strong US dollar(Figure 10.4) and continued ETF outflows.

Notes: USD refers to a trade-weighted index of the US dollar
Source: Bloomberg (2024); LBMA (2024) Gold price PM

Resources and Energy Quarterly | March 2024

103

Gold prices to ease, but remain elevated over the long-term

10.5

After 2025, gold prices are forecast to gradually fall to a low of around
US$1,860 an ounce (US$1,730 in 2024 dollars) in late 2027 as monetaryeasing cycles conclude, central bank purchasing slows and safe-havendemand eases to some extent. From early 2028 onwards prices are thenprojected to gradually rise in line with growth in institutional investment —discussed in the gold consumption section above — to average about
US$1,950 an ounce in 2029 (about US$1,760 in 2024 dollars).

Australian gold exports rose to record levels in 2023

In combination with an assumed appreciation in the Australian dollar
against the US dollar, the Australian dollar gold price is projected to
decline over the forecast period, from around A$2,900 an ounce in 2023 toaround A$2,600 an ounce in 2029 (A$2,300 in 2024 dollars) (Figure 10.5).
Prices are forecast significantly higher than in the March 2023 Resources
and Energy Quarterly, due to persistence of safe-haven demand from bothinvestors and consumers, as well as expectations for structurally higher
official sector demand over the forecast period.

2,500

3,500

2,000

2,800

1,500

2,100

1,000

1,400

500

700

0
2019

2021
2023
US dollar gold price2024 A$ a troy ounce

2024 US$ a troy ounce

Figure 10.5: US and Australian dollar gold prices

0
2025
2027
2029
Australian dollar gold price (rhs)

Source: Department of Industry, Science and Resources (2024); LBMA (2024) Gold price PM

Resources and Energy Quarterly | March 2024

Australia’s trade, production and exploration

Australia’s gold exports rose by 21% year-on-year to $28 billion in 2023, arecord in nominal terms. The gain was driven by higher Australian dollar
gold prices (up by 13%) and a lift in export volumes.
Growth in Australian exports was led by a 39% year-on-year increase to
the financial hubs (US, UK, Switzerland, Hong Kong and Singapore),
which collectively purchased $16 billion worth of gold. Within the financial
hubs, exports to Hong Kong increased by 37% to $6.8 billion, decreasedslightly to Singapore ($2.8 billion) and Switzerland ($2.0 billion) andincreased dramatically to the United Kingdom ($2.8 billion). Among the key
consumer markets, gold exports to China fell by 11% year-on-year to$6.4 billion, while exports to India more than doubled to $3.4 billion.
Australian gold export earnings to decline over the long-term
Australian gold export earnings are forecast to increase by 14% to $28
billion in 2023–24. Growth will largely be driven by 11% year-on-year
growth in export volumes and a strong September quarter 2023 result (inboth volume and price terms). Export earnings are then forecast to decline
by 17% to $23 billion in 2024–25, due to lower forecast export volumes
and Australian dollar gold prices (Figure 10.6).
From 2025–26 onwards, Australian gold export earnings are projected to
decline in real terms by 3.2% a year on average. Forecast declines will be
driven by falls in real Australian gold prices. Australian export volumes areprojected to grow and stabilise at around 275 tonnes a year from 2026–27
onwards, supported by growth in domestic mine production.
Australian gold mine production decreased in 2023
Australia’s gold industry produced 294 tonnes of mined gold in 2023, downby 2.8% year-on-year. Production was adversely affected in the first half ofthe year by heavy rainfall in the Northern Territory (NT) and northern partsof Queensland (QLD) and Western Australia (WA). Over the second half ofthe year, production was then lower year-on-year due to lower grades or
major outages due to maintenance at some mines. Production was also

104

400

40

300

30

200

20

100

10

0

2018–19 2020–21
Mine production

2022–23 2024–25
Export volume

Pike North cutback — which commenced mining ahead of schedule in the
December quarter 2023. Lower grades and mill shutdowns in the
September quarter 2023 weighed on output from the company’s Carosue
Dam and Jundee operations, however strong performance otherwise lifted
full year production at Carosue Dam 11% higher year-on-year.
2023–24 A$ billion

TonnesFigure 10.6: Australian gold exports and mine production02026–27 2028–29
Export value (rhs)

Sources: ABS (2024); Department of Industry, Science and Resources (2024)

down year-on-year due to some mines having entered care andmaintenance due to profitability issues.
Production at Newmont’s Cadia mine in New South Wales (NSW) fell by
22% year-on-year to 16 tonnes in 2023. Falls in production were driven bylower grade and reduced mill throughput resulting from major planned
shutdown activities in the year. During the year, Cadia also commissioned
and ramped up activities from its new “PC2-3” panel cave project, andreceived the first renewable power through its Rye Park Wind Farm Power
Purchase Agreement. Production was down across Newmont’s other gold
projects, including an 8.4% decrease at Boddington (23 tonnes), a 7.8%
decrease at Tanami (14 tonnes) and a 17% decrease at Telfer(9.4 tonnes). Tanami production outages caused by heavy rainfall caused
production to be down by 18% year-on-year.
Production at Northern Star’s KCGM operation in WA was down by 9.7%
year-on-year in 2023, at 13.2 tonnes. Lower production was due toplanned increases in waste material movement (rather than ore
movement) ahead of the planned transition to the higher-grade Golden

Resources and Energy Quarterly | March 2024

Production at Evolution Mining’s Cowal operation in NSW increased by
18% year-on-year to 8.9 tonnes as the company commenced productionof higher-grade ores from its new underground mine. Adverse weather in
H1 2023 affected mining operations at the company’s Ernest Henry projectin QLD, dragging full year production down by 23% to 2.0 tonnes.
BHP’s Olympic Dam operation had record gold output in 2023, delivering
6.4 tonnes of gold — 40% more than 2022. Gold output from Olympic Dam
has grown as a result of additional concentrate feed from the recently
acquired Prominent Hill and Carrapateena assets — together producing
3.5 tonnes of gold in concentrate under BHP’s ownership in 2023.
First gold was poured at the 6.2 tonnes per year Bellevue Gold Project in
October 2023, with the plant also achieving nameplate milling capacity in
the December quarter 2023.
Having recently acquired Dacian Gold, Genesis Minerals’ 2.8 tonnes per
year Mount Morgans Gold Operation remained in care and maintenancethroughout the quarter, after operations were suspended in April.
Production also continued to be low over the quarter at Wiluna Mining
Corporation’s namesake project, which has been processing stockpiles
since entering care and maintenance in December 2022. Wiluna recently
released a pre-feasibility study for restarting mining operations, detailing aplan to produce 2.1 tonnes a year over a 9.5-year mine life.
Australian gold production to be supported by major project expansions
Australian gold production is forecast to rise marginally over the first half ofthe forecast period, from 292 tonnes in 2023–24 to 312 tonnes in 2025–
26. Within this trajectory, the impact of significant new projects and mine
expansions coming online will be offset in the short-term by mine closures

105Genesis Minerals’ 2.0 tonnes per year Ulysses project is underconstruction, with production expected to commence in early 2024.
Westgold’s 1.4 tonnes per year Great Fingall project continues to be
developed and is set to achieve first production in 2024.
Northern Star’s recently expanded Thunderbox mill ramped up to reachnameplate capacity in H2 2023, resulting in production increasing by 28%
year-on-year to 5.9 tonnes. Further expansions to Northern Star’s
Thunderbox mill output are expected in 2024–25, as high-grade ore feed
commences and mill optimisation continues.
Production from Newmont’s Tanami and Boddington projects is expected
to decline in 2024, due to lower ore grades (as part of planned minesequencing). The company is on track to begin lifting Tanami’s output from2026, as its Tanami Expansion 2 project reaches completion.
From 2025–26 onwards, Australian gold production is projected to step up
and stabilise at around 325 tonnes as major new projects and expansionsof current projects provide substantial new supply, while other projects
trend towards lower grades and reserve depletion.
Northern Star Resources’ Super Pit (KCGM) gold operation is scheduled
to begin long-term expansion in 2024, rising to about 20 tonnes by 2025–
26. In 2023, Northern Star committed to a $1.5 billion mill expansion at
KCGM to double processing capacity by 2029. This expansion will lift theSuper Pit’s output to 28 tonnes in 2028–29, up from 13 tonnes in 2022–23.
Outcomes of the definitive feasibility study at De Grey Mining’s Hemi Gold
Project were announced in September 2023, which forecast production of
17 tonnes per year on average in its first 5 years of operation (expected tocommence in 2026).

Resources and Energy Quarterly | March 2024

Gold exploration expenditure declined in 2023
Australia’s gold exploration expenditure decreased by 18% year-on-year to$1.3 billion in 2023 (Figure 10.7). As a result, gold’s share of Australianmineral exploration expenditure fell to 29% in 2023, down from 38% a year
earlier. This decline in exploration occurred despite high Australian gold
prices, which have historically motivated high exploration expenditure.
Western Australia remained the centre of gold exploration activity inAustralia, accounting for 70% of total gold exploration expenditure.
Figure 10.7: Australian gold exploration expenditure and prices
525

3,500

450

3,000

375

2,500

300

2,000

225

1,500

150

1,000

75

500

0
2009

2011 2013 2015 2017
Exploration expenditure

A$ a troy ounce

Production will continue to ramp up at recently commenced projects suchas Pantoro’s Norseman project, Calidus’ Warrawoona Gold project andBellevue Gold’s namesake gold project.

Weaker than expected gold prices present a downside risk to the forecastsof Australian gold output. Weaker prices could see higher-cost Australianproducers cease or cut back their operations, or upcoming projects befurther delayed.

A$ million

and project delays — leading to production taking a short-term dip to291 tonnes in 2024–25.

02019 2021 2023
Australian gold price (rhs)

Source: ABS (2024)

Revisions to the outlook
Compared with the December 2023 Resources and Energy Quarterly,
Australia’s forecast gold export earnings have been revised up in 2023–24

106

(by 9.1%) and 2024–25 (by 10%). This largely reflects upgrades made to
price forecasts.
Forecast US dollar gold prices have been revised up across the board,due to persistent strength on the demand side from investors and central
banks. Combining this with a slightly weaker than expected AUD/USD,
Australian dollar gold prices have been revised up over the outlook period.
Compared to the March 2023 Resources and Energy Quarterly, forecast
Australian export earnings (nominal) are 18% higher in 2023–24, due to a
29% higher Australian dollar gold price which offset a notable downgrade
to forecast export volume. Forecast export earnings are, on average, 3.9%
lower from 2024–25 to 2027–28, due to downgrades made to forecast
export volumes since then.
The downgrade in export volumes across all years in the outlook period islargely to a change in methodology (documented in June 2023 Resources
and Energy Quarterly), and to a lesser extent revisions to forecast mine
production. Mine production forecasts have been revised down since
March 2023, due to projects entering care and maintenance, or companies
delaying project commencements (with updates made to these dates in
the 2023 Resources and Energy Major Projects report).

Resources and Energy Quarterly | March 2024

107

Table 10.1: Gold outlook

World

Unit

2023

2024f

2025f

2026f

2027z

2028z

2029z

CAGR

Total demandtonnes

4,448

4,415

4,230

4,390

4,475

4,585

4,704

0.9

Fabrication consumption b

tonnes

2,466

2,415

2,480

2,590

2,695

2,800

2,905

2.8

Mine production

tonnes

3,644

3,765

3,780

3,850

3,875

3,850

3,800

0.7

– nominal

US$/oz

1,943

2,023

2,030

1,924

1,875

1,883

1,945

0.0

– real d

US$/oz

1,985

2,023

1,992

1,848

1,765

1,736

1,756

-2.0

Australia

Unit

2022–23

2023–24f

2024–25f

2025–26f

2026–27z

2027–28z

2028–29z

CAGR

Mine production

tonnes

301

292

291

312

325

324

324

1.2

– volumetonnes

228

253

248

265

277

275

275

3.2

– nominal value

A$m

24,40627,85023,16522,99722,50322,05822,529-1.3– real value e

A$m25,38627,85022,452

21,691

20,70619,802

19,732-4.1– nominal

A$/oz

2,721

3,028

2,909

2,701

2,530

2,493

2,546

-1.1

– real e

A$/oz

2,831

3,028

2,819

2,548

2,328

2,238

2,230

-3.9

Price cExports

Price

Notes: b includes jewellery consumption and industrial applications; c London Bullion Market Association PM price; d In 2024 US dollars; e In 2023–24 Australian dollars; f Forecast; z Projection.
Source: ABS (2024); Department of Industry, Science and Resources (2024); London Bullion Market Association (2024) gold price PM; S&P Market Intelligence (2024); World Gold Council (2024).

Resources and Energy Quarterly | March 2024

108

Resources and Energy Quarterly | March 2024

109

Resources and Energy Quarterly | March 2024

110

11.1






Summary

Aluminium prices are forecast to remain at 2023 levels in 2024,
averaging US$2,300 a tonne. Increased Russian supply is expected tooffset the impact of higher Chinese demand. Growing demand for newenergy-efficient cars/technologies is expected to result in the aluminium
price rising to US$2,437 a tonne by 2029 (in real terms).
Australia’s primary aluminium output is projected to be 1.6 million tonnes(Mt) a year. Alcoa’s decision to curtail its Kwinana alumina refinery in
WA by the end of the June quarter 2024 is likely to bring Australianalumina output below 19 Mt a year. Mine expansion and new mines are
expected to boost Australian bauxite output to 122 Mt by 2029.
The ramp up of high purity alumina output is expected to add about $1.5
billion a year to Australia’s aluminium, alumina and bauxite (AAB)
exports from 2025–26. Australian AAB exports are projected to reach$17 billion (in real terms) by 2028–29.

11.2

World consumption

China drove higher aluminium and alumina consumption
Rising primary aluminium demand from China pushed world primaryaluminium demand up 1.7% year-on-year to nearly 70 Mt higher in 2023
(Figure 11.1). Over this period, consumption in China, the world’s largest
primary aluminium consuming country, rose by 4.2% year-on-year. A risein the use of aluminium in China’s automotive sector (helped by the
Chinese government’s stimulus package) contributed to a jump in Chinesealuminium demand in 2023.
In 2023, primary aluminium consumption also grew in India (up 36% yearon-year) and South Korea (up 5.0% year-on-year). The growth in primaryaluminium consumption partly reflected increased aluminium use in new,energy-efficient car models. However, European consumption was hit bysluggish construction activity, leading to lower demand in Germany (-21%)and France (-13%). Demand from global automotive makers drove a 2.8%
year-on-year rise in the use of secondary aluminium in 2023 (Figure 11.1).
Secondary aluminium usage rose by 5.2% in China and 3.6% in the US.

Resources and Energy Quarterly | March 2024

Higher global primary aluminium production helped boost global alumina
consumption to 1.5% to 136 Mt in 2023 (Figure 11.2). China remained theworld’s largest alumina consumer, accounting for 59% of global alumina
consumption, and contributed most to this increase (up 3.0% year-onyear). Outside of China, alumina consumption in Brazil and Canada roseby 23% and 5.3% year-on-year in 2023, respectively.
Strong bauxite consumption from the United Arab Emirates (UAE) helped
push global bauxite usage up by 0.3% year-on-year in 2023 to 361 Mt(Figure 11.3). Over this period, the UAE consumed nearly 11 Mt of
bauxite, up 46% year-on-year, as the country’s alumina production rose by
45% year-on-year in 2023.
Aluminium, alumina and bauxite demand to rise over the medium term
Demand for primary aluminium in 2024 is expected to be mainly driven by
China, as strong electric vehicle manufacturing activity lifts demand. As aresult, global primary aluminium consumption is forecast to increase by
2.8% in 2024, to 72 Mt (Figure 11.1).
Beyond 2024, world primary aluminium consumption is projected to growat an annual average rate of 3.7% to nearly 86 Mt by 2029 (Figure 11.1).
China’s green energy and electric vehicle sectors are expected to drive
global primary aluminium demand over the outlook period.
World secondary aluminium demand is forecast to increase by 15% yearon-year in 2024 to 28 Mt (Figure 11.1). After 2024, world secondary
aluminium demand is projected to increase at 4.5% a year over theoutlook period (Figure 11.1), supported by rising primary aluminium prices
and the use of low carbon aluminium.
In line with world primary aluminium production, world alumina usage is
forecast to grow by 1.7% year-on-year in 2024 before growing at a slower
rate through the rest of the outlook period (Figure 11.2).
Bauxite demand is expected to rise by 0.3% in 2024, with more rapid
growth projected through the rest of the outlook period (Figure 11.3)

111

Figure 11.3: World bauxite production and consumption
80

90

60

60

40
20

30
0

2019
2021
2023
Secondary aluminiumPrimary aluminium (share, rhs)

500
400
Million tonnes

120

Share of aluminium consumption(%)

Million tonnes

Figure 11.1: World aluminium consumption

300
200
100

0
2025
2027
2029
Primary aluminium
Secondary aluminium (share, rhs)

0

2019

2021
2023
2025
Production
Consumption

2027

2029

Source: World Bureau of Metals Statistics (2024); CRU (2024); Wood Mackenzie (2024);
Macquarie Bank (2024); Department of Industry, Science and Resources (2024)

Source: World Bureau of Metals Statistics (2024); Department of Industry, Science andResources (2024)

Figure 11.2: World alumina production and consumption

New emerging economy aluminium and alumina consumers

160

India is expected to emerge as a major consumer of primary aluminium by
the end of the outlook period, as the nation urbanises further. India’s
primary aluminium demand is projected to grow from 2.6 Mt in 2024 to 3.3
Mt in 2029.

140

Million tonnes

120
100

60

By the end of the outlook period, Indonesia is expected to consume morealumina to accommodate its rising aluminium output. Indonesia’s alumina
demand is projected to rise from 433,000 tonnes in 2024 to 1.5 Mt in 2029.

