Resources
and Energy
Quarterly
December quarter 2011
BREE 2011, Resources and Energy Quarterly, December Quarter 2011, BREE, Canberra,
13/12/2011.
© Commonwealth of Australia 2011
This work is copyright, the copyright being owned by the Commonwealth of Australia. The
Commonwealth of Australia has, however, decided that, consistent with the need for free
and open re-use and adaptation, public sector information should be licensed by agencies
under the Creative Commons BY standard as the default position. The material in this
publication is available for use according to the Creative Commons BY licensing protocol
whereby when a work is copied or redistributed, the Commonwealth of Australia (and any
other nominated parties) must be credited and the source linked to by the user. It is
recommended that users wishing to make copies from BREE publications contact the Chief
Economist, Bureau of Resources and Energy Economics (BREE). This is especially important
where a publication contains material in respect of which the copyright is held by a party
other than the Commonwealth of Australia as the Creative Commons licence may not be
acceptable to those copyright owners.
The Australian Government acting through BREE has exercised due care and skill in the
preparation and compilation of the information and data set out in this publication.
Notwithstanding, BREE, its employees and advisers disclaim all liability, including liability for
negligence, for any loss, damage, injury, expense or cost incurred by any person as a result
of accessing, using or relying upon any of the information or data set out in this publication
to the maximum extent permitted by law.
ISSN 978-1-921812-89-7 (Print)
ISSN 978-1-921812-88-0 (Online)
Vol. 1, no. 2
From 1 July 2011, responsibility for resources and energy data and research was transferred
from ABARES to the Bureau of Resources and Energy Economics (BREE).
Postal address:
Bureau of Resources and Energy Economics
GPO Box 1564
Canberra ACT 2601 Australia
Phone: +61 2 6276 1000
Email: info@bree.gov.au
Web: www.bree.gov.au
Foreword
Resources and Energy Quarterly is an important publication of the Bureau of Resources and
Energy Economics. It provides an overview of the global macroeconomic situation; the most
up-to-date global production and consumption data; forecasts for Australian volumes and
values for key resources and energy commodities for 2011–12; reviews of key topics and
issues of relevance to the sector; and detailed statistical tables on world production,
consumption, stocks and trade in key commodities as well as detailed information on
Australian production and exports over several years.
In the review section of Resources and Energy Quarterly there is an up-to-date analysis of
the euro crisis and its economic implications; a historical review of global oil prices,
production and reserves; the impact of gold on the Australian economy since the first gold
rush in the 1850s; and an economic analysis of trends in energy productivity and intensity in
the Australian grains industry.
The good news for Australia is that there is continued year-on-year growth in the total value
of Australian exports of resources and energy commodities. For 2011–12, BREE projects that
the total value of Australian exports of energy minerals and metals will exceed A$200 billion,
or a 15 per cent increase over 2010–11. Despite these projected record export earnings,
spot prices of key bulk commodities—iron ore and metallurgical coal—have weakened in the
past quarter, and there are real downside risks to the global economy associated with the
euro sovereign debt and liquidity crisis. For those interested in longer term forecasts, our
next issue of Resources and Energy Quarterly that will be released in March 2012 will
provide projections out for the next five years.
