Aussie mining exports rocked by war, tariffs and slowdown

Australia’s resources export earnings will plunge by $33bn despite surging demand for gold, according to government forecasts warning global shocks threaten commodity demand and prices.

Prime Minister Anthony Albanese at the Rio Tinto Dampier Port in Western Australia during the election campaign. Picture: Jason Edwards/NewsWire

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Australia’s resources export earnings will plunge by $33bn within two years despite surging demand for gold, according to government forecasts warning soft global economic growth, conflicts and trade wars threaten international commodity prices and demand.

Amid weaker iron ore, coal and LNG export earnings, mining companies are monitoring volatility driven by China’s weak construction sector, Donald Trump’s trade tariffs, slower-than-expected global disinflation, rising bond yields, higher oil prices and geopolitical tensions.

With safe-haven assets in demand, gold is expected to surpass metallurgical coal to become Australia’s third-biggest resource export earner in 2025-26, rising by $10bn to $56bn. Demand is also projected to rise for Australian copper, uranium and lithium.

The Resources and Energy Quarterly Outlook report, released on Monday by the Department of Industry and Resources’ Office of the Chief Economist, says export earnings would decline from $385bn to $369bn in 2025-26, before falling to $352bn in the following 12 months.

Risks identified in the report include “ongoing trade tensions among the US and its major trading partners; a slower-than-expected global disinflation path; extended contraction in China’s property sector; a further rise in geopolitical tensions, and; an increase in global bond yields”.

The giant Super Pit or Fimiston Open Pit, the largest open pit gold mine of Australia, in Kalgoorlie, Western Australia. Gold is expected to surpass metallurgical coal to become Australia’s third-biggest resource export earner in 2025-26. Picture: iStock

Iron ore export earnings, which along with coal have propped up state and federal budgets, are forecast to fall by $11bn to $104.8bn in the next financial year before reducing by a further $8.3bn in 2026-27. Despite the fall, iron ore earnings still account for 25 per cent of all commodities.

Lithium exports, which have been undermined by China fuelling oversupply of the key electric vehicle component and working with other countries to distort global markets, are expected to record minimal improvement.

While global EV sales grew last year due to higher adoption rates in China, the European and US markets remain weak.

The quarterly report said Argentina, Australia and China were contributing to “short-term global lithium oversupply”, and revealed “the global oversupply of mined lithium could lead to further mine closures”.

“Substantial growth in new global lithium supply and new advanced recovery techniques in China have created near-term oversupply. Lithium oversupply is continuing to put downward pressure on feedstocks such as spodumene concentrate, Australia’s major lithium export product to China,” the report said.

Global nickel prices remain weak with rising global trade barriers and continued growth in new low-cost supply putting “downward pressure on prices added to already high exchange inventories”.

“Nickel demand increased by nearly 6 per cent year on year in the March quarter 2025, driven by stronger electric vehicle and stainless steel production. However, increases in Indonesia’s supply, the world’s biggest producer, and slowing global industrial production continues to swamp EV and stainless steel demand growth.”

With Australia the fifth-largest exporter of refined copper, the report says export earnings would hit $13.2bn in 2024-25, up from $11.4bn in 2023-24. Copper exports will rise to $18.2bn in 2026-27 due to increased supply and higher prices.

Higher copper demand is being driven by “construction, EVs, data centres and broader investment in low-emission technologies”.

“Copper supply is struggling to keep pace with demand as new mines are slow to develop and trade barriers impact on copper scrap supply,” the report said.

Iron ore export earnings have been impacted by Chinese plans to reduce steel production, weather disruptions and uncertainty fuelled by trade barriers. Iron ore miners are also under threat from new supply coming out of Brazil and Africa.

Coal is unloaded from a ship at the coal terminal of Lianyungang Port, in China’s eastern Jiangsu province. Picture: AFP/China OUT

As China and India ramp up domestic thermal coal production, Australian export earnings will fall from record highs. Most of Australia’s thermal coal, of which 80 per cent is sent overseas, is exported to Japan and China.

Metallurgical coal exports remain stable, with Australia maintaining its position as the biggest global exporter of the resource used to make steel. About 153 million tonnes of coking coal was shipped offshore last year.

Amid a global push towards net zero and the US moving to lift nuclear energy output fourfold by 2050, uranium exports are forecast to remain strong. The reopened Honeymoon mine is ramping up production, exploration spending is rising, and growing uranium demand is expected to drive higher prices and volumes.

“Uranium is primarily used to generate electricity in nuclear reactors, construction rates have risen over the last decade to meet rising low carbon energy demand. Of the reactors currently under construction around the world, over half are based in either India or China,” the report said.

About 80 per cent of LNG exports from Australia, which ranks alongside the US and Qatar among the world’s top three exporters, are sold to Japan, China and South Korea, with around three-quarters sold on long-term contracts.

The outlook report said LNG export earnings would ease as prices drop, that large growth in supply is expected from the US and Qatar, and that exploration expenditure has eased.

Across the resources and energy sector, exploration “has softened” despite capital expenditure continuing to rise. The sector contributes 11.4 per cent of GDP, makes up about two-thirds of Australia’s total merchandise exports and directly employs more than 300,000 people.

“Greenfield exploration activity has continued to account for much of the weakness in exploration, with spending falling to a seven-year low and drilling metres falling to an almost nine-year low,” the report said.

“This reflects a continuation of recent trends in exploration companies (and investors) prioritising less risky brownfield projects, as well as continued price weakness for nickel and lithium.”

Resources Minister Madeleine King said income from resources and energy exports would continue retreating from record highs over the next two years. Amid the fallout from trade tensions and conflicts in the Middle East and Ukraine, Ms King said, higher prices for gold and larger exports of copper and lithium would “partly offset the impact of lower prices for iron ore, coal and LNG”.