40

11.3

20

Aluminium and bauxite output grew in 2023

80

0

2019

2021

2023

Production

2025

2027

2029

Consumption

Source: World Bureau of Metals Statistics (2024); CRU (2024); Wood Mackenzie (2024);
Macquarie Bank (2024); Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

World production

In 2023, a 2.8% year-on-year rise in China’s primary aluminium output
drove a 1.6% year-on-year rise in global primary aluminium output, tonearly 70 Mt (Figure 11.4). China’s primary aluminium producers raised
output in response to the removal of power restrictions and improved
power supply in the second half of 2023.

112

Amongst other major producers, primary aluminium output in the United
Arab Emirates (UAE) rose by 5.9% year-on-year in 2023, driven by the
ramp-up of production at Emirates Global Aluminium’s Al-Taweelah
smelter. Output also rose in Canada — by 8.0% year-on-year — driven by
the ramp up of production at Rio Tinto’s Kitimat aluminium smelter.

Million tonnes

120

80

90

60

60

40

30

0

20

2019

2021

2023

2025

Secondary aluminiumPrimary aluminium (share, rhs)

2027

2029

Share of aluminium production (%)

Figure 11.4: World aluminium production

0

Primary aluminium
Secondary aluminium (share, rhs)

Source: World Bureau of Metals Statistics (2024); CRU (2024); Wood Mackenzie (2024);
Macquarie Bank (2024); Department of Industry, Science and Resources (2024)

In Europe, primary aluminium output fell in 2023 — including France(down by 29% year-on-year), Germany (down by 45%) and Bosnia (downby 56%). The aluminium smelting capacity that was curtailed in 2022 —due to high energy costs — remained largely offline in 2023.
World secondary aluminium production rose by 0.1% year-on-year to 31
Mt in 2023 (Figure 11.4). Over this period, Brazil’s secondary aluminium
production was 900,000 tonnes, up 10% year-on-year, while Italy’s
secondary aluminium output was 747,000 tonnes, up 4.2% year-on-year.

Resources and Energy Quarterly | March 2024

Lower Chinese and Australian alumina output (down by 0.3% and 3.9%
year-on-year, respectively) drove a 0.8% year-on-year fall in global
alumina output in 2023 to nearly 142 Mt (Figure 11.2).
In 2023, higher output in Guinea, Australia, Brazil, China and India led to a
1.3% year-on-year rise in global bauxite output to 390 Mt (Figure 11.3). In
Indonesia, a ban on bauxite exports commenced in June 2023 reduced
Indonesian bauxite production in 2023 by 71% to 6.4 Mt.
Aluminium, alumina and bauxite output set to rise over the outlook period
Production ramp-up in China and India is expected to boost world primaryaluminium output by 1.7% year-on-year in 2024 to nearly 71 Mt (Figure11.4). Growth in China and India is expected to be relatively robust, but
weak primary aluminium demand in Europe is preventing curtailed
capacity from coming back online.
After 2024, production ramp-up in China, Indonesia and the Middle East is
expected to increase global primary aluminium output by 1.2% a year over
the outlook period, reaching 75 Mt by 2029 (Figure 11.4). China’s primaryaluminium production is projected to reach 45 million tonnes by 2029,
bringing it to the capacity cap introduced in 2017.
Outside of China, Indonesia’s primary aluminium production is projected torise from 336,000 tonnes in 2025 to 861,000 tonnes in 2029. Inalum’s
Kuala Tanjung aluminium smelter is expected to finish its expansion from
250,000 tonnes a year to about 275,000 tonnes a year by the end of 2024.
The Gulf Cooperation Council region (including Bahrain, Kuwait, Oman,
Qatar, Saudi Arabia and the UAE) is expected to establish itself as a major
aluminium producer over the outlook period. Saudi Arabia has made clear
its aspiration to become one of the world’s top ten aluminium producers.
By the end of 2023, the country has invested US$12 billion in aluminium
related projects to enhance its production capabilities.
World secondary aluminium output is forecast to increase by 5.8% yearon-year in 2024 to 33 Mt, driven by higher output from China (up by 6.1%
year-on-year) and the US (up by 12% year-on-year). After 2024, world
secondary aluminium output is projected to rise at 4.9% a year, reaching113

42 Mt by 2029 (Figure 11.4). In December 2023, Emirates Global
Aluminium in the UAE began the construction of a 170,000 tonnes a year
aluminium recycling plant. The construction is to be completed in 2026.
World alumina output is forecast to grow by 2.4% year-on-year in 2024 to
145 Mt, driven by rising output from new/existing refineries in China, Brazil
and Indonesia (Figure 11.2). After years of delay, Indonesia’s 1 Mt a year
Inalum alumina refinery is expected to come online in H2 2024.
After 2024, world alumina output is projected to rise by 1.4% a year over
the outlook period, reaching 156 Mt by 2029 (Figure 11.2). The gains are
forecast to be driven by India and Indonesia. Hindalco’s phase one 3 Mt ayear Aditya alumina refinery in Odisha, India is expected to start in 2027.
In Indonesia, eight alumina refineries with a combined production capacityof 8.5 Mt are expected to start production from 2024 and onwards. This
will include China Aluminium Company and the Indonesian joint-venture
partners’ 2 Mt a year Mempawah alumina project.
Emirates Global Aluminium in the UAE is planning to build a 1 Mt a year
alumina refinery in Guinea, but a start date has not been announced yet.
World bauxite output is forecast to grow by 3.3% in 2024 to 402 Mt (Figure11.2). Growth has been affected in the short-term by an explosion at themain fuel depots in Guinea and by Indonesia’s bauxite export ban, whichis having short-term effects on production. After 2024, world bauxite
production is projected to increase by 3.2% a year, reaching 464 Mt by
2029 (Figure 11.2). Australia and Guinea are expected to contribute mostto this rise.
Emerging aluminium and alumina producers
In the inauguration speech for his second term in 2019, President Widodo
committed to pushing for Indonesia’s economic transformation from anexporter of raw materials to an exporter of highly competitive products
through downstream industry. In line with the President’s speech, thecountry’s primary aluminium production is projected to increase from
249,000 tonnes in 2024 to 861,000 tonnes in 2029.

Resources and Energy Quarterly | March 2024

India is expected to get close to overtaking Brazil as the world’s thirdlargest alumina producer, after China and Australia, by the end of theoutlook period. India’s alumina production is projected to rise from 7.9 Mt
in 2024 to over 11 Mt in 2029.
Green aluminium, alumina and bauxite
In December 2023, the International Aluminium Institute launched a new
initiative that tracks and reports the progress in greenhouse gas reductionof its member companies.
Rio Tinto commenced the construction of a new solar farm and battery
storage system for its Amrun bauxite operations in Queensland in
December 2023, which is expected to be operational in 2025. Combinedwith the existing Weipa renewable power generation network, the solar
farms are anticipated to reduce diesel consumption by 10 million litres ayear and lower greenhouse gas emissions by 28,000 tonnes annually.
In January 2024, the Guinean Government announced a carbon tax on
mining companies is under consideration to protect the local environment.
Alcoa announced in February 2024 that it will supply global cable producer
Nexans with aluminium produced from the ELYSIS process — arevolutionary process that eliminates all direct greenhouse gas emissions
from the traditional smelting process.
In China, the use of green power — wind, solar, hydro, geothermal, ocean,biomass and other forms of renewable energy — has increased rapidly inrecent years. In 2015, thermal power accounted for 89% of energy usedby Chinese aluminium smelters, and hydroelectric power about 10%.
Currently, thermal power usage accounts for around 74% of production,
while hydro power usage has increased to around 19%.
In early 2024, Rio Tinto agreed to buy all electricity from the 1.1GW Upper
Calliope Solar Farm and 80% of Windlab’s 1.4GW Bungaban wind energy
project for 25 years to provide renewable power to its Gladstone
operations in Queensland. These agreements make Rio Tinto the largest
industrial buyer of renewable power in Australia.

114

11.4

World trade

Weak aluminium, alumina and bauxite exports in 2023
Lower primary aluminium exports from Europe and West Asia led to a
3.1% fall in global primary aluminium exports in 2023. Primary aluminium
exports declined from the Netherlands (- 9.9%), Sweden (-52%) andTurkiye (-33%). Falls in Europe and West Asia were offset in part by risingexports from Australia, Canada, the US, Russia and China. Russian
primary aluminium exports rose by 11% in 2023 to over 2.0 Mt.
Figure 11.5 shows the top five global primary aluminium exporters in 2023.
Australia ranked fourth and accounted for 10% of global primaryaluminium exports. Higher secondary aluminium exports from European
countries helped boost global secondary exports to 3.3 Mt in 2023, up
0.2% year-on-year. Falling energy costs in Europe increased primaryaluminium output, leading European users to use less secondary
aluminium as a substitute.

Figure 11.5: Top five global primary aluminium exporters, 2023
3.0

Million tonnes

2.4

The Indonesian bauxite export ban which started in June 2023 cut global
bauxite exports by 2.0% year-on-year in 2023 to 168 Mt. Figure 11.7
shows the top five global bauxite exporters in 2023. Australia ranked
second and accounted for 22% of global bauxite exports.
Guinea’s leading bauxite producer and exporter Societe Miniere de Boke
plans to invest US$1 billion over the next five years in export infrastructure
to boost Guinean bauxite exports that reached a record of 116 Mt in 2023.
China drove higher global bauxite imports
In 2023, lower primary aluminium imports from Europe and the US led to a
4.6% fall in world primary aluminium imports to 17 Mt (Figure 11.8).
At the end of 2023, the US Government officially extended the suspensionof tariffs on European Union (EU) steel and aluminium — a 25% importtariff on EU steel and a 10% tariff on EU aluminium introduced by the
Trump Administration in January 2022 — until December 2025.
Higher imports by Germany and the Netherlands boosted world secondary
aluminium imports, up 13% year-on-year in 2023 to 3.6 Mt (Figure 11.8).
In Germany, secondary aluminium imports rose by 18% year-on-year to535,000 tonnes in 2023. Over this period, secondary aluminium imports by
the Netherlands increased by 16% year-on-year to 507,000 tonnes.

1.8
1.2

World alumina imports fell by 4.7% year-on-year in 2023 to 32 million
tonnes, due to a 9.2% year-on-year fall in alumina imports from China.
Imports fell due to higher Chinese alumina production (Figure 11.8).

0.6
0.0

Lower alumina exports from Australia — the world’s largest alumina
exporter — cut global alumina exports by 5.5% in 2023 (see the Australia
section). Figure 11.6 shows the top 5 global alumina exporters in 2023.
Australia ranked first, accounting for 42% of global alumina exports.

CanadaNetherlands

RussiaAustralia

NorwaySource: World Bureau of Metal Statistics (2024); ABS (2024) International Trade in Goods
and Services, 5368.0

Resources and Energy Quarterly | March 2024

Higher bauxite imports from China — the world’s largest bauxite importer— led to a 6.3% year-on-year rise in global bauxite imports to 161 Mt(Figure 11.8). China imported 142 Mt of bauxite in 2023, a 13% year-onyear rise from 2022.
115

Figure 11.6: Top five global alumina exporters, 2023

Figure 11.8: World aluminium, alumina and bauxite imports

18

200

16
Million tonnes

Million tonnes

14
12
10
8
6

150
100
50

4
2
0

0

Australia

BrazilIndonesia

India

China

Source: World Bureau of Metal Statistics (2024); ABS (2024) International Trade in Goods
and Services, 5368.0

2023
BauxiteSource: World Bureau of Metal Statistics (2024); Department of Industry, Science andResources (2024)

On 14 July 2021, the European Commission released its draft regulationon the Carbon Border Adjustment Mechanism (CBAM). The draft
regulation sets out the policy for the European Union (EU) to tax imports
based on the greenhouse gases emitted to make them. The CBAM — theworld’s first carbon tax on imports — applies to EU imports of iron ore,steel, aluminium, cement, fertiliser, electricity and hydrogen.

120
100
Million tonnes

2021
Alumina

European Union Carbon Border Adjustment Mechanism (EU CBAM)

Figure 11.7: Top five global bauxite exporters, 2023

80

After nearly two years of consultation, the EU’s parliament approved the
CBAM legislation on 18 April 2023. Starting in October 2023, European
companies must report the emissions of their imported goods, including
the indirect emissions released by the electricity generation that powers
overseas factories. European importers will have to pay taxes on theemissions from 2026 and onwards.

60
40
20
0

2013
2015
2017
2019
Primary aluminium
Secondary aluminium

GuineaAustralia

BrazilTurkiyeJamaica

Source: World Bureau of Metal Statistics (2024); ABS (2024) International Trade in Goods
and Services, 5368.0

Resources and Energy Quarterly | March 2024

The introduction of EU CBAM is unlikely to directly impact Australia’s
primary aluminium exports. The EU accounted for 0.03% ($1.6 million) of
Australia’s total primary aluminium exports in 2023. Over this period,
Australia exported $5.2 billion of primary aluminium; 33% to South Korea,
23% to Japan, 8% to the US, and 7% to Taiwan.
116

11.5

Prices

Aluminium prices fell sharply in 2023
Sluggish primary aluminium demand in Europe and the rise of Russianaluminium in the London Metal Exchange (LME)’s warehouses
outweighed the impacts on aluminium prices of supply disruptions in
China’s Yunnan province. The LME spot price for primary aluminium fellby 19% year-on-year in 2023, averaging US$2,299 a tonne in real terms.
LME stock changes reflect the sluggish ex-China primary aluminium
demand, rising from 407,325 tonnes in January 2023 to 549,050 tonnes in
December 2023. Shanghai Future Exchanges aluminium stock changes
reflect the supply issues in Yunnan, falling from 226,395 tonnes in January2023 to 99,029 tonnes in December 2023. LME off-warrant stocks reflect
the rise of Russian aluminium stocks, rising from 385,752 tonnes inJanuary 2023 to 436,113 tonnes in December 2023 (Figure 11.11).

Resources and Energy Quarterly | March 2024

1,000

20

800

16

600

12

400

8

200

4

0

RussiaTurkiye
UAE
India
China
Import volumes
CO2 intensity (rhs)0Tonnes of CO2 emission per tonne ofaluminium

The EU CBAM is likely to have large impacts on Indian and Chinese
primary aluminium exporters as India and China have a high carbon
footprint. India does not have a carbon tax or emission trading scheme(ETS) that can be used as a partial offset for the EU CBAM. In China, therelocation of aluminium smelters to the Southern provinces, where cheaphydropower is available, is expected to bring down the emission intensityof Chinese primary aluminium producers and boost their competitivenessin exporting primary aluminium into the EU. As a result, primary aluminium
exports from Russia and Turkiye to the EU are expected to remain thesame or increase when the CBAM commences in 2026. In contrast,
primary aluminium exports from India and China to the EU are expected tofall, unless the emission intensity is reduced in India and China.

Figure 11.9: Major primary aluminium suppliers to the EU andemission intensity

kt

However, the EU CBAM is likely to impact global primary aluminium tradefrom 2026 and onwards. Figure 11.9 shows major primary aluminium
suppliers (Russia, Turkiye, the UAE, India and China) to the EU and theiremission intensity. The EU CBAM is likely to have minimal impacts on
Russian and Turkiyen primary aluminium exporters as Russia and Turkiye
have a relatively low carbon footprint.

Source: ING, How the EU’s carbon border tax will affect global metals trade (2 May 2023)

The free on board (FOB) Australian alumina price fell by 9.2% year-onyear in 2023 to US$352 a tonne in real terms (Figure 11.10).
Prices remain unchanged in real terms in 2024
In 2024, Chinese primary aluminium demand is expected to strengthenamid stimulus policies and a push for energy efficient cars andtechnologies. Demand for aluminium in the Western markets is subject tothe US Federal Reserve and the European Central Bank decisions on
interest rates. A lower interest rate environment will boost higher
aluminium demand. On the supply side, the level of Russian aluminium in
LME warehouses and the possibility of an LME ban on Russian aluminium
will push aluminium prices upward. The absence of new measures on
Russian aluminium in the latest US sanctions on Russia announced on 23
February 2024 has put downward pressure on aluminium prices. Onbalance, the LME aluminium spot price is forecast to be unchanged in
2024, averaging US$2,299 a tonne in real terms (Figures 11.10).

117

An influx of Russian primary aluminium into LME warehouses may nothave the usual impact on LME primary aluminium prices. By the end ofJanuary 2024, Russia’s share of LME on-warrant stock reached 90%(Figure 11.12). As more and more consumers opt not to purchase Russian
primary aluminium, a further increase of Russian aluminium LME stocks is
expected. However, these stocks may disguise underlying shortages.

3,000

500

2,700

450

2,400

400

2,100

350

1,800

Western sanctions on Russian primary aluminium risk a build up ofaluminium inventories in the short term. China has limited need for
Russian aluminium shunned by Western nations. Indian and other nations
accepting Russian exports are unlikely to take all Russian aluminium
exports currently being exported to Western nations.

Resources and Energy Quarterly | March 2024

2023

2025

2027

2029

300

Source: LME (2024); Department of Industry, Science and Resources (2024)

Figure 11.11: Exchange aluminium stocks
6
5
Million tonnes

On 18 December 2023, the European Council imposed a new sanction
package targeting imports of Russian aluminium wire, foil, tube and pipe.
This new sanction has no direct impacts, as the LME only trades primaryaluminium (unformed products). Nonetheless, European Aluminium has
called for the sanctions to be extended to Russian primary aluminium.

2021

Average LME aluminium real price
Average FOB Australia alumina real price (rhs)More sanctions on Russian aluminium
The prospects of more sanctions on Russian aluminium from Westerncountries are likely to cause some bifurcation of base metal markets andcould raise the volatility of aluminium prices. Effective from 15 December
2023, the UK Government prohibited its citizens from acquiring, importing,supplying and delivering Russian origin metal, including aluminium. If any
person or company buys LME warranted Russian primary aluminium, they
can only hold and sell that metal, not take physical delivery or re-warrant in
the LME system.