Quentin Grafton
Executive Director/Chief Economist
Bureau of Resources and Energy Economics
3
Contents
Foreword ................................................................................................................................... 3
Contents .................................................................................................................................... 4
Acronyms and abbreviations ..................................................................................................... 5
Macroeconomic outlook and energy and minerals overview ................................................... 6
Energy outlook ........................................................................................................................ 14
Oil and gas ........................................................................................................................... 14
Thermal coal ........................................................................................................................ 21
Resources outlook ................................................................................................................... 26
Steel and steel-making raw materials ................................................................................. 26
Gold ..................................................................................................................................... 34
Aluminium ........................................................................................................................... 38
Copper ................................................................................................................................. 43
Nickel ................................................................................................................................... 47
Zinc ...................................................................................................................................... 53
Reviews.................................................................................................................................... 57
Sovereign debt crises, the real economy and the euro zone crisis ..................................... 58
Global oil prices, reserves, production and intensity: An overview .................................... 63
Gold and Australia’s economic development ..................................................................... 69
Energy productivity analysis of the Australian grain industry ............................................. 73
Statistical tables....................................................................................................................... 79
4
Acronyms and abbreviations
ABARES
Australian Bureau of Agricultural and Resource Economics and Science
ABS
Australian Bureau of Statistics
BREE
Bureau of Resources and Energy Economics
FOB
free on board
GDP
gross domestic product
IEA
International Energy Agency
IMF
International Monetary Fund
LME
London Metal Exchange
LNG
liquefied natural gas
mb/d
millions of barrels per day
MBtu
million British thermal units
Mt
million tonnes
OECD
Organisation for Economic Co-operation and Development
OPEC
Organisation of the Petroleum Exporting Countries
PPP
purchasing-power parity
RBA
Reserve Bank of Australia
SAIL
Steel Authority of India
TWI
trade-weighted index
UNCTAD
United Nations Conference on Trade and Development
WTI
West Texas Intermediate
5
Macroeconomic outlook and energy and
minerals overview
Nhu Che, Thuy Pham and Quentin Grafton
The global economy: slowing growth and rising risks
There are a number of downside risks to the global economy in the 2011. Despite an upward
revision of economic growth in the US, unemployment remains high and the ongoing
sovereign debt crisis in the euro zone could generate substantial negative spillovers to the
real economy, and not just to those in Europe. The large volatility in financial markets in
recent months is an indication of the uncertainty about near-term economic prospects.
The global economy has recovered since the global financial crisis, although occurring at
different speeds across regions. While the expectation is for growth in major advanced
economies to be slow, the emerging economies of Asia are expected to continue to grow
strongly. This is promising for Australia’s export prospects, as most of Australia’s major
trading partners are in Asia.
At the start of 2011, forecasts for economic growth were for a slight moderation in the
speed of the global economic recovery relative to 2010. However, the March 2011
earthquakes and tsunami in Japan that affected global supply chains, high energy prices, and
weakening consumer confidence in some developed economies has had a negative impact
on short-term growth prospects.
Growth in Western Europe has faltered in 2011 with confidence eroded by the escalating
concerns about sovereign debt. Elsewhere, economic activity remained robust. Most of Asia
and Latin America has had strong growth in 2011, with their primary concerns being about
rising inflation and not lagging growth. The outlook for major developed economies in 2012
is for a continued positive, but weak and ‘bumpy’ growth. Prospects for emerging market
economies are much better, but are becoming less certain, especially for those countries
that are highly reliant on export-led growth.
Less certain future growth prospects associated with the sovereign debt crisis in Europe has
generated very large fluctuations in financial markets in the second half of 2011. This
volatility has led some analysts to expect further weakening in the global economy due to
sharp falls in consumer and business confidence. For a more in-depth analysis of the euro
zone crisis, please see the review article Sovereign debt crises, the real economy and the
euro zone crisis.
In Asia, recent economic data has been mixed, although broadly consistent with the modest
slowdown that some authorities in the region have been trying to achieve in order to
contain inflationary pressures. India and China, in particular, are trying to reduce inflation
and their actions are expected to moderate slightly their very high growth rates.
Figure 1:
World economic growth, 1996 to 2012
Please refer to page 7 of the Resources and Energy Quarterly – December quarter 2011 PDF
version.
6
Economic prospects in Australia’s major export markets
Non-OECD economies
In the second half of 2011 China’s economic growth has slowed. The largely governmentengineered moderation is expected to provide more stable and sustainable growth for the
economy throughout 2012, although the economy is facing increasingly complex reform
challenges. In 2012, China’s GDP growth is projected to ease to around 9 per cent under the
combined effect of monetary-tightening economic policies and continued weakness in
advanced economies that has weighed negatively on exports growth. To help reduce
inflation the Chinese Government increased interest rates five times in the past year and
also raised the reserve ratio requirement for banks on several occasions. Industrial
production growth is also projected to slow. Despite this slight contraction in growth, China
is still expected to continue its major role in both the supply and demand side of the global
economy.
