Canberra, Australia — MININGREVIEW.COM — 03 March 2009 – Australia is forecasting a strong rise in iron ore production and a 10% jump in copper output in the year to June 2010, even after factoring in a more prolonged economic slump that has already triggered supply curbs.
In its first forecasts for the coming financial year here today, the Australian Bureau of Agricultural & Resource Economics (ABARE) also added that production of coking coal was expected to remain largely unchanged after a downward revision.
At a time when many commodity producers are cutting back production quickly to keep pace with tumbling demand as the world falls into a deep recession, Reuters quotes ABARE forecasts as suggesting that some new projects are too advanced to stop, adding pressure to metal and ore prices that have already halved or more.
This might be especially true of iron ore, said DJ Carmichael & Co mining analyst James Wilson, citing recent expansions by Australia’s top three producers, BHP Billiton, Rio Tinto and Fortescue Metals, as well as smaller companies Atlas Mining and BC Iron.
Total earnings from Australia’s commodity exports – a major engine of the economy – are forecast to fall 17% to US$103 billion (R1 billion) in 2009/10, following an estimated 33% surge to US$130billion (R1.3 billion) in 2008/09 after big leaps in the prices of iron ore and coal, as well as oil and gas.
Of the major commodities, metallurgical coal looks the worst affected by the economic downturn that has forced miners, such as Rio, Xstrata Plc and Anglo American Plc to shut down mines in Australia, throwing hundreds of miners out of work.
ABARE cut its forecast of metallurgical coal output in the year to June to 135.4 million tonnes from a December forecast of 146.6 million tonnes, as the global downturn hit steelmakers, but sees output stabilising at 136.3 million tonnes next year.
Iron ore output for 2008/09 was revised up to 340 million tonnes from a December forecast of 327 million tonnes, and is forecast to climb to 367.7 million tonnes in 2009/10 as new miners continue to crank up production, hoping to win sales in China, one of the few major economies still managing to grow.