20192024 prices US$ a tonne

Aluminium market distorted as buyers shun Russian aluminium

Figure 11.10: Primary aluminium and alumina prices

2024 prices US$ a tonne

An improvement in global demand and Kwinana’s curtailment are
expected to support alumina prices. The free on board (FOB) Australianalumina price is forecast to rise by 0.7% year-on-year in 2024 to average
US$347 a tonne in nominal terms. As inflation remains high in Western
economies, the real FOB Australian alumina price is forecast to fall by
1.5% year-on-year in 2024 to average US$347 a tonne (Figure 11.10).

4
3
2
1
0
Mar-14Mar-16

Mar-18

LME aluminium stocks

Mar-20Mar-22Mar-24

Shanghai aluminium stocks

LME off-warrant stocks
Source: London Metal Exchange (2024); Bloomberg (2024)

118

Figure 11.12: LME on-warrant primary aluminium stocks

over the same period to $8.5 billion in real terms.
The Indonesian ban on bauxite exports boosted Australian bauxite export
volumes and values by 4.3% (to 37 Mt) and 48% (to nearly $1.7 billion)
year-on-year in 2023, respectively. In the December quarter 2023,
Australia had record export earnings — more than $0.5 billion (Figure11.13) — of which 98% to China.

100
90
70
60
50

Figure 11.13: Australia’s bauxite exports, quarterly

40
30
20
0

Jan-23
RussiaMar-23May-23

Jul-23

Sep-23

India (non-Russian)Nov-23Jan-24

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 (2024)

Higher aluminium prices over the outlook period
After 2024, the LME aluminium price is projected to rise to average
US$2,437 a tonne in real terms in 2029 (Figure 11.10). Growing demand
for new, energy-efficient cars and technologies will boost aluminium
usage. This is projected to see the FOB Australian alumina price average
US$339 a tonne in real terms in 2029 (Figure 11.10).

11.6

Australia’s exports and production

Record bauxite exports in the December quarter 2023
A 16% year-on-year fall in the LME aluminium price in 2023 and a 5.3%
year-on-year fall in the Australian FOB alumina price in 2023 reduced
Australian aluminium, alumina and bauxite export values by 8.4% year-onyear in 2023 to $16.6 billion in real terms.
Australian alumina export volumes fell by 5.7% year-on-year to 16 million
tonnes in 2023. Australian alumina export values fell by 12% year-on-year

Resources and Energy Quarterly | March 2024

Million tonnes

10

12

600

10

500

8

400

6

300

4

200

2

100

0
Mar-90 Mar-95 Mar-00 Mar-05 Mar-10 Mar-15 Mar-20
VolumesValues (rhs)0

A$ million

Share (%)

80

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024).

A strong earnings year for Australia’s AAB exports in 2023–24
An expected rise in bauxite exports in 2024 is likely to boost Australia’s
aluminium, alumina and bauxite (AAB) export earnings to $17 billion in realterms in 2023–24 (Figure 11.14).
Disruptions to bauxite exports from Guinea are expected. In Guinea,
bauxite mines are dependent upon diesel for their operations. Damage toa major oil depot in Guinea from an explosion in December 2023 is likely
to take more than two years to repair. As the world’s 2nd largest bauxite
exporter, Australia is in the box seat to fill the loss of bauxite from Guinea.
In China’s Guangxi province, alumina refineries are encouraged to use
imported bauxite with preferential support from the local government.
119Figure 11.14: Australian aluminium/alumina/bauxite exports

2023-24 A$ billion

20

No expansions or major disruptions are expected at existing aluminium
smelters in Australia over the outlook period. Australia’s primary aluminium
output is projected to be around 1.6 Mt a year.

15

In mid-December 2023, Alcoa received an approval from the Western
Australia Government to continue mining bauxite in WA.

1050Higher bauxite output over the outlook period

2018–192020–212022–23

Aluminium
Bauxite2024–25

2026–27

2028–29

AluminaHigh purity alumina

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

After 2023–24, Australia’s AAB exports are projected to be about$17 billion a year in real terms over the outlook period (Figure 11.14). The
Australian bauxite industry is expected to earn $2 billion in exports by
2026–27. It is estimated that high purity alumina (HPA) will add about $1.5
billion to Australia’s AAB exports from 2025–26 and onwards.
Australia’s primary aluminium and bauxite production rose in 2023
An improved operating performance from Rio Tinto’s aluminium smelters
led to a 3.0% year-on-year rise in Australian primary aluminium output in
2023 to 1.56 Mt. Over this period, production at Boyne Island aluminium
smelter in Queensland rose by 10% year-on-year to 496,000 tonnes.
Planned maintenance at Worsley alumina refinery and approval delays at
Alcoa’s refineries in Western Australia reduced Australian alumina output
by 3.9% year-on-year to 18.8 Mt in 2023.
A production ramp-up at Metro Mining’s Bauxite Hill mine lifted Australianbauxite output, up by 3.3% year-on-year in 2023 to nearly 104 Mt.

Resources and Energy Quarterly | March 2024

Rio Tinto’s Gove bauxite mine in WA is expected to continue until 2030.
Mine expansion and new mine are expected to boost Australian bauxite
output to 122 Mt by 2029. These include the expansion of Metro Mining’s
Bauxite Hills mine in Queensland from 3.5 million tonnes a year to 7
million tonnes a year (expected to be commissioned in 2024) and thecommissioning of Glencore Bauxite Resources’ and Mitsubishi’s 8.0
million tonnes a year Aurukun bauxite project in Queensland.
Alumina output to fall from 2024–25
In January 2024, Alcoa announced its decision to fully curtail its 2.2 Mt ayear Kwinana alumina refinery in WA by the end of the June quarter of2024 amid rising costs, ageing plant and grade challenges. Thiscurtailment is likely to reduce Australian alumina output from 19.4 Mt in
2023–24 to 18.6 Mt a year from 2024–25 and beyond. Despite theproduction curtailment at Alcoa’s Kwinana alumina refinery, Australia
remains the world’s second largest producer of alumina and the world’s
largest exporter of alumina.
In early January 2024, the Australian Government announced theinclusion of aluminium on the Strategic Materials List. The list contains
minerals that are important to the global transition to net zero, for which
Australia has potential for resources, and in demand. Australia is one offew countries in the world that has an integrated aluminium value chain bauxite mining, alumina refining, aluminium smelting and downstream
manufacturing. It is a key global producer and exporter of primaryaluminium, alumina and bauxite (Figure 11.15).

120

45
40
35
30
25
20
15
10
5
0

Figure 11.16: World’s high purity alumina production
90
80
70
60
Kt

Share of global production/exports(%)

Figure 11.15: Australian world ranking, 2023

50
40
30
20

Alumina
exporterWorld's 1st

Bauxiteproducer

BauxiteexporterWorld's 2nd

Alumina Primary Primary
producer aluminium aluminium
exporter producer
World's
4th

World's
7th

10
0

2023
Australia
Malaysia

2024
China
USA

2025

2026
Germany
Other

2027
2028
2029
NorwayJapanSouth Korea France

Source: World Bureau of Metal Statistics (2024); Department of Industry, Science andResources (2024)

Source: Altech Chemicals (2020), White paper: The global high purity alumina market; CRU(2020), High purity aluminium: A steady developing industry promoted by high-tech;
Department of Industry, Science and Resources (2024)

Australia: likely the world’s largest high purity alumina producer in 2025

Australian alumina and bauxite producers have comparatively low costs

The addition of HPA to Australia’s critical minerals list in 2022 reflects its
growing economic and strategic importance. HPA is used in the aerospace
and automotive sectors, and is an important component of highperformance electronics and optics. HPA is also a key input for ensuring
the stability of lithium-ion batteries. As the world’s second-largest producer
and the world’s largest exporter of smelting grade alumina, Australia is
well placed to build capacity in HPA. Australia is expected to overtake
China as the world’s largest HPA producer by 2025, with 49% of world
output (Figure 11.16).
Alpha HPA is expected to release a definitive feasibility study for its $300
million Stage 2 First Project in the March quarter 2024. This comes afterStage 1 of the project reached commercial production in late 2022.
Queensland Pacific Metals’ $82 million Lava Blue HPA Project is expected
to start commercial production in 2025. The pre-feasibility study of Lake
Hope’s $65 million HPA Project in Western Australia is expected to becompleted in late 2024.

Resources and Energy Quarterly | March 2024

Figure 11.17 shows the operating cash costs of aluminium smelters inselect major primary aluminium producing nations. Australian smelters’
operating costs are above the world average of US$1,905 a tonne in 2024,
and those in India, China and Russia.
Figure 11.18 shows the operating cash costs of alumina refineries inselected major alumina producing nations. Australian refiners’ operating
costs are below the world average of US$297 a tonne in 2024, and thosein Russia, China and Brazil.
Figure 11.19 shows the operating cash costs of bauxite mines in selectedmajor bauxite producing nations, Australia, Guinea, China, Indonesia andBrazil. Australian miners’ operating costs are below the world average of
US$20 a tonne in 2024, and those in China, Guinea, Brazil and Indonesia.

121

Figure 11.19: Bauxite mine total operating cash costs

2,200

30

2,100

25

2,000

20

US$ a tonne

US$ a tonne

Figure 11.17: Aluminium smelter total operating cash costs

1,900
1,800
1,700
1,600

15
10
5

2023
2024
US
Australia

2025
2026
2027
India
China

2028
Russia

2029
World

0

2023
2024
China
Guinea2025
Brazil2026
2027
Indonesia

2028
Australia

2029
World

Notes: Total operating cash costs include average delivered alumina cost, carbon and otherraw materials, consumables, labour, repair and maintenance materials, services and othercost, and total energy.

Notes: Total operating cash costs include diesel, residual fuel, labour, consumables, othermaterials, services, bauxite levy, royalties and taxes.

Source: Wood Mackenzie (2024)

Source: Wood Mackenzie (2024)

Figure 11.18: Alumina refinery total operating cash costs

Revisions to the outlook
The forecast for Australia’s AAB export earnings in 2023–24 has beenrevised up from the December 2023 Resources and Energy Quarterly(REQ) — by $478 million. The revision reflects a stronger than expected
rise in bauxite exports in the December quarter 2023. Compared with the
March 2022 REQ, forecast Australian earnings in 2027–28 (in nominal
terms) has been revised down by 2.6% to $18.9 billion. This reflects theimpacts of Kwinana’s alumina production curtailment on alumina export
volumes.

400

US$ a tonne

350
300
250
200
150
100
50
0

2023
Russia2024
Brazil

2025
2026
2027
China
Australia

2028
India

2029
World

Notes: Total operating cash costs include bauxite, freight, caustic/lime/limestone/ash, totalenergy, labour, and other costs.
Source: Wood Mackenzie (2024)

Resources and Energy Quarterly | March 2024

122

Table 11.1: Aluminium, alumina and bauxite outlook
World
Primary aluminium
Production
Consumption
Prices aluminiumc- nominal- reald
Prices alumina spot
- nominal- reald

Australia
Production
Primary aluminium
Alumina
BauxiteConsumption
Primary aluminium
Exports
Primary aluminium- nominal value- real valuee
Alumina- nominal value- real valuee
Bauxite- nominal value- real valuee
Total value- nominal value- real valuee

Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGR rkt
kt

69,75969,18470,96372,326

72,40975,15673,52177,73874,70580,27275,06083,35575,48786,526

1.3
3.8

US$/t
US$/t

2,249
2,299

2,299
2,299

2,470
2,424

2,580
2,478

2,644
2,488

2,663
2,454

2,700
2,437

3.1
1.0

US$/t
US$/t

344
352

347
347

352
345

355
341

360
339

365
336

375
339

1.4
-0.6

Unit

2022–23

2023–24f

2024–25f

2025–26z

2026–27z

2027–28z

2028–29z

CAGR r

kt
kt
Mt

1,532
18,97198.5

1,571
19,445107.8

1,561
18,484106.4

1,561
18,564106.4

1,561
18,564122.4

1,561
18,564122.4

1,561
18,564
122.4

0.3
-0.4
3.7

kt

151

150

126

126

126

126

126

-3.0

kt
A$m
A$m

1,440
5,281
5,494

1,462
4,985
4,985

1,483
5,108
4,951

1,483
5,129
4,837

1,483
5,168
4,756

1,483
5,248
4,711

1,483
5,309
4,650

0.5
0.1
-2.7

kt
A$m
A$m
kt
A$m
A$m

16,566
8,308
8,642
34,113
1,284
1,335

17,1658,826
8,826
43,237
1,987
1,987

16,6368,370
8,112
43,492
1,987
1,926

16,7088,023
7,567
43,492
2,023
1,908

16,7087,977
7,340
50,2122,517
2,316

16,7088,064
7,239
50,2122,517
2,260

16,708
8,215
7,195
50,212
2,517
2,205

0.1
-0.2
-3.0
6.7
11.9
8.7

A$m
A$m

16,005
16,64916,967
16,967

17,535
16,996

18,061
17,035

18,511
17,033

18,678
16,76818,890
16,5442.8-0.1

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 primaryaluminium; d In 2024 calendar year US dollars; e In 2023–24 financial year Australian dollars; f Forecast; r Average annual growth between 2023 and 2029 or 2022–23 and 2028–29; z Projection;
Source: ABS (2024) International Trade in Goods and Services, 5368.0; Bloomberg (2024); London Metal Exchange (2024); Department of Industry, Science and Resources (2024); World Bureauof Metal Statistics (2024)

Resources and Energy Quarterly | March 2024

123

Resources and Energy Quarterly | March 2024

124

Resources and Energy Quarterly | March 2024

125

Summary Despite significant growth in copper consumption in China, copper prices
trended down throughout 2023 and into 2024. The fall in copper prices
was driven by weakness in construction and manufacturing in advanced
economies including US, EU, and Japan. The benchmark LME copper
price is estimated to average about US$8,340 a tonne in 2024 but is
expected to rally and reach US$9,200 a tonne in 2029 (real terms).
 Global mined and refined copper production are expected to grow by
2.4% and 2.0% in 2024, respectively. This growth will be driven by a
combination of starts of new greenfield projects, a rise in production
capacity, and increasing automation of certain production processes.
 Australian copper export earnings are forecast to reach $12.1 billion in
2023–24. Higher export volumes and rising prices are expected to seereal export earnings reach $16.8 billion in 2028–29.

12.2

World consumption

Robust growth in world copper demand in 2023, driven by China
World refined copper consumption grew 8.5% in 2023, to reach just over
28 million tonnes (Mt) (Figure 12.1). This continued a solid, post-COVID
recovery of 4.1% growth in annual global demand since 2021. China was
the major contributor to growth in demand in 2023, rising by 11% over theperiod. This helped to offset falls in refined copper consumption in the US,
and the EU by 6.4% and 2.4%, respectively.
Global copper consumption is forecast to grow by 1.3% in 2024 to reach
28.4 Mt. Key end use sectors such as property construction (in China andEurope) and manufacturing (in Europe) are expected to remain weak in
the near term. However, resilient conditions in other parts of the global
economy (especially the US), as well as a broader trend of infrastructure
investment globally, are expected to drive solid growth in demand in 2024.
Beyond 2024, global consumption is expected to rise by 2.2% per annum
over the outlook period to reach about 32 Mt in 2029. Clean energy
applications (such as electric vehicles and low emissions power
generation) and grid infrastructure will drive growth.

Resources and Energy Quarterly | March 2024

Figure 12.1: Refined copper actual consumption & projection
36
32
28
Million tonnes

12.1

24
20
16
12
8
4
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
China

Rest of Asia

EuropeUS

ROWWorld actual & projection

Source: World Bureau of Metal Statistics (2024); Department of Industry, Science andResources (2024)

New energy applications driving China’s copper demand
Despite the ongoing downturn in the real estate sector, China’s copper
usage was strong in 2023. Strong manufacturing activity and infrastructure
spending helped boost copper demand. This included a 46% rise in EVs
production in 2023, an increasingly important global end user of copper.
China’s refined copper consumption is projected to grow 1.9% during theoutlook period. A key driver of growth in copper consumption is expected
to be the transportation and clean energy manufacturing. This will include
continued growth in domestic purchases of EVs — with the Chinese
Government last year announcing an extension of the tax-exemption onpurchased EVs until 2027 — as well as the ongoing export of thesevehicles to international markets.
Low emissions power generation and transmission is also expected to bea major growth engine for China’s copper demand in coming years. As

126part of the Chinese Government’s ‘dual carbon’ targets announced in
2020, the country set a target of 1,200 GW of renewable power capacity
by 2030). However, recent trends suggest the country could meet thistarget by 2025, demonstrating the significant investment the country is
continuing to make in copper-intensive energy infrastructure.

However, a more moderate outlook for economies such as Europe andJapan are expected to contain ex-China growth in copper demand to
relatively modest levels. Industrial production continued to fall in both theEurozone and Japan in early 2024, while US output lifted according to the
PMI report in February 2024. The Eurozone Manufacturing PMI rose in
February 2024 but remained in contractionary territory.

Slower outlook for global (ex. China) in manufacturing, and construction
Most advanced economies outside of China experienced weakening
manufacturing and construction activity through much of 2023, impacting
ex-China world demand. Leading indicators in early 2024 suggest a slight
improving for select economies such as the US and South Korea. This hashelped to see a return to positive territory for JP Morgan’s Global
Manufacturing PMI in February, with a reading of 50.3 (Figure 12.2).