India’s economic outlook has improved in recent months, reflecting an increase in
manufacturing output that has strengthened private consumption. However, economic
growth is still expected to slow to 7.5 per cent in 2012. In part, this is because of an expected
continuation of a monetary policy response to target relatively high rates of inflation.
Near-term growth in the ASEAN countries (including Indonesia, Malaysia, Philippines,
Thailand, and Vietnam) is assumed to be around 5.5 per cent in 2011 and 2012 due to robust
domestic demand—in particular, strong investment—which should offset any slowdown in
export growth.
In Asia overall, growth has moderated slightly, reflecting a general tightening of
macroeconomic policy over the past year or so in response to increasing inflation in the
region. After recovering strongly from the global recession, growth in the newly
industrialised economies of South Korea, Singapore, Hong Kong and Taiwan is expected to
slow due to weaker export demand and tighter fiscal positions.
OECD economies
Economic growth in OECD economies is assumed to increase by 1.7 per cent in 2012, up
from 1.4 per cent in 2011. Recovering from the damage caused by the March 2011
earthquakes and tsunami, Japan’s industrial production is now growing rapidly, business
sentiment has improved sharply, and household spending is rebounding. Japan’s gross
domestic product (GDP) is assumed to grow by 2.3 per cent in 2012.
In the euro area, the outlook remains weak. Growth is expected to moderate as an easing in
world growth slows export trade. Fiscal consolidation across the region which started in
2011 is likely to weigh on the labour market and household consumption, and tight credit
conditions are likely to continue to restrain investment. The recovery is expected to remain
sluggish in 2012.
The pace of growth in the 17 euro zone economies has slowed in the second half of 2011,
and the near-term outlook for the European Union (EU) as a whole remains highly uncertain.
In Greece, Ireland, Italy, Portugal, and Spain, fiscal tightening, banking system issues,
reduced consumer and business confidence and high unemployment are weighing on
domestic demand. Further, slowing economic growth in the core northern euro area
7
economies, such as Germany, is likely to make economic conditions in the southern
economies more difficult in 2012.
The German economy, driven by export-led growth, is assumed to have the strongest
economic growth rate in Western Europe, growing by 2.7 per cent in 2011. However, more
recent data indicates that there has been a decline in business confidence. Retail sales in
Germany fell by 2 per cent over the September quarter 2011, and forward-looking indicators
of growth in exports and in machinery and equipment investment have moderated. This
recent data highlights the downside risks of the forecasts for Europe, as they are highly
dependent on German economic growth.
In 2011, economic growth in the US is assumed to be modest at 1.5 per cent, before
recovering to 1.8 per cent in 2012. However, modest consumer spending, weak jobs growth
and continued strains in the housing market pose risks for the economy. Assumed very low
nominal interest rates over the next two years are expected to provide a boost to
investment over the short term. Despite the recent pick-up in growth, GDP has only just
returned to its pre-crisis peak.
Table 1:
Key macroeconomic assumptions
2009
2010
2011 a
2012 a
%
%
%
%
%
%
%
%
%
%
–3.4
–3.5
–6.3
–4.1
–5.1
–2.7
–4.9
–5.2
0.3
–2.1
3.0
3.0
4.0
1.8
3.7
1.5
1.4
1.3
6.2
1.7
1.4
1.5
–0.5
1.5
2.7
1.7
1.1
0.6
3.9
2.0
1.7
1.8
2.3
1.0
1.3
1.4
1.6
0.3
4.4
3.8
Developing countries
– non-OECD Asia
South-East Asia b
China c
Chinese Taipei
Singapore
India
– Latin America
Russian Federation
Ukraine
Eastern Europe
%
%
%
%
%
%
%
%
%
%
%
4.2
6.9
1.7
9.2
–1.9
–0.8
7.0
–1.7
–7.8
–14.8
–3.6
7.8
9.6
6.9
10.3
10.9
14.5
9.0
6.1
4.0
4.2
4.2
6.8
8.3
5.3
9.5
5.2
5.3
7.8
4.5
4.3
4.7
4.3
6.5
8.1
5.6
9.0
5.0
4.3
7.5
4.0
4.1
4.8
2.7
World d
%
–0.5
5.0
3.8
3.8
Industrial production
OECD
%
–14.1
7.9
3.1
4.1
Inflation
United States
%
–0.4
1.6
3.4
2.7
Interest rates
US prime rate e
%
3.3
3.3
3.3
3.3
World
Economic growth
OECD
United States
Japan
Western Europe
– Germany
– France
– United Kingdom
– Italy
Korea, Rep. of
New Zealand
8
a BREE assumption. b Indonesia, Malaysia, the Philippines, Thailand and Vietnam. c Excludes Hong
Kong. d Weighted using 2010 purchasing-power-parity (PPP) valuation of country GDPs by the IMF. e
Commercial bank prime lending rates in the US.