80

66

60

62

40

58

20

54

0

50

-20

46

-40

42

-60

38

-80
Jan-22

Jul-22

Jan-23

Jul-23

34
Jan-24China property starts

US building permits

Eurozone construction PMI (RHS)

World manufacturing PMI (RHS)

China manufacturing PMI (RHS)
Source: Bloomberg (2024)

Resources and Energy Quarterly | March 2024

Challenges still remain with European manufacturing and construction
PMI reading

Annual percentage change

Figure 12.2: Leading global indicators for copper

Global construction activity — which accounted for about 26% of world
copper demand in 2022 — has helped to mitigate ongoing weakness in
ex-China manufacturing. By sector, infrastructure construction has helped
resource demand, while tighter financial conditions have dented activity inthe residential and commercial sectors. By region, the Middle East &Africa, and the Americas, continue to see the strongest activity, though
growth appears to be slowing in North America. Europe continues to see a
noticeable deterioration in both activity and year-ahead expectations. The
outlook for the Asia region remains mixed, with a strong outlook for India
and Philippines offsetting weaker expectations for China.
European copper consumption in December 2023 was 2.4% lower yearon-year. This reflected weakness in the manufacturing and construction
sectors. Although the manufacturing PMI improved in February 2024, theindex remained in sub-50.0 (contractionary) territory.
The European construction sector faces further near-term challenges.
Monetary policy is restrictive, housing construction expected to reduce
more, prices for construction materials remain high and with labour
shortages in some EU countries. The Eurozone construction PMI total
activity index showed rose (to 42.9) in February 2024 but remained incontractionary territory where it has been for more than twenty months.
US manufacturing shows improvement, and a healthy long-term outlook
The US manufacturing PMI posted 52 in February 2024, up from 50.7 inJanuary. The improvement came from higher new orders, and stronger
output expectations in the year ahead; employment rose for the first timesince September 2023.

127

Figure 12.3: World copper consumption in 2022, by end use

12.3World production

Stable growth in global mine supply, despite ongoing operational risks
Global mined copper output grew by 3.8% to reach 22.4 Mt in 2023.
Amongst major producers, Peru, and the Democratic Republic of Congo(DRC) saw significant production growth in 2023, up by 13% and 22%,
respectively, while Chile — the world’s largest producer — saw copper
output fall by 1.5%, due to a combination of operational issues (discussed
in detail below), project holdups and continued social unrest.

Figure 12.4: Major copper mine actual production & projection
28

Notes: Uses categories from the Copper Alliance Global Semis End Use data; Consumer andgeneral products inc. appliances, instruments and tools, cooling equipment, electronics, andother diverse products; Building construction inc. plumbing, telecommunications, airconditioning, electrical power; Infrastructure inc. power utility and telecommunications;
Transport inc. automotive, EV batteries and other transport; Industrial inc. transformers andmotors, non-electrical fittings and plant.

Million tonnes

24
20
16
12
8

Source: International Copper Study Group (2024)

4

Business confidence jumped to a 21-month high in January 2024. Rising
input costs, supply disruptions, and transaction delays continue to be themajor concerns for producers. Due to higher input costs, the output prices
are expected to rise as firms seek to pass on higher costs to customers.
As the domestic demand grows, the country’s goods producers recorded amarginal drop in output in January 2024.

0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Despite the near-term challenges, new investment — encouraged by the
Inflation Reduction Act — is expected to drive stronger growth in US
manufacturing activity over the medium term. This will include a particularconcentration of projects in the clean energy sector, with market estimatesof as much as $280 billion in new investments in the sector since thepassing of the Act.

Resources and Energy Quarterly | March 2024

ROW

Chile

Peru

China

DRC

EuropeIndonisaWorld actuals & projection

Source: World Bureau of Metal Statistics (2024); Department of Industry, Science andResources (2024)

Chilean copper production in 2023 was impacted by a number of issues,
including adverse weather, equipment and technical issues, community
action, and lower grades from many existing operations. Codelco (Chile’s
largest copper miner) reported an 8.3% fall in production in 2023, to total
1.424 Mt over the period. The company continued to be impacted by its
high debt levels (delaying a number of its sustaining and expansion
projects) as well as poorer weather, and lower grades at its existing
operations.

128

The fall in Codelco’s copper output in 2023 was partially offset by higher
output from other major Chilean copper mines (such as Escondida andCollahuasi). BHP’s joint venture, Escondida recorded a growth in total
production in 2023 of 4.5% to reach 88,500 tonnes. While the GlencoreAnglo-American JV, Collahuasi, grew by 0.4% to reach 60,300 tonnes.
Peruvian mine output grew by 13% in 2023 to reach 2,755,000 tonnes.
This included higher output from Quellaveco, the nation’s newest major
copper mine, expected to produce 300,000 tonnes of copper equivalent
per year on average over the period.
Among other major producers, Panama’s mined copper output fell by 5.5%
in 2023, following closure of its biggest mine, Cobre Panama, due tocommunity opposition.
Mined copper to grow 2.4% in 2024, and 2.6% annually to 2029
Global mine output is forecast to grow by 2.4% in 2024 to reach about
23 Mt, and by 2.6% to 26.1 Mt by 2029 (Figure 12.4). Growth over theoutlook period is slightly slower compared to the last 5 years, mainly due
to declining ore grades, geopolitical instability, environmental challenges,
weather, and logistical issues. Over the rest of outlook period, global
mined copper output will rise by 2.6% per annum through 2029. The major
contributors to this growth will be Chile and the DRC.
The DRC is expected to add around 450,000 tonnes in new annual
capacity over the outlook period. Growth in DRC production reflects
significant Chinese investment made in many of the country’s copper
projects in recent years, including the Tenke Fungurume expansion,
Kamoto’s Katanga mine, the Kansanshi S3 expansion and critically, the650,000 tonnes per annum Kamoa-Kakula project (joint owned by Zijin
Mining Group, Ivanhoe mines, the DRC, and Crystal River Global).
Chile is expected to add around 500,000 tonnes of mined capacity over
the outlook period, including 300,000 tonnes from 2024 with the ramp up
of Quebrada Blanca. Codelco’s Chuquicamata underground mine is also
expected to continue to ramp up over the next few years, to reach a peakof 300,000 tonnes annual production by 2029. Escondida — the world’s

Resources and Energy Quarterly | March 2024

largest copper mine — is expected to maintain output near current levelsof close to 1 Mt a year.
One of Peru’s largest existing mines, Antamina, received environmental
approval for an expansion in H2 2023. This will see construction begin in
2024 and project aimed at extending mine life (from 2028 to 2036).
Mine production capacity in China is also expected to increase from 1.9 Mt
in 2023 to a peak of 2.2 Mt in 2027, coming from operations including
Qulong and Yulong.
Rising AI applications in the exploration and production of mined copper
Last year saw the increasing use of Artificial Intelligence (AI) in copper
extraction and refining processes, as producers seek to meet the robust
demand projected for copper in coming decades. At the world’s largest
mine Escondida, BHP continues to explore ways to improve copper
recovery, including a partnership announced with Microsoft in May lastyear that aims to use AI to optimise the mine’s initial processing circuit. In
early 2024, Kobold Metals announced the discovery of an expansive
copper deposit in Zambia using AI. The deposit has been compared to thesignificant Kamoa-Kakula project in the DRC, with Kobold hopeful it canbegin operations toward the end of the 2020s.
China and DRC lead global refined copper production in 2023
Refined copper output grew by 7.1% in 2023, to reach about 27.6 Mt(Figure 12.5). This included significant growth in the DRC and China —the world’s largest producer with almost 50% of the world’s refined output.
These gains helped to offset falls amongst other major producers such as
Europe and Chile. Domestic refiners in China boosted output sharply in
2023, growing by about 18% year-on-year. The rise was concurrent with asignificant fall in China’s imports of refined copper over the same period
and driven by stronger refining charges. Rising domestic output in partreflected considerable growth in China’s apparent demand for copper in
2023, a consequence of the large investment made in the country’s energy
infrastructure (particularly renewable energy) and domestic electric vehicle
production (see World Consumption section).

129

Figure 12.5: Refined copper actual production & projection
36
32
Million tonnes

28
24
20
16
12
8
4
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Indonesian refined copper output is expected to significantly increase in
the next few years, a consequence of a 2018 government policy toprocess all ores domestically. The country’s largest mine PT Freeportcurrently has construction underway on its new 600,000 tonne per year
Manyar Maju refinery, with first production expected in the second half of
2024.
India is also expected to see strong growth in refined copper production
over the next few years. This includes Adani Group’s Gujarat refinery,
expected to be operational in early 2024. According to ICSG, phase 1 of
Adani scheduled to start production in H1 2024, with an initial capacity of
500,000 tonnes per year, and an eventual annual nameplate capacity of 1
Mt. In addition, phase 2 of Adani group is the additional expansion will
come to operation in 2026-28 with an initial capacity of 500,000 tonnes per
year.

Source: World Bureau of Metal Statistics (2024); Department of Industry, Science andResources (2024)

Despite the strong rise in Chinese copper output, copper inventories in
China (and elsewhere) remain at historic lows, and this represents anongoing upside risk to prices over the outlook period (Figure 12.6).

Sizable, refined output expansion from China, Indonesia, and India

Figure 12.6: Global copper inventories

ROW

Europe

Chile

Japan

DRC

World actuals & projection

World refined copper production is forecast to grow by around 2.5%
annually over the outlook period to 2029. The major contributors to thisnew capacity are expected to be China, Indonesia, and India.
The Guangxi Nanko refinery project in China is expected to add more than
1 Mt of refining capacity in the next few years, equivalent to close to 10%of the country’s total production in 2022. This will include phase 2 of the
project with an initial annual capacity of 275,000 tonnes, expected to startin early 2024. Three further projects, all owned by Tongling Nonferrous
Metals (Chifeng Jintong, Jinguan Tongling phase 2 and the Tongling newrefinery) are expected to add further refining capacity in the next few
years. From 2025 onward, the Chifeng Jintong and expansion of Jinguan
will add initial capacity of 400,000 and 280,000 tonnes respectively.
Similarly, the Tongling Nonferrous project is expected to contribute with an
initial capacity of 300,000 tonnes per year from 2026 onward.

1,400
1,200
Thousand tonnes

China

1,000
800
600
400
200
0
2018

2019

2020

World inventory
Refined copper stocks in China

2021

2022

2023

Inventory at major exchanges

Source: Bloomberg (2024)

Resources and Energy Quarterly | March 2024

130

PricesGlobal copper prices expecting to rise over the outlook period
After reaching post-COVID highs of more than US$9,300 a tonne in
January 2023, copper prices have continued to decline during the last
12 months, averaging about US$8,340 a tonne by February 2024. The fallin prices came despite solid growth in China’s refined copper demand in
2023 and was a consequence of the weak outlook for construction andmanufacturing in other key markets such as US, EU, and ex-China Asia.
In 2024, the average copper price is forecast to remain relatively similar to2023 levels (US$8,400 a tonne). Rising consumption of copper from end
uses such as grid infrastructure and clean energy power generation are
expected to offset moderating demand from sectors such as residential
construction and manufacturing. Beyond 2024, the copper price is
expected to rise by around 1% annually over the outlook period, to reach
US$9,200 (real terms) a tonne in 2029 (Figure 12.7). Higher prices will be
driven by stronger consumption in copper-intensive sectors such as
construction, power sector, appliances and EVs.

12000
10000

US$/t

8000
6000
4000

Australia

Higher volume, healthy export earning over the outlook period
Export volumes are forecast to reach 845,000 tonnes in 2023–24, littlechanged from 2022–23 (Figure 12.8). However, due to a lower copper
price, export earnings for 2023–24 are forecast to be around $12.1 billion,
a 1.2% contraction compared to 2022–23. Over the outlook period, exports
earnings (in real terms) are projected to grow 4.7% annually, to reacharound $16.8 billion by 2028–29.

Figure 12.8: Australia’s copper export volumes and values
1,200

18

800

12

400

6

0

2000
0
2019

12.5

Metal content, thousand tonnes

Figure 12.7: Copper priceHowever, historically low levels of global inventories pose an upside risk
for the copper prices over the outlook period. Stronger demand in coming
quarters could be expected to draw inventories down further, putting
upward pressure on prices. Larger-than-expected expansions of clean
energy manufacturing, construction, and the ongoing moving toward EVs
in economies such as China and the US, also present upside risks tocopper prices over the outlook.

2021

2023

Source: LME (2024) Official cash copper price (refined)

Resources and Energy Quarterly | March 2024

2025

2027

2029

2020–212022–23

2024–25

Volumes2026–27

2028–292022-23 A$ billion

12.4

0

Values (rhs)

Source: ABS (2023) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024)

131

Australian mine production is projected to grow by 6.2% per annum over
the outlook period, to reach 1,160,000 tonnes in 2028–29. Over the same
period, Australian refined output is expected to grow by around 0.7%
annually. The projected growth in both mined and refined production will
come from a range of new projects and expansions of existing operations.
Hillgrove Resources’ Kanmantoo copper mine project in South Australia
started production in February 2024. Kanmantoo is a significant greenfieldproject and is expected to add around 43,500 tonnes of copper per year toAustralian mine production. Hillgrove Resources is also expected todevelop further projects through its strong pipeline of exploration
opportunities over the outlook period.
BHP’s acquisition of OZ Minerals in May 2023 has seen the consolidationof Olympic Dam, Carrapateena and Prominent Hill as a new singleoperated asset known as Copper South Australia. The amalgamation is
expected to significantly increase refined copper output from thecompany’s South Australian operations over the outlook period. BHP’s OZ
Minerals acquisition also included the West Musgrave project. This projectcontains a large scale of copper and nickel sulphide—although the lower
price for nickel might be a downside risk for operation of the project as the
final investment decision is pending from the company yet. However, theproject is expected to add an annual production capacity of 41,000 tonnes
from 2025 onward over the outlook period.
The rise in Australian mined production will come despite the closure of
Glencore’s Mount Isa copper mines and concentrator in H2 2025,
announced in October 2023 by the company. However, Glencore’s copper
smelter in Mount Isa and refinery in Townsville are expected to continue
operating to 2030, subject to approval of additional capital investment.

In February 2024, BHP announced the identification of some high gradesof copper at its Oak Dam deposit in South Australia. This discovery issignificant for future Australian copper production.

Figure 12.9: Australian copper exploration
200
160

A$ million

Mine production continues to grow over the outlook period

120
80
40
0
2013

2015

2017

2019

2021

2023

Source: ABS (2024) Mineral and Petroleum Exploration, Australia. 8412.0

Revisions to the outlook
Since December 2023 Resources and Energy Quarterly, the forecast forAustralia’s copper export earnings in 2023–24 has been revised down by
0.6 billion due to moderate revision of the price of copper export ores andconcentrates. Compared to the March 2023 Resources and Energy
Quarterly, export earnings in 2027–28 have been revised up by
approximately $1.2 billion at $16.2 billion (in real terms), due to an upwardrevision of the forecast price of copper ore and concentrates.

Copper exploration very strong through 2023
Copper exploration expenditure on average rose to $169 million in 2023.
This was around 19% higher compared to the last year, and continues ageneral upward trend seen since 2017 (Figure 12.9).

Resources and Energy Quarterly | March 2024

132

Table 12.1: Copper outlook
World

Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

– minekt

22,36422,94623,542

24,14524,76025,392

26,0392.6– refinedkt

27,62628,17928,897

29,63630,39331,16931,966

2.5

Consumption

kt

28,03428,40928,97429,44630,06730,98031,856

2.2

Closing stocks

kt

656

426

349

539

865

1054

1164

10.0

1.2

0.8

0.6

1.0

1.5

1.8

1.9

7.7

US$/t

8,469

8,340

8,827

9,359

9,665

9,945

10,2073.2

USc/lb

384

378

400

425

438

451

463

3.2

US$/t

8,655

8,340

8,663

8,991

9,098

9,166

9,211

1.0

USc/lb

393

378

393

408

413

416

418

1.0

Australia

Unit2022-23s

2023–24f

2024–25z

2025–26z

2026–27z

2027–28z

2028–29

CAGRr

Mine output

kt

808

813

821

888

1,031

1,114

1,160

6.2

Refined output

kt

454

462

470

454

460

469

472

0.65

– ores and concsc

kt

1,511

1,421

1,505

1,757

2,116

2,287

2,396

8.0

– refined

kt

415

434

470

454

460

469

472

2.2

– total metallic content

kt

852

845

906

954

1,052

1,104

1,135

4.9

– nominal

A$m

12,262

12,12013,28814,322

16,635

18,07919,184

7.7– realA$m

12,755

12,12012,87913,50915,307

16,231

16,802

4.7

Production– weeks of consumption
Prices LME– nominal– realb

Exports

Export valuedNotes: b In 2024 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; r Average annual growth
between 2023 and 2029 or 2022–23 and 2028–29; z Projection.
Source: ABS (2024) International Trade, 5465.0; LME (2024) spot price; World Bureau of Metal Statistics (2024); Department of Industry, Science and Resources (2024).

Resources and Energy Quarterly | March 2024

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134

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135

•

Summary

Strong supply growth in recent years — predominantly from Indonesia
and China — has created a global nickel surplus that is expected topersist over the next few years. This surplus has put sustained
downward pressure on the nickel price over the past year, leading to afall of 40% in the 12 months to February 2024.

 Despite the near-term oversupply, continued growth in global demand —particularly from new low emission technologies — is expected to see atightening global balance for nickel in the latter half of the outlook period.
 Current weaker prices and reduced production are expected to see
Australian nickel export earnings fall to $3.6 billion in 2023–24 and$2.5 billion in 2024–25. However, improved prices toward the end of theoutlook period will see Australian exports reach around $4.4 billion in
2028–29 (in real terms).

13.2

World consumption

World nickel demand strong in 2023, with rising clean energy applications
Global nickel demand grew by 6.1% in 2023, maintaining the robust
recovery seen since 2020 (with growth averaging over 10% a year in 2021
and 2022). The rise in global demand last year was primarily led by China(up 13%), which offset falls in other major markets such as Europe, Japanand the US (down 4%, 8% and 2.4%, respectively).

Figure 13.1: World nickel demand
400

Thousand tonnes

13.1

300
200
100
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
China
European Union
Indonesia
Projected global demand

Rest of world
Japan
United States

Source: International Nickel Study Group (2024); Department of Industry, Science andResources (2024)

applications in other clean energy technologies (such as wind and otherlow emissions power generation, and stationary storage) are estimated tohave accounted for around 4% of total commodity demand in 2023.
Outlook for global demand to 2029 bright, despite emergent challenges

Global stainless-steel output — accounting for two-thirds of nickel demandin 2023 — is estimated to have increased by around 3.5%. This included
13% growth in Chinese production, with increased infrastructure spending
helping to counter a softening outlook for other key sectors such as
manufacturing and residential construction. This pattern was also seen inglobal markets outside of China, with infrastructure-led construction
helping to offset a widespread moderation in manufacturing activity.

World nickel demand is projected to grow by 5.8% annually over theoutlook period (Figure 13.1). Clean energy technologies are expected tobe the primary driver of growth, accounting for nearly 50% of total nickel
demand by the end of the outlook period. This will include nickel’s use in
EVs and low emission power generation technologies — such as wind,hydro and geothermal — as well as growing application in stationary
storage. Demand from traditional uses of nickel (such as stainless steel in
consumer goods and construction) is expected to be steady (Figure 13.2).

Demand for nickel from EV battery production continued to rise in 2023,
growing by 8.5% year-on-year. The rapid expansion of EV vehicle
production has seen this sector increase its share of total nickel demand
from around 5% in 2018 to 15% in 2023. At the same time, nickel’s

Lithium iron phosphate (LFP) batteries have recently emerged as analternative to nickel-based chemistries in lithium-ion batteries. The market
share for this chemistry type has risen from 10% of total battery demand in
2018 to 30% in 2023. Higher market adoption of non-nickel-based

Resources and Energy Quarterly | March 2024

136

Figure 13.2: IEA projections of world nickel demand by end use
5Million tonnes

4
3
2
1
0
Other

2022
2025
2030
Low emissions power generation and storage
EVs

Note: IEA projections under a State Policies scenario; low emissions power generation
includes wind and solar PV.
Source: International Energy Agency (2024); Department of Industry, Science and Resources(2024)

Figure 13.3 World mined nickel production

In addition to EV battery applications, nickel is expected to play animportant ongoing role in low emissions power generation. The IEA
projects nickel’s use in power-generative technologies to rise from 4% in
2023 to about 12% of total nickel demand by 2030 — almost 5 times
current aggregate demand. Demand is expected to be prevalent intechnologies such as wind, hydropower, geothermal, where nickel alloys
resistant to erosion, corrosion and heat are seen as essential components.
Beyond the outlook period, secondary (i.e. recycled) nickel is expected to
become a more prevalent supply source for the mineral, carrying potential
risks to the level of growth in primary demand from the mid-2030s.

13.3

350

World production

Growth in Indonesian supply fundamentally altering global nickel market

300
Thousand tonnes

lithium-ion batteries is expected to continue over the outlook period, with
LFP batteries expected to rise to about 40% of total battery demand by
2029. More nascent technologies, such sodium-ion batteries (see Lithium
chapter) and other stationary storage technologies are also expected togain small market shares over the outlook period. However, robust growthin aggregate demand for batteries will ensure comparably strong growth innickel demand from this sector over the outlook period.

World mined nickel production grew by 15% in 2023, underpinned by acontinued expansion of Indonesian supply. Indonesia is estimated to haveadded more than 450,000 tonnes of new nickel output in 2023, theequivalent of 14% of total global supply in the previous calendar year.

250
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Indonesia

Rest of world

Philippines

Australia

RussiaSource: International Nickel Study Group (2024); Department of Industry, Science andResources (2024)

Resources and Energy Quarterly | March 2024

The rapid rise in Indonesian nickel in recent years reflects substantial
investment in new processing capacity, primarily by Chinese interests —firstly to make stainless steel and (more recently) battery grade matte. In
2020, Indonesia’s government implemented a ban on nickel ore exports(after announcing and partially implementing this policy over the previous
decade) with the aim of promoting value add through domestic refining of
its mined nickel. This policy has coincided with rapid investment in
integrated facilities capable of mining and processing in a single operation.

137

Indonesia is expected to continue working to address environmental andsustainability challenges associated with its nickel industry over theoutlook period. Responsible ESG practices are expected to become anincreasing feature (and preference) in global EV supply chains, aconsequence of policies such as the US’ Inflation Reduction Act. However,
the availability of high-grade nickel reserves in Indonesia poses a risk toglobal production in the medium term, with the nation’s key peak nickel
mining association flagging risks of a potential depletion in high grade
reserves before 2030 without stricter controls being implemented.
World refined nickel output rose by 9.4% in 2023, with Indonesia(21% gain) and China (12% gain) accounting for the vast majority ofgrowth. The 2020 ban on the export of nickel ores by the Indonesian
Government has led to considerable Chinese investment — more than
US$30 billion by some estimates — in Indonesian processing capacity.
This has led to a dramatic rise in the production of intermediate andrefined products in Indonesia in recent years (Figures 13.4 and 13.5), withover 80% of Indonesian battery-grade nickel production expected to comefrom majority Chinese-owned producers in 2024.
The rise in intermediate production has been aided by technologicalinnovation commercialised by Chinese firm Tsingshan in 2021, which
made possible the processing of lower-quality, laterite nickel pig iron (NPI)
into grade 1 ‘battery grade’ nickel products (via the production of matte).
While this development has prompted considerable growth in the
production of nickel matte in Indonesia in the last few years, the markedly
higher emissions associated with this process (around 6 times the intensityof sulphide-based production according to the IEA) is considered by someResources and Energy Quarterly | March 2024

70
60
Thousand tonnes

Over the outlook period, annual world mine output is forecast to rise 2.8%.
Growth will continue to be driven by increased Indonesian supply throughthe continued ramp up of existing industrial parks such Weda Bay andMorowali, and prospective projects such as the IGP Pomalaa project.

Figure 13.4 World intermediate nickel production

50
40
30
20
10
0
2020

2021
Indonesia

2022
Rest of world2023

Source: International Nickel Study Group (2024); Department of Industry, Science andResources (2024)

Figure 13.5 World refined nickel production
350
300
Thousand tonnes

This policy has seen Indonesian supply grow from 10% of world mine
output in 2016, to 55% in 2023 (Figure 13.3).

250
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Indonesia
China
RussiaAustralia
Rest of World

Source: International Nickel Study Group (2024); Department of Industry, Science andResources (2024)

138

market participants as limiting upside potential of this product over theoutlook period.

Figure 13.6 Nickel spot price and stock at exchanges

However, Indonesia’s nickel industry is expected to see continued ramp up
of projects utilising an alternative hydrometallurgical technology (throughthe use of High Pressure Acid Leaching, or HPAL) to produce intermediate
products such as Mixed Hydroxide Precipitate (MHP). While this emerging
process tends to have lower emissions intensity than the matte-via-NPI
route, it does present its own environmental issues for Indonesia, such as
the significant waste and storage issues created by the process. Despite
these challenges, higher production and exports of these materials is
expected to be a key trend over the outlook period.

Stocks (thousand tonnes)

World refined nickel production is forecast to grow 4.4% annually over theoutlook period. Indonesia and China are expected to be the major
contributors to this growth, with each expected to increase annual capacity
by approximately 500,000 tonnes by 2029. This would see these twocountries account for around 75% of global refined nickel supply by 2029.

13.4

PricesSustained fall in nickel prices though to early 2024
After reaching a peak of just over US$30,000 a tonne at the end ofJanuary last year, nickel prices have seen persistent downward pressurein the intervening period. In the last 12 months, the LME nickel price has
fallen 40% to average around US$16,400 a tonne in February 2024. This
compares with an average real nickel price (in 2023 US dollars) for theperiod 2013 to 2022 of US$17,800/tonne.
Structural oversupply in global nickel markets has continued to act as theprimary driver of falling prices, with substantial growth in both mined
supply (from Indonesia) and refined products (from both Indonesia andChina) in recent years (see World Production section).
Moderating (cyclical) global demand has further contributed to recent priceweakness. Global manufacturing new orders marked 22 months of decline
in December 2023, with recent lead indicators such as PMI remaining
subdued as of early 2024. The current outlook for global construction also
Resources and Energy Quarterly | March 2024

50,000

600
500
400

30,000300
20,000200

US$ a tonne

40,00010,000100

002016 2017 2018 2019 2020 2021 2022 2023 2024
LME stocks

SHFE stocks

LME nickel cash (rhs)

Source: Bloomberg (2024); LME (2024); Department of Industry, Science and Resources(2024)

remains mixed, with infrastructure continuing to bolster broader weakness
in residential and commercial construction in key regions such as Europe
and China (see Steel chapter).
Global EV sales — a primary driver of recent growth in world demand —appears to be slowing from the impressive rates of growth seen in recent
years, with total sales growth moderating to 30% in 2023 (from 60%
growth in 2022). While growth in this industry is expected to remain strongin coming years, its maturation (and the more moderate rates of growth
this would be expected to bring) now appears to be weighing on prices.
Excess global supply to keep prices below US$19,000 for next few years
With solid growth in mined and refined supply projected to continue over
the outlook period, and slowing demand from key sectors in the near term,
the resulting oversupply is forecast to contain nickel prices in 2024. The
LME nickel price is expected to average US$17,000 a tonne in 2024, andis forecast to average below US$18,000 a tonne through to 2026 (in real

139

Healthy growth in mined and refined nickel supply is expected to maintaina global oversupply to 2026, which should help to replenish the historically
low inventory levels seen at major exchanges such as LME and Shanghai
Futures Exchange. Notably, LME inventories are currently more than 70%
below their previous 10-year average. This provides a modest upside risk
to prices in the near term: a pick-up in demand coinciding with further
supply disruptions would limit builds in inventories currently priced in.

13.5

Australia

Falling prices impacting Australian production in the near-term
Lower nickel prices are forecast to see a reduction in Australia’s total
mined and refined nickel production through to 2025–26. Recent price falls
have seen mine closures and reduced output announced by several
Australian producers, as well as delays in planned projects. This includes
the closure of BHP’s Kambalda nickel concentrator, with the company
update in mid-February indicating it was continuing to study a potential fora period of care and maintenance for its Nickel West operations.
Australia’s mined output is expected to fall by 16% in 2024–25 to reach
129,000 tonnes, while refined output is projected to remain flat.
Australian production to grow in latter half of the outlook period
Higher prices projected from 2026 are expected to support higher
production volumes, with a number of projects set to come online incoming years. By the end of the outlook period, Australian mined nickel
production is projected to grow to 230,000 tonnes in 2028–29, with new
output from a number of large and mid-tier producers. This will include anumber of new projects aiming to produce intermediate products (such as
Mixed Hydroxide Precipitate) and nickel sulphate (an emerging alternativefor feeding into the production of cathode materials for lithium-ion

Resources and Energy Quarterly | March 2024

300

6

200

4

100

2

0

2020–212022–23

2024–25

Export volumes

2026–272028-292023-24 A$ billion

Class 1 inventories likely to build on global surplus

Figure 13.7 Nickel export volumes and values

Thousand tonnes

terms). However, continued growth in clean energy applications should
see a more balanced market in the latter half of the outlook period, when
prices are projected to recover to around US$19,000 a tonne by 2029.

0

Export values (rhs)

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources estimates (2024)

batteries). Australia’s refined production is projected to grow to
113,000 tonnes over the same period.
Export earnings to be impacted by falling nickel prices and production cuts
Weaker prices and reduced export volumes are expected to impact
Australia’s nickel export earnings over the next few years. Export earnings
in 2023–24 are expected to fall to $3.6 billion from an estimated$5.2 billion in 2022–23 (in real terms). Australia’s export earnings fromnickel are expected to fall further to $2.4 billion in 2024–25 (in real terms)
as lower prices and reduced export volumes persist. Recovering prices in
the latter part of the outlook period are expected to drive improved nickel
exports from Australia, with total export value projected to reach around$3.9 billion (in real terms) in 2028–29.
2023 exploration expenditure the highest since 2008
Nickel and cobalt exploration expenditure in Australia for 2023 was around$325 million. This was 2.9% higher than the previous year, and 55%
higher than the comparable period in 2018 (nominal terms).

140

Revisions to the outlook
Forecast export earnings for 2023–24 (in nominal terms) have beenrevised down from the December 2023 Resources and Energy Quarterly— from $3.9 billion to $3.6 billion in this edition. This reflects lower-thananticipated prices in recent months and reduced Australian production andexport of nickel products. Export earnings in 2024–25 have also beenrevised down, from $4.3 billion to $2.5 billion, given those same drivers.
Compared with the March 2023 Resources and Energy Quarterly, forecast
Australian earnings in 2027–28 (in nominal terms) have also been revised
down from $4.9 billion to $3.5 billion.

Resources and Energy Quarterly | March 2024

141

Table 13.1: Nickel outlook
World

Unit

2023

2024f

2025f

2026z

2027z

2028z

2029z

CAGRr

–mine

kt

3,684

3,861

4,040

4,180

4,260

4,300

4,280

2.5

–refined

kt

3,346

3,607

3,780

3,935

4,060

4,190

4,300

4.3

Consumption

kt

3,104

3,494

3,566

3,770

3,960

4,150

4,400

6.0

Global balance

kt

243

113

214

166

100

40

-100

Closing stocks

kt

935

1 049

1 263

1 428

1 528

1 568

1 468

7.8

16

16

18

20

20

20

17

1.7

US$/t

21,477

16,954

17,65018,375

19,57520,55021,400-0.1

USc/lb

974

769

801

833

888

932

971

-0.1

US$/t

21,95016,954

17,321

17,652

18,426

18,94019,312-2.1

USc/lb

996

769

786

801

836

859

876

-2.1

Unit

2022–23f

2023–24f

2024–25z

2025–26z

2026–27z

2027–28z

2028–29

CAGRr– minec

kt

153

141

106

122

162

200

230

7.0

– refined

kt

97

94

68

71

84

100

113

2.7

– intermediate

kt

38

40

28

28

30

38

57

7.1

Export volume

kt

161

159

107

112

144

182

214

4.9

– nominal value

A$m

4,956

3,563

2,448

2,462

3,087

3,859

4,377

-2.0

– real value

A$m

5,155

3,563

2,373

2,322

2,841

3,464

3,834

-4.8

Production–weeks of consumption
Prices LME–nominal–realbAustralia
Production

Export valuedNotes: b In 2024 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; r Average annual growth
between 2023 and 2029 or 2022–23 and 2028–29; z Projection.
Source: ABS (2024) International Trade, 5465.0; LME (2024) spot price; World Bureau of Metal Statistics (2024) World Metal Statistics; Department of Industry, Science and Resources (2024).

Resources and Energy Quarterly | March 2024

142

Resources and Energy Quarterly | March 2024

143

Resources and Energy Quarterly | March 2024

144

Summary The outlook for zinc demand remains subdued due to slowing global
growth and ongoing weakness in China’s property market. The zincprice is forecast to rise gradually (in real terms) over the outlook period,
from around US$2,400 a tonne to around US$2,700 a tonne by 2029.
 Australia’s zinc production is forecast to grow steadily over the next two
years, due to the Century mine expansion and higher Golden Grovemine output. However, output is expected to gradually ease from 2026
as production tapers off in some of Australia’s older zinc mines.
 Australia’s zinc exports are forecast to decline from $4.0 billion in
2023–24 to $3.3 billion in 2028–29 in real terms, with lower volumes
partially offset by moderate increases in prices.

14.2

World consumption

Global zinc consumption showing tentative signs of recovery
Zinc consumption is heavily affected by the global industrial production
cycle, reflecting its primary role in galvanising steel (Figure 14.1) and its
heavy use in the manufacturing, construction and automotive sectors.
World refined zinc consumption rose by an estimated 5.9% year-on-year in
the December quarter 2023. Over the same period, consumption rose in
China (12%), ex-China Asia (5.3%) and the European Union (3.1%),
though was offset by a large fall in the US (24%).
China is the world’s largest consumer of zinc, and demand in the
December quarter 2023 was supported by strong growth in infrastructure
investment growth and rapid growth in manufacturing output. However,China’s property sector downturn has yet to stabilise. China is prioritising
the delivery of its existing construction pipeline, after concerns thatliquidity-constrained developers had been forced to abandon projects
already started. This has seen a turnaround in property completions, withfloor space of completed residential buildings up by 16% in December(year-on-year), compared with a fall of 14% a year earlier.

Resources and Energy Quarterly | March 2024

Figure 14.1: Zinc consumption vs industrial and steel production
9
Annual percentage change

14.1

6
3
0
-3
-6

2015

2017

2019

2021

World industrial production
World zinc consumption

2023

2025

2027

2029

World steel production

Source: International Lead Zinc Study Group (2024); CPB Netherlands Bureau for Economic
Policy Analysis (2024); World Steel Association (2024); Department of Industry, Science andResources (2024).

Despite this, new home sales, floor space under construction and fixed
asset investment in real estate, were all down noticeably in year-on-year
terms in December 2023. Structural factors, such as the peak in China’s
population and slowdown in urbanisation rates, are adding to thechallenges faced by the sector.
China’s passenger vehicle production rose steadily over 2023 to reach justover 25 million vehicles for the year, 5.1% higher than 2022. China isemerging as a leading manufacturer of electrical vehicles, overtaking
Japan as the world’s largest exporter of passenger motor vehicles in 2023.
Other major passenger vehicle producers posted production gains in 2023,
shaking off the problems with chip shortages that affected production inearlier years. In 2023, Japanese passenger vehicle output rose by 12.2%,
while production in Germany rose by 18.1%.