Sources: BREE; Australian Bureau of Statistics; IMF; OECD; RBA.
Demand for mining commodities
Over 2011–12, demand for mineral and energy commodities is projected to grow strongly.
Demand growth will be supported mainly from China, India and other non-OECD economies.
Consumption of raw materials is forecast to be driven by increasing household incomes,
coupled with industrial and housing construction growth, and strong demand for consumer
durables and transport infrastructure.
Demand in the OECD is expected to be led by Japan in response to the rebuilding of
infrastructure following the March 2011 earthquakes and tsunami. Consumption demand in
large export-oriented EU economies, such as Germany, will depend on efforts to remediate
public debt and liquidity concerns in the region as a whole. Faster convergence to trend
economic growth in the US is forecast to boost energy and minerals demand in that
economy, but its positive impact on resource commodities will depend on the scale of the
recovery in its housing and labour markets.
Supply for mining commodities
In 2012, world production of most minerals and energy commodities is forecast to increase,
relative to 2011. Higher production across most commodities reflects relative high prices in
2011 that have provided an incentive for suppliers to increase output. Production increases
have been forecast for uranium (up 12 per cent), nickel (up 8 per cent), aluminium (up 8 per
cent), steel (up 6 per cent), copper (up 3 per cent) and gold (up 3 per cent). In addition,
world trade in 2012 is forecast to increase by 7 per cent for iron ore and 5 per cent for coal.
Australia’s economic prospects
The Australian economy is relatively strong compared with other developed economies. Real
GDP in Australia grew by 1.8 per cent in 2010–11 and is assumed to grow by 4 per cent in
2011–12. The relatively moderate economic growth in 2010–11 stemmed from the negative
affect of flooding in Queensland and Northern NSW, a moderate growth rate in the nonmining sectors, and below trend productivity growth. Offsetting the negative effects of these
factors has been an upswing in household spending on some key items, such as motor
vehicles.
Recent economic data suggest that the mining-related sectors of the economy have
continued to perform strongly in terms of both volumes of exports and capital investment
relative to other sectors. Overall, domestic demand is expected to continue to grow at a
robust pace, although a relatively high exchange rate, the winding back of government
stimulus spending programs, and changes in household spending and borrowing behaviour
continue to have a negative effect on some industries. As in many other countries, recent
volatility in global financial markets has resulted in noticeable declines in measures of
consumer and business confidence since July.
9
Table 2:
Key macroeconomic assumptions for Australia
Australia
Economic growth
Inflation
Australian exchange rates
US$/A$
TWI for A$ b
2008–09
% 1.4
% 3.1
0.75
60.0
2009–10
2.3
2.3
2010–11
1.75
3.1
2011–12 a
4.0
3.3
0.88
69.0
0.99
74.0
1.00
75.0
a BREE assumption. b Base: May 1970 = 100.
Sources: BREE; Australian Bureau of Statistics; IMF; OECD; RBA.
In November 2011 the Australian dollar depreciated against the US dollar, trading at US101c
and TWI 75 compared with around US107c and TWI 77 in early June 2011.