145

Despite substantial falls in US zinc consumption in recent months,
indicators of related construction activity have been positive. US
construction spending rose by 11.6% in the December quarter 2023 innominal terms, driven by a large rise in non-residential construction
spending, up 24% year-on-year. Residential construction also contributed
to the growth, up 2.9% year on year — a turnaround from the 5.3% yearon-year fall in the September quarter. The rise in non-residential
construction spending was driven by manufacturing (up 71% year-on-year)
and computer/electronics (up 134% year-on-year). US motor vehicle
assemblies — the majority of which are commercial vehicles — rose 6.6%
year-on-year in January 2024.
The EU’s construction production (volume) index remained relatively flat in
the December quarter 2023, rising just 0.2% year-on-year. Despite healthy
growth in a number of countries, including Italy and Spain, ongoing
weakness in Germany and France continues to weigh on the EU’s
construction sector.
Demand outlook for zinc remains subdued
World zinc consumption is forecast to grow by 1.6% a year on averageover the outlook period to 2029 (Table 14.1). This rate of growth is muchslower than the 2009 to 2019 period when zinc consumption grew by anaverage of 2.4% per year. This reflects slowing global economic growth,largely driven by the expected ongoing structural slowing in China’s growth
as it matures. The IMF projects China’s 2024 growth at 4.6%, easing to
3.5% in 2028 (see Macroeconomic Outlook chapter).
Over the outlook period to 2029, China’s residential construction activity
will likely stabilise at a lower level, reducing steel — and therefore zinc —demand. Stronger growth in infrastructure and manufacturing investment,along with steel-intensive manufactured exports (including automobiles
and whitegoods) helped support Chinese zinc demand in 2023.
Infrastructure investment is also expected to continue to support demandfor zinc over the outlook period to 2029, as the Chinese Government
seeks to support economic growth.

Resources and Energy Quarterly | March 2024

The global energy transition will likely have mixed effects on zinc demand,increasing usage for some sectors but potentially seeing zinc usage
reduced for other applications. Construction and deployment of renewableenergy infrastructure is expected to support the demand for zinc due to thecomplementary role it plays with steel as an input to wind turbines, solar
panels and transmission towers. However, growing electric vehicle
adoption could also weaken demand for zinc as automakers preference
lighter materials to steel (in particular, aluminium) to improve battery range
and performance.

14.3

World production

Mine closures and project delays disrupted supply in 2023
Sharp falls in zinc prices over the past two years have seen
unprecedented disruptions to global zinc mine supply, as owners chose toplace mines on care and maintenance to cut losses. World mine
production fell by around 1.4% year-on-year in 2023. Mine production fell
0.5% year-on-year in China, which accounts for a third of global
production. Production also fell in the EU (10%) and US (1.7%). 2023 saw
the closure of both the Tara mine in Ireland — the largest zinc mine inEurope — and the Aljustrel mine in Portugal. There were also slippages inthe start-up of several mine operations including the Buenavista (Mexico),Ozernoye (Russia) and Vares (Bosnia) projects.
Global refined zinc production rose by 3.8% in 2023. Output in China —the world’s largest zinc refiner — rose by 7.7% in 2023. A surge in refining
capacity in China resulted in a rapid decline in the spot treatment price forzinc ore imported to China. The price fell to US$85 a tonne in February
2024 from an average of US$181 a tonne in 2023 — when the closure ofsome European zinc smelters (due to high energy prices) resulted in a
crunch in global zinc refining capacity.
Global production to rise steadily over the outlook period
Over the outlook period, global zinc mine output is forecast to achieve
average annual growth of 2.1% (Figure 14.2). The fall in mine production
and rise in refining production over the past year has eliminated much of

146

10

12

5

8

0

4

-5

0

-10

2015

2017 2019 2021
Mine production

2023 2025 2027 2029
Mine production change (rhs)

Source: International Lead Zinc Study Group (2024); Department of Industry, Science andResources (2024).

14.4

PricesThe LME (spot) zinc price is forecast to stay relatively low through 2024,
due to the soft demand outlook. This will put mine margins under pressure
and raise the prospect of further price-induced mine closures. The priceshould average about US$2,600 a tonne in 2024, before picking up slightly
in 2025 and 2026 as global industrial production and construction pick up(Figure 14.3).
Figure 14.3: Zinc prices and stocks

Prices weaken on growing concerns over the demand outlook
The London Metal Exchange (LME) spot zinc price declined slightly
quarter-on-quarter in the March quarter 2024 to around US$2,400 a tonne.
This continued the weakening trend in zinc prices experienced over the
past year and leaves prices well below the US$3,100 a tonne achieved in
the March quarter 2023, when worries over shortages of zinc refining
capacity kept prices high. The price falls in 2023 were triggered by thereopening of some European zinc smelters and were sustained byrelatively soft demand throughout 2023.
Zinc inventories fluctuated markedly over the course of 2023. Weakdemand over 2023 saw LME zinc stocks increase to around 148 thousand
tonnes by the end of August. However, consumption strengthened overResources and Energy Quarterly | March 2024

4,000

12

3,000

9

2,000

6

1,000

3

0
2015

2017

2019 2021
Price

2023 2025
Stocks (rhs)

2027

2029

Weeks of consumption

16

Annual percentage change

Million tonnes

Figure 14.2: World zinc mine production, metallic content

the September quarter 2023 and LME zinc stocks were drawn down to 68
thousand tonnes in mid-November before rising steadily in recent months
to around 275 thousand tonnes in March 2024. Zinc stocks are forecast to
increase gradually to around the long run average over the outlook period.

2024 US$ a tonne

the surplus in the concentrate market evident in 2023. Refined production
is expected to rise by 1.4% a year on average. Most of the new capacity is
expected to be in China.

0

Source: LME (2024); International Lead Zinc Study Group (2024); Department of Industry,
Science and Resources (2024).

14.5

Australia’s exports and production

Export earnings to fall unless new resources can be developed
Australia’s export earnings for both zinc concentrates and refined zinc
(combined) fell by 24% year-on-year to $1.0 billion in the December
quarter 2023. The fall was largely driven by declining prices over theperiod, with prices received for exports of ore and refined zinc down 23%

147

Australian production was disrupted in early 2024 when concentrate
shipments to China were suspended after flooding prevented the
movement of material from mines in Queensland. The rail line serving
Cannington, Dugald River and Mt Isa re-opened in late-February.
Australian mine output is expected to decline by an average 0.3% per year
over the outlook period to 2029. Over the next two years an expansion of
the Century mine, as well as increases in production from the Golden
Grove mine (following the completion of ventilation upgrades) will maintain
output levels. However, from 2026–27 Australia’s mined zinc output isprojected to taper off, due to lower output likely at several operations.
From $3.9 billion in 2023–24, Australia’s export earnings (in real terms) for
concentrates and refined zinc (combined) are forecast to fall to $3.3 billion
in 2027–28 (Figure 14.4). However, the forecast is subject to someuncertainty. There are upside risks to the forecast, due to the potential formine expansions, the reopening of mines under care and maintenance,
and the development of new mines. For example, while there have beenreports that the New Century mine may run out of ore by 2027, thecompany has stated that, based on indicated and inferred resources, there
is an opportunity to extend operations beyond 2030. Similarly, MMG’s
Rosebery mine in Tasmania has stated it is undertaking an accelerated
exploration program and investigating options for expanding tailings
storage, in a bid to support future operations.

Resources and Energy Quarterly | March 2024

Exploration expenditure for silver, lead and zinc rose by 32% year-on-year
in the December quarter 2023. The strong result defied the weaker prices
the sector has been experiencing since the middle of 2023. Exploration
expenditure slumped in 2020 — due to the COVID pandemic — but
recovered as zinc prices rose over 2021 and 2022. However, exploration
expenditure can be expected to begin moderating if zinc prices remain atlower levels throughout 2024.
Figure 14.4: Australia’s zinc exports, metallic content
1,800

6

1,500

5

1,200

4

900

3

600

2

300

1

0

2016-17 2018-19 2020-21 2022-23 2024-25 2026-27 2028-29
Volumes

2023-24 A$ billion

Australian mine production fell by 11% year-on-year in the December
quarter 2023, following the closure of several small mines earlier in theyear due to the impact of falling zinc prices on profit margins. These
included the Jaguar mine operated by Aeris Resources, the Mount Garnet
and King Vol zinc mines owned by Aurora Metals — which entered into
administration in mid-2023 — and the Hera mine, owed by Aurelia metals.

Exploration expenditure rises sharply in the December quarter

Thousand tonnes

and 16%, respectively. Falls in export volumes also contributed to a
decline in export revenue in the December quarter 2023. Zinc ore exports
fell by 7% year-on-year, while export volumes of refined zinc metal fell by
1.0% year-on-year.

0

Values (rhs)

Source: ABS (2024) International Trade in Goods and Services, 5368.0; Department ofIndustry, Science and Resources (2024).

Revisions to the outlook
Compared to the December 2023 Resources and Energy Quarterly,
forecast export earnings for 2023–24 and 2024–25 remain largely
unchanged. Compared to the March 2023 Resources and Energy
Quarterly, export earnings for 2027–28 have been revised down by around$600 million in nominal terms, due to a moderation in forecast production
volumes — as output tapers off in some of Australia’s older mines.

148

Table 14.1: Zinc outlook
World

Unit

2023

2024f

2025f

2026z

2027z

2028z

2028z

CAGRr

kt

12,256

12,774

12,99913,235

13,464

13,66813,8672.1

kt

13,863

13,96014,195

14,443

14,683

14,89915,111

1.4

Consumption

kt

13,65913,876

14,09914,344

14,576

14,783

14,986

1.6

Closing stocks

kt

824

908

1,004

1,104

1,211

1,327

1,453

9.9

3.1

3.4

3.7

4.0

4.3

4.7

5.0

US$/t

2,658

2,593

2,646

2,733

2,841

2,917

3,045

2.3

USc/lb

121

118

120

124

129

132

138

2.3

US$/t

2,716

2,593

2,597

2,626

2,675

2,688

2,748

0.2

USc/lb

123

118

118

119

121

122

125

0.2

Australia

Unit

2022–23f

2023–24f

2024–25z

2025–26z

2026–27z

2027–28z

2028–29

CAGRr

Mine output

kt

1,154

1,188

1,252

1,237

1,199

1,177

1,134

-0.3

Refined output

kt

424

482

520

525

525

525

525

3.6

– ore and concentrate c

kt

1,886

2,103

1,885

1,839

1,755

1,707

1,609

-2.6

– refined

kt

388

455

487

492

492

492

492

4.0

– total metallic content

kt

1,247

1,401

1,332

1,316

1,279

1,257

1,213

-0.5

– nominal

A$m

4,315

3,978

3,873

3,720

3,687

3,754

3,774

-2.2

– real d

A$m

4,489

3,978

3,754

3,509

3,393

3,370

3,306

-5.0

Production– mine– refineda– weeks of consumptionPrice– nominal– real b

Export volume

Export value

Notes: a Includes secondary refined zinc; b In 2024 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 (2024) International Trade in Goods and Services, Australia, Cat. No. 5368.0; Company reports; Department of Industry, Science and Resources (2024); International Lead Zinc Study
Group (2024); Wood Mackenzie (2024); LME (2024).

Resources and Energy Quarterly | March 2024

149

Resources and Energy Quarterly | March 2024

150







Summary

Australia’s lithium export earnings are projected to fall more than halfover the forecast period — from $21 billion in 2022-23 to $9 billion in
2028-29 (in real terms). This is driven by a revised lower price forecast,though prices are highly difficult to predict given the rapid pace of supply
and demand growth. Lower prices are expected to be partially offset by
the impact of a projected 70% increase in Australia’s lithium mine
production over the period.
Global lithium demand is projected to more than double between 2023
to 2029, driven by the rising adoption of electric vehicles. However,
evolving battery technologies could reduce lithium usage in batteries.
Global lithium supply is projected to broadly keep pace with risingdemand, with sizeable project pipelines among large producers (suchas Australia and China) as well as among new and emerging
producers (such as Argentina and Zimbabwe).

15.2

World demand

Lithium industry growth underpinned by advances in battery technologies
World lithium consumption is estimated to have been 1.0 million tonnes(mt) lithium carbonate equivalent (LCE) in 2023, a 28% increase from2022, continuing a trend of rapid growth in recent years. Demand growth isprimarily driven by rising adoption of electric vehicles (EVs), with demand
from EVs rising to exceed half of global lithium demand in 2022. This risein adoption can largely be attributed to improvements to battery energy
density and reductions in battery cost.
Technological innovation has seen improvements to battery energy
density — the amount of energy carried by a battery for a given weight —which has created new applications and markets for batteries in recent
decades. In a 2021 paper Re-examining rates of lithium-ion battery
technology improvement and cost decline, Ziegler and Trancik estimatethat between 1991 and 2018, the highest energy density achievable forlithium-ion batteries in each year rose from 80 Wh/kg to over 250 Wh/kg.
In the 2000s, more energy dense lithium-ion batteries made it possible to

Resources and Energy Quarterly | March 2024

build smartphones that consume substantially more power than traditional
mobile phones. EVs became viable from the late 2010s as improved
energy density added to vehicle range.
The cost decline of lithium-ion batteries has been rapid, improving thecost-competitiveness of the technology. Surveys by Bloomberg New
Energy Finance find that the weighted-average cost of lithium-ion batteries
fell from US$345/kWh in 2016 to US$139/kWh in 2023 in real 2023 USD
terms (Figure 15.1). This fall can be attributed to improved manufacturing
techniques and benefits from scale as the battery industry expands.

Figure 15.1: Volume-weighted average lithium-ion battery price2023 US$/kWh

15.1

800

40%

600

30%

400

20%

200

10%

0

0%

-200

2013
2015
2017
Cell price
Pack price

-10%
2019
2021
2023
annual price decline (RHS)

Notes: Survey includes passenger cars, buses, commercial vehicles, and stationary storage.
Battery costs rose in 2022 due to high lithium price, with lithium hydroxide price reaching
US$79 thousand a tonne in November 2022.
Source: Bloomberg New Energy Finance (2023)

The share of value captured by lithium in the battery value chain has been
rising in the last decade. As manufacturing cost falls, materials are making
up a rising proportion of the cost of a battery. The International Energy
Agency estimates that material cost makes up just over 20% of the cost of
a battery in 2021, compared to less than 5% in 2015.

151

China EV adoption surges, but other markets have fallen short
Wood Mackenzie estimates that EV penetration in the global passenger
vehicle market rose from 4.5% in 2020 to 18% in 2023. Estimates by the
University of Exeter’s Economics of Energy Innovation System Transition
programme suggests that in the EU and China the ownership cost of EVs
is now lower than for small and medium ICE vehicles. Cost parity is
expected to be reached in other markets by 2025.
EV sales in China surged during 2023: penetration in China’s passenger
vehicle market rose by 9.5 percentage points over the year to reach 35%(Figure 15.2). In China, buying a licence for a new internal combustion
engine (ICE) vehicle is sometimes not straight forward. Policy differs fromcity to city: in Shanghai, licence plates for ICE vehicles are sold in monthly
auctions — since 2014, fewer than 20% of bidders in each auction wereable to buy a licence — while licence plates for electric vehicles areavailable at no cost.
In the EU and the US, growth in EV sales were slower than expected over2023, with the high initial price tag (compounded by rising interest rates),lack of charging infrastructure, and concerns over vehicle range, proving tobe significant barriers to adoption. The EU has some of the highest EV
penetration rates after China, with sales supported by consumer
preference for smaller cars and relatively high taxes on petrol. However,growth in EV sales slowed in Europe’s passenger vehicle market, rising byonly 0.8 percentage points to 22% in 2023.
In the US, EV adoption lags other markets globally, with EV penetration in
the light duty vehicle market (including light commercial vehicles andpassenger vehicles) rising to 9.3% in the first 9 months in 2023 whencompared with the same period in 2022. EV sales appear to have fallen
short of vehicle manufacturers’ expectations, with data from Cox
Automotive showing an increase in EV inventories to 114 days of supply in
November 2023. This was up from 53 days of supply a year prior. A US
tariff of 27.5% inhibits US consumers purchasing Chinese EVs, which areamongst the most cost-competitive EVs globally.

Resources and Energy Quarterly | March 2024

Figure 15.2: EV penetration rate in selected vehicle markets
40%

30%

20%

10%

0%
Mar-22Jun-22

Sep-22

Dec-22European Union

Mar-23China

Jun-23

Sep-23

Dec-23

United States

Notes: Data presented for the EU and China are for the passenger vehicle market, while data
presented for the US is for the light duty vehicle market. EVs include both battery electricvehicles (BEV) and plug-in hybrid electric vehicle (PHEV).
Source: European Automobile Manufacturers Association (2024), China Association ofAutomobile Manufacturers (2024), Alliance for Automotive Innovation (2023)

Box 15.1: China’s battery and electric vehicle industries lead global rivals

The shift from nickel manganese cobalt (NMC) batteries to lithium iron
phosphate (LFP) batteries is strengthening the competitive position ofChinese EV and battery manufacturers. While NMC batteries have moreenergy density than LFP batteries, improvements to energy density for
newer LFP batteries, as well as their lower cost, are lifting theattractiveness of LFP, especially in mid-range EVs.
LFP batteries’ key advantage over NMC batteries are their substantiallylower material costs; the names of these batteries are derived from theirrespective cathode materials, and iron and phosphate are available at amuch lower cost than nickel, manganese and cobalt. Furthermore, LFP
batteries can be manufactured using lithium carbonate, while NMC
batteries use the more expensive, and less shelf-stable, lithium hydroxide.

152

In China, LFP’s share of batteries installed in EVs rose for the fifth year ina row in 2023, reaching a commanding share of close to 70% of batteries
installed in EVs (Figure 15.3). This includes many export models: Tesla’s
non-US standard versions of the Model 3 and the Model Y — with a rangeof 513 km and 455 km, respectively — use LFP batteries sourced from
Chinese suppliers BYD and CATL, and are typically assembled at its
Shanghai Gigafactory. The intellectual property and technical expertise of
manufacturing commercial LFP batteries are largely held by Chinesecompanies. Wood Mackenzie estimates that more than 99% of global LFP
battery cathode production was located in China in 2023.
China has leveraged its large domestic EV market and dominance in thebattery supply chain into a strong position in EV manufacturing, with
Chinese manufacturer BYD overtaking Tesla as the world’s largest EV
manufacturer in the December quarter 2023. A 2023 report by UBS foundthat BYD have a 25% cost advantage over North American and European
companies, with technical expertise in battery manufacturing leveraged
into advantages in EV design through, for example, battery cell-to-bodydesign and integrated power electronics modules. The report forecast that
Chinese EV makers could hold a third of the global EV market by 2030.
China overtook Japan to become the largest vehicle exporter in 2023, with
4.9 million vehicles exported compared to 4.4 million exported from Japan.
In value terms, almost half of China’s vehicle exports were for EVs in 2023
(US$38 billion of US$79 billion), and the export value of EVs rose by 70%
from 2022, according to data published by the General Administration ofCustoms of the People’s Republic of China. The EU is a major market for
China’s EVs, taking about 37% of value of China’s EV exports in 2023.

Resources and Energy Quarterly | March 2024

Figure 15.3: Batteries installed in EVs in China
500

100%

400

80%

300

60%

200

40%

100

20%

GWh

Between 2018 and 2023, lithium carbonate was typically about 20-30%
cheaper than lithium hydroxide, on a lithium metal-content basis. Beyond
the cost of materials, LFP batteries are safer and have longer cycle-life,
while cobalt mining has been associated with human rights abuses in the
Democratic Republic of Congo.

0%

0
2016

2017

2018

LFP

2019
Other

2020

2021

2022

2023

% LFP (RHS)

Notes: Based on materials released by the China Automotive Power Battery Innovation
Alliance and the Chinese government. Prior to 2022, compiled by Mitsui & Co. Global
Strategic Studies Institute. 2023 data compiled by DISR.
Source: Mitsui & Co. Global Strategic Studies Institute (2023), Department of Industry,
Science and Resources (2024)

Much of China’s EV exports to the EU are for cars from Westerncompanies with factories in China, such as Tesla’s aforementioned
Shanghai Gigafactory. The Centre for Strategic and International Studies
found that Tesla and joint ventures between European and Chinesecompanies accounted for more than half of China’s EV exports to the EU
in the first half of 2023. Joint ventures between European and Chinesecompanies — for example, between Mercedes-Benz and Geely — havebecome common, with European companies seeking to tap into Chinese
supply chains and technical expertise.

153

Electric vehicle adoption to drive rise in global lithium demand
In LCE terms, global lithium consumption is forecast to rise by 16% peryear to 2.3 mt in 2029 (Figure 15.4). Demand from EVs is expected todrive the bulk of this demand, with the share of demand from EVs risingover the outlook. This forecast is presented with a substantial risk to thedownside: EV adoption faces challenges ranging from rising trade barriers
and supply chain concerns — as a result of ongoing geo-strategiccompetition — and lithium is in competition with other materials, since newbattery chemistries could use less or no lithium.

thousand tonnes LCE

Figure 15.4: World lithium consumption, by demand source
2500

100%

2000

80%

1500

60%

1000

40%

500

20%

0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Electric vehicle
Other battery% of demand from EVs (RHS)

0%

Energy storage system
Other industrial

Notes: Projections are based on DISR assessment, informed by Wood Mackenzie research.
Source: Department of Industry, Science and Resources (2024), Wood Mackenzie (2024)

Both the US and the EU are shifting towards establishing higher tradebarriers against rising Chinese EVs exports (see Box 15.1), which could
raise the cost of EVs for consumers and slow adoption. In February 2024,
US President Biden claimed that ‘China’s policy could flood our market
with its vehicles’ and announced an investigation to study whether datacollection by Chinese EVs posed national security risks. In October 2023,

Resources and Energy Quarterly | March 2024

the European Commission initiated an anti-subsidy investigation into EU
imports of battery electric vehicles from China. The investigation may last
up to 9 months, after which the Commission may impose countervailingtariffs.
The US could tighten rules relating to the eligibility for EV tax credits underthe Inflation Reduction Act, with new proposed guidelines on Foreign
Entities of Concern (FEoC) released in early December 2023. Under the
proposed guidelines, to be eligible for the US EV tax credit, EV batteries
and battery components must not be sourced from a FEoC from 2024, andcritical minerals used within those batteries must not be sourced from a
FEoC from 2025. An entity is considered an FEoC if 25% or more of its
board seats, voting rights or equity interests, are held by or subject to thejurisdiction or direction of the governments of China, North Korea, Russia
or Iran. These proposed changes are likely to further bifurcate global
lithium and batteries trade.
Evolving battery chemistry could reduce lithium usage in batteries
Lithium manganese iron phosphate (LMFP) batteries (a type of LFP
battery) could see substantial uptake in EVs over the outlook period.
LMFP batteries replace some of the iron in the cathode of an LFP battery
with manganese, and could deliver 20% higher energy density overcurrent LFP batteries with the same lithium content. The existing
investment pipeline suggests LMFP cathode production could rise from15 thousand tonnes (kt) in 2023 to 200 kt by 2025. 200 kt would be about
20% of LFP cathode production in 2023, according to a 2023 report by the
Mitsui & Co. Global Strategic Studies Institute. This pipeline could expand
if LMFP batteries prove to be commercially successful, reducing lithium
demand over the outlook period.
Sodium-ion batteries use no lithium and are cheaper than lithium-ion
batteries. Current versions of sodium-ion batteries have low levels ofenergy density compared to lithium-ion batteries, as well as lower cycle
life. JAC Group, a Volkswagen backed Chinese company, began deliveryof the Yiwei 3, one of the first commercial sodium-ion powered cars, inJanuary 2024. The vehicle has a range of 230 km, and a higher154performance variant with a range of 300 km is expected to be launchedlater this year.
The history of battery technology suggests the performance of sodium-ion
batteries may improve, alongside other battery technologies. This would
allow sodium-ion batteries to follow a similar commercialisation pathway to
LFP batteries: targeting consumers who prefer a lower cost product withacceptable performance over higher cost and higher performance options(see Box 15.1).
The current investment pipeline for sodium-ion batteries production
facilities shows a relatively low level of investment, and production
capacity is therefore expected to remain small in the short term. However,there is substantial overlap in manufacturing processes between lithiumion and sodium-ion batteries, and manufacturers may thus leverage
existing supply chains to deploy sodium-ion battery production capacity.

15.3

World production

Australia’s share of global lithium extraction to fall as supply diversifies
Lithium extraction is primarily divided into extracting and evaporatingbrines (a groundwater rich in dissolved lithium, extracted fromunderground lakes), and hard rock mining of either spodumene or
lepidolite. Lithium lepidolites have higher costs than spodumene due totheir lower lithium content. From a refined product perspective, brines are
generally cheaper compared to hard rock mining. Evaporating brines
produces lithium chemicals (largely lithium carbonate) which require nofurther refining depending on the use case, while ores/concentrates fromhard rock mining must be processed at refineries to create lithiumhydroxide or lithium carbonate.
World lithium output in 2023 is estimated at 993 kt LCE, a 44% increase
from 2022. The largest increase came from Australia (see Australia
section), but Zimbabwe and China also saw strong increases, andproduction rose from a range of smaller producers. As a result, Australia’s
share of global lithium extraction fell from 48% in 2022 to 46% in 2023.

Resources and Energy Quarterly | March 2024

Global lithium extraction is projected to rise by 13% per year to 2.1 mt LCE
by 2029 (Figure 15.5). Australia is projected to add more lithium extraction
capacity than any other country between 2023 and 2029, but a strong risein production is also projected from other countries including China,
Zimbabwe and Argentina. As a result, Australia’s share of global lithium
extraction is projected to fall to 32% by 2029.

Figure 15.5: Global lithium extraction, 2023 vs 2029

2023

2029

0

500

Australia

China

1000
1500
thousand tonnes LCE
Chile Argentina Zimbabwe

2000
Canada2500
Other

Notes: Includes lithium extracted from brines or mines. Projections are based on DISR
assessment, informed by Wood Mackenzie research.
Source: Department of Industry, Science and Resources (2024), Wood Mackenzie (2024)

Argentina’s share of global lithium extraction is projected to rise from 4.3%
to 11% between 2023 and 2029. Argentina holds 12% of global lithium
reserves and generally has access to lower cost brine resources
compared to Australia’s hard rock resources. Early lithium extraction
investments favoured Australia over Argentina, due to Australia’s relatively
favourable investment climate. In 2021, the Argentine government’s“Investment Promotion Regime for Exports” relaxed capital controls toallow foreign investors to withdraw up to 60% of export earnings from155

Argentina, for purposes such as paying interest and dividends abroad.
This change triggered a wave of foreign investment into its lithium sector.
The Argentine Association of Mining Companies estimate that investmentin the sector reached US$1.5 billion in 2022.
Zimbabwe’s share of global lithium extraction rose from 0.7% to 4.5%
between 2022 and 2023. Over 2021 and 2022, Chinese companies
invested about US$1 billion in hard rock lithium projects in Zimbabwe,according to CRU Group. In 2022, Zimbabwe’s government banned thepractice of direct ore shipment, requiring ores to be processed into lithium
spodumene concentrates domestically before export. The commissioningof some of those processing plants saw Zimbabwe’s lithium extraction rise
sharply over 2023. Zimbabwe’s share of global lithium extraction is
projected to rise to 8.6% by 2029.
China’s share of global lithium extraction is projected to remain at 21%
between 2023 and 2029. China has access to a mixture of brine,
spodumene and lepidolite resources, and much of the increase in Chinese
production over 2023 was from high cost lepidolite mining. Chinese
lepidolite production is projected to stagnate during the outlook period.
However, the relatively high cost of lepidolite production makes theseprojects amongst the most vulnerable to falls in lithium prices, and there issubstantial risk that these lepidolite operations may close, especially ifother low-cost sources of lithium increase, or global lithium demand fails torise as quickly as forecast.
Production from Chile is also projected to rise over the outlook period, but
at a slower rate than other producers. Chile’s President announced plans
to nationalise the nation’s lithium industry in April 2023, which will likely
lead to a slowdown in investment in the sector. Chile’s share of global
lithium extraction is forecast to fall from 19% in 2023 to 14% in 2029.
Global supply of lithium hydroxide to diversify over the outlook period
Lithium ores and concentrates are processed into refined lithiumchemicals including lithium hydroxide (required for NMC batteries and canbe used for LFP batteries) and lithium carbonate (largely used in LFPResources and Energy Quarterly | March 2024

batteries). While brines produce lithium chemicals without requiring further
processing, it is common for carbonates produced by brines to be further
processed (at dedicated refineries) into hydroxide for use in NMC
batteries. The chemicals are used in the production of active materials thatare part of the battery’s cathode.
The global supply of refined lithium products is highly concentrated, with
China the dominant producer of refined lithium chemicals. In 2023, China’s
share of global production was 87% for lithium hydroxide and 66% forlithium carbonate (Figures 15.6-7). Other major refined lithium chemical
producers include Argentina and Chile, which extract lithium from brine.

Figure 15.6: Global lithium hydroxide production, 2023 vs 2029

2023

2029

0
China

200
Australia

400
600
thousand tonnes LCE
USASouth Korea

Chile

800
Indonesia

1000
Other

Note: Includes supply from refineries and from brines, and therefore partially overlap with
supply shown under lithium extraction. Projections are based on DISR assessment, informedby Wood Mackenzie research.
Source: Department of Industry, Science and Resources (2024), Wood Mackenzie (2024)

156

There is no currently substantial investment in refineries producing lithium
carbonate outside of China. As a result, China’s share of global lithium
carbonate production is expected to rise slightly to 67% by 2029.
Excluding carbonates produced by brines, all refinery production of lithium
carbonate is located in China in 2023, and more than 99% of refinery
production of lithium carbonate is projected to be in China by 2029.

Figure 15.7: Global lithium carbonate production, 2023 vs 2029

15.4

PricesLithium prices to stabilise as high-cost producers exit the market
Rapid adoption of EVs drove a record rally in lithium prices over 2021 and2022 (Figure 15.8). Lithium spodumene and hydroxide prices peaked in
November 2022, with spodumene price averaging US$6,108 a tonne andthe lithium hydroxide price averaging $75,393 a tonne. Compared toNovember 2020, prices for spodumene rose more than 15 times from anaverage of US$392 a tonne, while prices for hydroxide rose more than 8times from an average of US$9,045 a tonne.

Figure 15.8: China lithium price index, quarterly
700
600
Real price index

China’s share of global production for lithium hydroxide is projected to fallto 59% by 2029, due to investments in lithium refinery capacity outside of
China, particularly in Australia and the US. Australia is projected to rise to
15% of global lithium hydroxide production (see Australia section), while
US is projected to rise to 10%. A faster than expected adoption of LFP
batteries — at the expense of NMC batteries — could put pressure on
lithium hydroxide producers. The highest cost producers are lithium
carbonate to hydroxide conversion facilities in China and the US, andthese will likely be the most vulnerable if lithium hydroxide prices fall morethan expected.

500
400
300
200
100
0
Mar-172023

Mar-19 Mar-21
Spudumene China

Mar-23Mar-25 Mar-27 Mar-29
Lithium Hydroxide China

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). Index is normalized to March 2024
quarter as 100.
Source: Bloomberg (2024); Department of Industry, Science and Resources (2024)

2029

0

200
China

400
600
thousand tonnes LCE
Chile

Argentina

USA

800

1000

Indonesia

Note: Includes supply from refineries and from brines, and therefore partially overlap with
supply shown under lithium extraction. Projections are based on DISR assessment, informedby Wood Mackenzie research.
Source: Department of Industry, Science and Resources (2024), Wood Mackenzie (2024)

Resources and Energy Quarterly | March 2024

In 2023, a wave of investment in lithium production spurred on by the highprices of 2022 resulted in a sharp rise in global lithium supply. Lithium
demand was weaker than expected over the year, due to a slower than
expected EV adoption in the US and EU. This closed the market deficit
which drove the record prices in 2022. Prices fell over 2023 and havelargely returned to levels similar to those prior to the rally in 2021. In
February 2024, the spodumene price fell to an average of US$1,000 atonne, while the lithium hydroxide price fell to average US$13,350 a tonne.

157

Similarly, lithium hydroxide price is forecast to rise (in real terms) to about
US$18,330 a tonne by 2026, before falling to about US$13,890 a tonne by2029. Rising LFP battery adoption is projected to continue to put lithiumhydroxide prices under pressure (see Box 15.1). The carbonate discountover hydroxide slid through 2023 to average 13% over 2H 2023,
comparing to 21% over the same period in 2022.
The forecasts have a high degree of uncertainty, as new producers enter
the market around the world and uneven trends in EV demand growth.
Lithium prices could respond to unexpected developments in the pace ofEV adoption and in other emerging uses, changes in battery technology
and government policy, over the outlook period.

15.5

Australia

Australian lithium mine production grew strongly in 2023
Australian lithium spodumene export earnings fell 25% year-on-year in the
December quarter of 2023, driven by falling prices. The implied export
price of Australian spodumene (at an equivalent to spodumene with 6%lithium content basis) fell 39% year-on-year (Figure 15.9), less than whatfalls in the spot price would suggest. This is due to substantial parts ofAustralian lithium exports trading under offtake agreements at prices which
are typically priced with a lag of several months from the spot price. In
LCE terms, export volumes rose by 18% year-on-year, offsetting some ofthe price impact. 98% of spodumene exported from Australia over the
December quarter 2023 was to China.

Resources and Energy Quarterly | March 2024

Figure 15.9: Australian spodumene prices
7,000
6,000
5,000
US$/t

The lithium spodumene price is forecast to rise (in real terms) to about
US$1,360 a tonne by 2026, before falling to about US$1,090 a tonne by2029. The fall in prices over 2023 has driven a reduction in production(particularly by some high-cost producers). This is likely to support amodest recovery in the lithium prices over 2024 and 2025. From 2026,
alternate battery chemistries could place some price pressure on lithiumion EV batteries, resulting in a fall in lithium prices for the rest of theoutlook period.

4,000
3,000
2,000
1,000
0

Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
Australia spodumene spot FOB
Implied export priceNotes: The Australian export implied price is derived from export volumes and values
published by the ABS, adjusting export volumes to be equivalent to spodumene with 6%lithium content.
Source: S&P Global (2024); ABS (2024); Department of Industry, Science and Resources(2024)In the December quarter 2023, Australian lithium mine production isestimated to have risen 27% year-on-year to reach 119 kt LCE (1 kt oflithium spodumene with 6% lithium content is equivalent to 0.148 kt in LCE
terms). The bulk of this increase in production came from mines operatedby Mineral Resources, with the Wodgina mine ramping up its output over2023, following its opening in mid-2022. Mineral Resources have alsoacquired the Bald Hill mine. The mine was placed on care andmaintenance in 2019 when Alita Resources went into receivership. The
mine re-opened following the acquisition on 1 November 2023, with areported annual capacity of 150 kt of spodumene concentrate with 5.5%
lithium content. At other lithium mines in Australia, year-on-year changes
in production for the quarter were largely due to changes in ore grade.
Australian mine production to rise despite cut back at some mines
Lithium spodumene prices remain higher than the cash cost — a measureof marginal cost of production — at most major Australian lithium mines(Figure 15.10). Cash costs can indicate whether a mine is likely to reduce158

production or close, but other considerations will factor into potential
closures, such as floor prices in offtake agreements, a company’s ability toservice its loans and other liabilities, and costs associated with laying off aworkforce. High prices over 2022 and 2023 left most lithium miners with ahigh level of cash reserves, reducing the risk of any forced mine closures.