Over 2011–12, the Australian dollar is assumed to average around US100c and TWI 75. A key
driver of the Australian exchange rate in 2012 is recent interest rates cuts by the Reserve
Bank of Australia that will dampen demand for Australian dollars. Should the euro crisis
worsen, this may also have negative impacts on the ability of Australian banks to borrow on
overseas markets, and may reduce capital inflows that would tend to lead to a depreciation
of the Australian dollar. Demand for Australia’s exports in Asia, and market expectations
about minerals and energy commodity prices, are also factors that will influence the value of
the Australian dollar in 2011–2012.
The Australian mining industry
In 2010–11, the gross value added produced by the mining industry was approximately
$95.5 billion. Of this total, the mining sector (excluding services to mining) contributed $86.4
billion while the exploration and mining support services generated about $9.2 billion (see
Figure 2).
Figure 2:
Australian mining industry gross value added, chain volume measures,
1990–91 to 2010–11
Please refer to page 12 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Over the past decade, there has been a significant increase in the value of investment in the
mining sector. In 2010–11, investment in new capital expenditure in the mining sector was
valued at $47 billion. This compares with inflation-adjusted figures of $39 billion in 2009–10
and $7.6 billion a decade ago. Much of the current investment is underpinned by liquefied
natural gas (LNG), iron ore and coal projects.
Australian Bureau of Statistics data indicates that the mining industry employed a total of
205 300 people in 2010–11, which represents an increase of 19 per cent compared with
2009–10 and an increase of 162 per cent from 2000–01. By sub-industry, the metal ore
industry employed the largest number of people (approximately 69 200 people), accounting
for 34 per cent of employment in the mining industry (see Figure 3). The coal industry
ranked second followed by the oil and gas extraction industry.
10
Figure 3:
Employment in the Australian mining industry, 1990–91 to 2010–11
Please refer to page 13 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Commodity prices
Commodity prices were lower in the September quarter compared with the previous
quarter, but were still at higher levels than the first half of 2009. Lower bulk commodity
prices largely reflected a slowing in the growth of global steel production and higher iron ore
and metallurgical coal exports from Australia in the second half of 2011. Spot prices for the
key steelmaking commodities—iron ore and metallurgical coal—have fallen sharply since
September 2011, as have steel prices. Demand for iron ore in Europe appears to have
weakened, which has led to some diversion of Brazilian supply towards Asia. Some base
metals have also declined in price in response to weaker financial markets.
Prices for energy-related commodities, such as thermal coal and oil, were little changed over
the quarter. The resilience of the thermal coal spot price relative to other bulk commodities
reflects different demand conditions. For instance, the shutdown of nuclear power
generation capacity in several countries (especially Japan), and below average hydroelectricity production in China, are providing underlying support for thermal coal demand.
Figure 4:
Metal price index, quarterly
Please refer to page 14 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Figure 5:
Bulk commodity price index, quarterly
Please refer to page 14 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Australian mine production and exports
In 2010–11, the index of Australian mine production remained relatively stable compared
with 2009–10, reflecting a 12 per cent increase in metals and other minerals production
which was offset by an 11 per cent decrease in the production of energy commodities (see
Figure 6).
Total Australian mine production is forecast to increase by 11 per cent in 2011–12, largely
attributed to a 15 per cent increase in the output of energy commodities, particularly
thermal coal, metallurgical coal and uranium. Also contributing to this growth will be a 6 per
cent increase in the production of metals and other minerals, underpinned by rising nickel,
zinc and copper production.
Figure 6:
Australian mine production index, 1989–90 to 2011–12
Please refer to page 15 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
11
In terms of exports, earnings from exports of energy and minerals commodities increased by
29 per cent between 2009–10 and 2010–11, reaching $179 billion in 2010–11 (see Figure 7).
Of this total, export earnings from minerals commodities contributed $110 billion,
accounting for about 61 per cent. Export earnings from energy commodities accounted for
39 per cent of the total, or approximately $70 billion in real terms.