Figure 15.10: Reported cash cost of production over H2 2023

the Joint Venture remains committed to the completion of the CGP3
processing plant. This plant is expected to increase the mine’s capacity bya third from 2025 and will drive the bulk of Australia’s increase in lithium
mine production over the outlook period.

Figure 15.11: Aust. lithium mine and hydroxide production
700
thousand tonnes LCE

1600
1400
1200
US$/t

1000
800
600

600
500
400
300
200

400

100

200

0

0

Finniss

Mt Cattlin

Wodinga

Mt Marion Pilgangoora Greenbush

Notes: Cash costs is adjusted to spodumene with lithium content of 6% equivalent, using
company reported cash cost and spodumene lithium content for H2 2023, and converted to
US dollars with an exchange rate of 0.66.
Source: Company reports

Australian miners will be supported by the new proposed guidance on
foreign entity of concern from the US (see World Demand section), which
will exclude mines with some Chinese ownership from suppling lithium for
US EVs. Most Australian lithium mines will be eligible for export to US
markets under the proposed new rules.
Between 2023–24 and 2026–27, mine production is expected to rise by
about 10% per annum (Figure 15.11). Greenbushes, Australia’s largest
lithium mine and one of the lowest cost sources of lithium globally,
reported that production will be reduced over the first half of 2024, due tolower demand from Joint Venture partners. However, IGO announced that

Resources and Energy Quarterly | March 2024

2018-192020-212022-232024-252026-27
Spodumene
Lithium hydroxide2028-29

Source: Department of Industry, Science and Resources (2024)

Other mines in Australia are also expected to lift production. Forward
guidance from Mineral Resources suggests that Wodgina and Bald Hill willcontinue to ramp up production. Liontown’s Kathleen Valley mine reported
that construction of the mine was 74% complete at end 3023. A previously
anticipated A$760 million loan to Liontown could no longer be finalised due
lithium price falls. As a result, plans to expand Kathleen Valley from 300 kt
to 400 kt of spodumene concentrate with 6.0% lithium content have been
delayed. Westfarmers reported that Mt Holland had been successfullycommissioned at the start of 2024, and is expected to produce 100 kt oflithium spodumene (with 5.5% lithium content) in H1 2024.
Offsetting some of this increase is the suspension of Core Lithium’s
Finniss mine and production cutbacks at Mt Cattlin. The Finniss mine,
located in Northern Territory and the only lithium mine outside of Western

159

Total Australian production is projected to be largely stable between 2026–
27 and 2028–29. Identified ore reserves at Mt Cattlin suggest the mine
could only operate until 2028, while the Greenbush Tailing Retreatment
Project is also expected to end in 2028, as the project reaches end of life.
These reductions will offset supply from new projects.
Australian lithium refineries ramp up more slowly than expectedExport of lithium hydroxide from Australia rose above 1 kt in LCE terms forthe first time in the December quarter 2023 (1 kt of pure lithium hydroxide
is equivalent to 0.88 kt in LCE terms). IGO reported that production at the
Kwinana lithium refinery rose to 1.2 kt over H2 2023, a level below IGO’s
expectations with the refinery suffering from extended downtime over theperiod. A review of bottlenecks and processes at the refinery is underway.
Construction of trains 1 and 2 of the Kemerton lithium refinery werecompleted in 2022, with an expected capacity of 50 kt of lithium hydroxidea year. However, Albemarle reported that commissioning of these trains is
ongoing. Mineral Resources’ FY23 report noted that the commissioning ofTrain 1 is progressing — with the facility producing battery-grade lithiumhydroxide at an unspecified volume — while train 2 has not yet begun
production. Mineral Resources sold their 15% stake in the Kemerton
refinery to Albemarle on 18 October 2023.
Australian production of lithium hydroxide is forecast to reach 148 kt in
LCE terms by 2028–29, representing 22% of forecast Australian lithium
mine production in that year.
Record lithium export earnings to decrease as prices decline
Lithium export earnings (in real terms) are expected to fall from a record

Resources and Energy Quarterly | March 2024

$20 billion in 2022–23 to between $9-11 billion a year over the outlook
period (Figure 15.12). This is driven by the lower lithium prices projected.
Rising export volumes should offset some of the effects of lower prices.

Figure 15.12: Value of Australian lithium exports
25
20
2023-24 A$ billion

Australia, suspended production at the start of 2024 after operating forless than three months. Core Lithium’s reports to the ASX show the mine
has a cash cost more than twice of other lithium mines operating inAustralia over H2 2023. Mt Cattlin has the second highest cash cost inAustralia over the same period and has reported plans to reduce
production to cut costs.

15
10
5
0

2018-192020-212022-23
Spodumene

2024-252026-27
Lithium hydroxide2028-29

Source: ABS (2024), Department of Industry, Science and Resources (2024)

Revisions to the outlook
Since the December 2023 Resources and Energy Quarterly, the forecast
for Australia’s lithium earnings in 2024–25 has been revised down by 38%(from $15 billion to $9.5 billion in nominal terms). This is due to a lower
price forecast for lithium spodumene (see Prices section), partially offset
by higher production forecasts from stronger company forward guidance(see Australia section).
Compared with the March 2023 Resources and Energy Quarterly, theprojection for Australia’s lithium earnings has been revised down by 50%(from $22 billion to $10.4 billion in nominal terms) in 2027–28. This is dueto the lower price forecast for lithium spodumene (see Prices section),while the production projection for 2027–28 is largely unchanged.

160

Table 15.1: Lithium outlook
World

Unit

2023s

2024f

2025f

2026z

2027z

2028z

2029f

CAGR rProduction b

LCEa kt

1,019

1,322

1,540

1,744

1,892

2,017

2,261

14.2

DemandLCEa kt

1,001

1,219

1,419

1,635

1,841

2,050

2,266

14.6

– nominal

US$/t

3,730

1,139

1,379

1,416

1,369

1,261

1,210

-17.1

– real c

US$/t

3,812

1,139

1,353

1,361

1,289

1,162

1,092

-18.8

– nominal

US$/t

50,28815,87018,393

18,334

17,762

16,396

15,394-17.9– real c

US$/t

51,395

15,87018,05017,613

16,71915,112

13,892-19.6

Australia

Unit

2022–23s

2023–24f

2024–25f

2025–26z

2026–27z

2027–28z

2028–29z

CAGR r

LCEa kt

397

493

539

655

668

676

676

9.3

– Ore and concentrate (spodumene) h

kt

3,277

3,410

3,191

3,704

3,651

3,606

3,559

1.4

– Refined (lithium hydroxide) h

kt

-

22

74

120

143

160

169

n/a

– Ore and concentrate (spodumene)

A$m

20,069

9,774

5,774

6,994

6,742

6,260

5,781

-18.7

– Refined (lithium hydroxide)

A$m

-

478

1,883

2,966

3,478

3,629

3,566

n/a

– Total (nominal) d

A$m

20,194

11,3099,483

10,888

11,232

10,937

10,434-10.4– Total (real) d g

A$m

21,005

11,309

9,191

10,26910,335

9,819

9,138

-13.0

Spodumene priceLithium hydroxide price

Production– Mine (spodumene)
Export volume

Export value

Notes: a Lithium carbonate equivalent: this is a measure of the quantity of lithium metal in the product; b Refined lithium products include lithium hydroxide and lithium carbonate; c In current
calendar year US dollars; d Revenue from spodumene concentrate, lithium hydroxide and other lithium products; g In current financial year Australian dollars; h Quantities refer to the gross weightof the product without adjustments for lithium content: lithium content of sposdumene from Australian mines are generally, but not always, between 5 to 6 percent; f Forecast; r Compound annual
growth rate (per cent), for the period from 2023 to 2029 or for the equivalent financial years; s Estimate; z Projection.
Source: ABS (2024); Bloomberg (2024); Company reports; Department of Industry, Science and Resources (2024); Wood Mackenzie (2024)

Resources and Energy Quarterly | March 2024

161

Principal markets for Australia‘s resource and energy exports

Table 16.1: Principal markets for Australia’s total resource and energy exports
Unit

2018–192019–20

2020–212021–222022–23

Share(2022-23)

China

$m

111,167

126,595

148,787

149,538

165,086

35%

Japan

$m

50,60545,53934,22375,941

98,95621%

Other Asia a$m34,64829,54633,491

46,261

51,43911%

Korea, Rep. of$m21,74621,42323,042

43,21045,182

10%

India

$m

14,427

9,449

11,612

26,41821,265

5%

EU28

$m

11,616

18,633

15,546

13,711

14,3893%

Other b$m

35,86238,304

41,793

66,61270,020

15%

Total

$m

280,071289,489

308,494

421,691

466,338-

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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Table 16.2: Principal markets for Australia’s iron ore exports
Unit

2018–192019–20

2020–212021–222022–23

China$m63,46784,786

124,820

108,307

104,777

Japan

$m

5,757

7,038

9,080

10,257

8,073

Korea, Rep. of

$m

4,667

6,222

9,033

8,293

6,932

Taiwan

$m

1,768

1,876

3,070

2,793

1,974

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

77,553102,861

152,975

132,489

124,131

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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

163

Table 16.3: Principal markets for Australia’s LNG exportsa
Unit

2018–192019–20

2020–212021–222022–23Japan$m

21,21019,928

11,64924,80034,508China$m17,482

16,277

11,377

21,42019,833

South Korea

$m

5,307

5,161

3,343

11,47318,310

Taiwan

$m

2,343

2,593

2,237

7,521

12,070Singapore

$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

2,231

Total

$m

49,72747,52530,47770,571

92,237

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 (2024) International Trade in Goods and Services, 5368.0; International Trade Centre (2024); Department of Industry, Science and Resources (2024)

Table 16.4: Principal markets for Australia’s thermal coal exports
Unit

2018–192019–20

2020–212021–222022–23Japan$m

11,630

8,347

7,009

23,81937,712

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

5,485

Total

$m

25,95820,376

16,00946,25865,500Notes: 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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

164

Table 16.5: Principal markets for Australia’s metallurgical coal exports
Unit

2018–192019–20

2020–212021–222022–23India$m

11,242

7,489

7,580

20,88917,078

Japan

$m

7,657

6,084

4,744

14,131

15,642

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

15,07013,101

Total$m

43,63734,24523,187

67,58861,922

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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Table 16.6: Principal markets for Australia’s gold exports
Unit

2018–192019–20

2020–212021–222022–23

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

26,10523,20024,406

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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

165

Table 16.7: Principal markets for Australia’s lithium exports
Unit

2018–192019–20

2020–212021–222022–23

China

$m

na

na

na

4,725

19,788Belgium

$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

20,069Notes: 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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Table 16.9: Principal markets for Australia’s copper exports
Unit

2018–192019–20

2020–212021–222022–23

China

$m

3,606

3,787

2,747

1,958

2,351

Korea, Rep. of

$m

683

651

1,315

1,375

1,410

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

6,959

Total

$m

9,770

10,208

11,44012,12812,262

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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

166

Table 16.10: Principal markets for Australia’s alumina exportsa
Unit

2018–192019–20

2020–212021–222022–23

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 (2024) International Trade in Goods and Services, 5368.0; International Trade Centre (2024); Department of Industry, Science and Resources (2024)

Table 16.11: Principal markets for Australia’s aluminium exportsa
Unit

2018–192019–20

2020–212021–222022–23

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

Indonesia

$m

120

95

111

164

143

Other b

$m

433

546

769

1,278

1,083

Total

$m

4,166

3,692

3,763

5,710

5,281

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 (2024) International Trade in Goods and Services, 5368.0; International Trade Centre (2024); Department of Industry, Science and Resources (2024)

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167

Table 16.12: Principal markets for Australia’s nickel exports
Unit
China

$m

India

$m

Other b

$m

Total

$m

2018–192019–20

2020–212021–222022–23

339

479

307

244

572

0

0

0

3

60

2,110

2,443

2,898

4,158

4,324

2,450

2,922

3,204

4,405

4,956

Note: Department of Industry, Science and Resources estimates based on International Trade Centre data and company reporting; 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 (2024) International Trade in Goods and Services, 5368.0; Department of Industry, Science and Resources (2024)

Resources and Energy Quarterly | March 2024

168

AppendicesAppendix A
Definitions and classifications
A.1

Exchange rates

In this report, the AUD/USD exchange rate (Australian dollar relative to
the US dollars) is based on the median of economic forecasters at the timethat the report is prepared. The source is the Bloomberg survey of
economic forecasters.
World commodity prices are typically denominated in US dollars, andexchange rate movements can have a significant effect on the actual
outcomes of commodity prices and export earnings. A change in the valueof the US dollar against other floating international currencies caninfluence movements in world resources and energy prices. A change in
the Australian dollar against the US dollar will impact on export earnings
for domestic commodity exporters and producers. There is substantial
uncertainty surrounding any exchange rate forecast, with changes toexchange rates influenced by changes in financial market sentiment,
sometimes resulting in strong volatility.

A.2

Conversion to real dollars

Nominal values and prices are converted to real dollars using Australianand US consumer price indexes (CPI). The Australian and US CPI
forecasts are based on the median of economic forecasters at the timethat the report was prepared. The source is the Bloomberg survey of
economic forecasters.

Resources and Energy Quarterly | March 2024

A.3

Time periods

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‘projection’ refer to different periods in the future. It is important todistinguish between different future time horizons, as factors affecting
production, consumption and prices in the short-term differ from factors
affecting these components in the medium to long-term. Forecasts also
become increasingly imprecise over longer time horizons, due toincreased risk and uncertainty. For these reasons, the Department ofIndustry, Science and Resources’ Office of the Chief Economist(DISR OCE) uses different terminology to distinguish between short-term
forecasts and medium to long-term projections, as outlined in Table A2.
Table A1: OCE terminology for different time periods/horizons
PeriodYears

Terminology

Historical

Time period has passed but
complete data for the period is not
yet available

Estimate

Short-term

1 to 2 years

Forecast

Medium-term

3 to 5 years

Projection

Long-term

Beyond 5 years

n/aSource: Department of Industry, Science and Resources (2022)

170

A.4

Commodity classifications

The DISR OCE defines exports for each commodity by a selected set of 8digit Australian Harmonised Export Commodity Classification (AHECC)
codes. Where possible, the choice of AHECC codes is based on alignment
with international trade data, to ensure that direct comparisons can be
made. For example, groupings for various commodities are aligned withclassifications 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 ofMetal Statistics.

In this report, benchmark prices and Australian production and exports are
forecast for 21 commodities, as shown in Table A2. In estimating a total forAustralia’s resources and energy exports, the remaining commodities,
defined as ‘other resources’ and ‘other energy’, are forecast as a group.

Table A2: Resources and energy commodities groupings and definitions
Resources (non-energy)

EnergyDefinition

Resource commodities are non-energy minerals andsemi-manufactured products produced from nonenergy minerals

Energy commodities are minerals and petroleum
products that are typically used for power generation

Australian Harmonised Export Commodity
Classification (AHECC) chapters

25 (part); 26 (part); 28 (part); 31 (part); 73 (part); 74;
75; 76; 78; 79; 80; 81

27 (part)

Commodities for which data is published, forecasts are
made and analysed in detail in this report

Aluminium; alumina; bauxite; copper; gold; iron ore;
crude steel; nickel; zinc, lithium

Crude oil and petroleum products; LNG; metallurgicalcoal; 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 | March 2024

171

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

BarrelBcm

Billion cubic metres

BenchmarkA 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

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Conventional gas

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

COVID-192019 Novel Coronavirus

CPB

CPB Netherlands Bureau for Economic Policy Analysis

CPI

Consumer Price Index — measures quarterly changes in the price of a basket of goods and services which account for a high proportion of
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

Economic growth

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
nominal or real gross domestic product (GDP).

EIAThe 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 vehiclef

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.

HCC

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

JCC

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

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

NEVNew 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.

PCI

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

PCI

Pulverised coal injection — a process used in blast furnace operationsPM

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.

PPP

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

RoW

Rest of worlds

Estimate — Incomplete data or subject to revision

Shale gas

Natural gas found in shales

SDR

Special drawing right

SHFE

Shanghai Futures Exchange

SSCC

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
quality and more impurities.

TariffA 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 pricez

Projection a five year outlook

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177About this edition
The Resources and Energy Quarterly uses IMF economic growth forecasts
as the basis of its world growth forecasts.

The Resources and Energy Quarterly (REQ) contains forecasts for thevalue, volume and price of Australia’s major resources and energy
commodity exports.
The ‘medium term’ (five year) outlook is published in the March quarter
edition of the Resources and Energy Quarterly. Each June, September
and December edition of the Resources and Energy Quarterly features a‘short term’ (two year) outlook for Australia’s major resource and energy
commodity exports.
Underpinning the forecasts/projections contained in the Resources andEnergy Quarterly is the outlook for global resource and energy commodity
prices, demand and supply. The forecasts/projections for Australia’s
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 andprojections by estimating the impact on Australian producers and the valueof their exports.

In this report, commodities are grouped into two broad categories,
referred to as ‘resources’ and ‘energy’. ‘Energy’ commodities comprise
metallurgical and thermal coal, oil, gas and uranium. ‘Resource’commodities in this report are all other mineral commodities.
Unless otherwise stated, all Australian and US dollar figures in this report
are in nominal terms. Inflation and exchange rate assumptions areprovided in tables 2.1 and 2.2 in the Macroeconomic outlook chapter.
Information in this edition of the Resources and Energy Quarterly iscurrent as of 19 March 2024.

Resources and Energy Quarterly publication schedule
Publication

Expected release date

Outlook period final year

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

31 March 2025

Australian data: 2029–30
World data: 2030

June 2024

March 2025
Source: Department of Industry, Science and Resources (2023)

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