Figure 7:
Australian energy and mineral export earnings, 1989–90 to 2011–12
Please refer to page 16 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In 2011–12, total export earnings for energy and minerals commodities are forecast to
increase by 15 per cent to $206 billion, reflecting increases in export values for both energy
and minerals commodities. Energy commodity export earnings are forecast to grow by 19
per cent to $83 billion as a result of strong increases in export earnings from thermal coal
(up 34 per cent to $18.8 billion), oil (up 21 per cent to $14.2 billion), LNG (up 15 per cent to
$12 billion), and metallurgical coal (up 13 per cent to $33.6 billion). Mineral commodity
export earnings are forecast to increase by 12 per cent to $123 billion as a result of increase
in export values of gold (up 45 per cent to $18.9 billion), iron ore (up 12 per cent to $60.4
billion), alumina (up 18 per cent to $6.2 billion), and copper (up 3 per cent to $8.7 billion).
Partially offsetting the increased export earnings for mineral commodities will be lower
forecast export earnings for zinc (down 10 per cent to $2.1 billion), nickel (down 9 per cent
to $3.7 billion), and aluminium (down 4 per cent to $4 billion).
Table 3:
Australia energy and minerals exports, by selected commodities
Volume
Value
Commodity
Unit 2010-11
2011-12
f
%
change
Unit
2010-11
2011-12
f
%
change
Oil
ML
19636
20806
6.0
$m
11772
14214
20.7
LNG
Mt
20
20
-0.3
$m
10437
11978
14.8
Thermal coal
Mt
143
163
13.5
$m
13956
18760
34.4
Uranium
t
6950
7930
14.1
$m
610
791
29.7
Iron ore
Metallurgical
coal
Mt
407
460
13.0
$m
54197
60412
11.5
Mt
140
150
7.1
$m
29796
33595
12.8
Gold
t
301
336
11.6
$m
13014
18874
45.0
Alumina
kt
16227
16799
3.5
$m
5218
6156
18.0
Aluminium
kt
1686
1741
3.3
$m
4178
4029
-3.6
Nickel
kt
210
233
11.0
$m
4097
3748
-8.5
Copper
kt
850
935
9.6
$m
8416
8653
2.8
Zinc
kt
1482
1499
2.4
$m
2375
2144
-9.7
Sources: BREE; ABS.
Table 4: Major indicators of Australia’s minerals and energy sector
Change
from
2006– 2007– 2008– 2009– 2010– 2011– previous
07
08
09
10
11
12 f
year
2010 2011
12
Commodity
exports
Exchange rate
Unit returns b
Mineral resources
– energy minerals
– metals and other
minerals
–11
–12
%
%
US$/A
0.78
$
0.90
0.75
0.88
0.99
1.00
12.5
1.0
index
index
100.0
100.0
104.9
114.2
142.2
192.8
111.7
125.3
141.2
153.5
149.1
171.1
26.4
22.5
5.6
11.5
index
100.0
99.2
112.1
103.7
134.0
136.0
29.2
1.5
Value of exports
10751 11736 16179 13946 17923
5
2
6
8
3
39427 45591 77892 57478 69673
10956
68088 71771 83903 81990
0
20583
28.5
0
83056 21.2
12277
33.6
4
Mineral resources
A$m
– energy minerals
– metals and other
minerals
A$m
Total commodities
A$m
13926 14870 19770 17155 21531 24384
25.5
3
2
1
1
2
2
13.3
index
121.3
120.7
121.4
125.0
125.1
138.3
0.1
10.6
– energy
index
118.9
116.6
122.8
126.2
111.9
129.1
–
11.3
15.4
– metals and other
minerals
index
124.3
124.8
119.6
123.5
138.8
147.7
12.4
6.4
Gross value of
mine production
A$m
10321 11266 15532 13389 17206 19759
28.5
4
7
4
0
4
7
14.8
New capital
expenditure c
A$m
23621 29201 37977 35185 47247 na
34.3
na
A$m
3940
5496
6034
5727
6246
na
9.1
na
A$m
2533
3501
4293
3984
4028
na
1.1
na
A$m
1407
1995
1741
1742
2218
na
27.3
na
Employment
Mining
’000
136
146
170
173
205
na
18.6
na
Australia
’000
10388 10708 10892 11027 11355 na
3.0
na
Minerals and
energy sector
Volume of mine
production
Exploration
expenditure
– energy
– metals and other
minerals
A$m
14.8
19.2
12.1
b Base year: 2006–07=100. c Mining industry (ANZSIC subdivision B) only. f BREE forecast. na Not
available.
Note: The indexes for the different groups of commodities are calculated on a chain weight basis
using Fishers’ ideal index with a reference year of 1997–98=100.
Sources: BREE; ABS.
Major Australian commodity exports
Please refer to page 18 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
13
Energy outlook
Oil and gas
Nina Hitchins and Adrian Waring

In 2012, oil prices are forecast to remain high, relative to 2011, underpinned by
consumption growth in emerging economies. Consumption growth in OECD economies
is forecast to remain unchanged in 2012.

Growth in oil production is forecast to be strongest in non-OPEC producers during 2012,
while OPEC oil production growth is expected to be supported by increased production
of natural gas liquids.

In 2011–12, the value of Australian crude oil and condensate exports are forecast to
increase 21 per cent to $14.2 billion.
Higher oil prices in 2012
In the first half of 2011, the West Texas Intermediate (WTI) oil price averaged $98 a barrel,
an increase of 24 per cent relative to the annual average in 2010. The price increase
reflected supply disruptions in Libya, increases in Japan’s oil-fired electricity generation
following the March 2011 earthquakes and tsunami, and strong consumption growth in
emerging economies. The oil price fell by 12 per cent in the September quarter of 2011,
relative to the previous quarter, and is estimated to average US$92 a barrel in the second
half of 2011. Lower prices reflect deteriorating market sentiment resulting from sovereign
debt issues in the US and Europe, and increasing concerns of weaker economic growth and
reduced global oil demand. For 2011 as a whole, oil prices are estimated to average US$95 a
barrel.
In 2012, prices are forecast to increase, supported by an assumed marginal improvement in
OECD economic growth. The average WTI price in 2012 is forecast to rise by 5 per cent,
relative to 2011, to US$100 a barrel. A significant risk to the outlook for oil prices is
weakening world economic growth over the next 12 months (for further details on
macroeconomic assumptions and associated risks, see the macroeconomic outlook and
energy and minerals overview).
OPEC spare capacity decreased during 2011 as a result of production shut-ins in Libya and
increased production from other OPEC economies to counteract the Libyan shortfall. In
October 2011, OPEC spare capacity was 4.6 million barrels a day, 25 per cent below the
average in 2010. OPEC spare capacity is expected to increase in 2012 as Libyan production
ramps-up and new oil fields come online in Iraq and Angola. However, OPEC spare capacity
is likely to remain low, relative to 2010, supporting higher prices in 2012.
OECD oil stocks fell in the September quarter of 2011 following a decision by the
International Energy Agency (IEA) in June that member countries would collectively release
60 million barrels over 30 days. In September 2011, OECD stocks were 2 per cent below
those recorded in the same month a year earlier.
14
Box 1: The Brent-WTI price differential
Crude oil differs in quality across fields and regions. Generally crudes with low density (light)
and low sulphur content (sweet) are of higher quality compared to high density (heavy), high
sulphur content (sour) crudes. Light sweet crudes require less processing, produce more
valuable products and, therefore, attract higher prices.
West Texas Intermediate is light sweet crude oil that is typically produced in northern US
and Canada, and is the traditional price benchmark for US crude oil. WTI is traded on the
New York Mercantile Exchange and priced against delivery to Cushing, Oklahoma. Generally,
WTI is refined in the Midwest of the US or transported to Cushing for distribution to other
refineries.
Brent North Sea crude, or Brent, originates from the North Sea, northeast of the United
Kingdom. It is also a light sweet crude, although typically of lower quality than WTI.
Consequently, WTI has historically attracted a higher price than Brent.
However, since the start of 2011, the price relationship between WTI and Brent has not
reflected their relative quality and in September 2011, the price of Brent averaged US$24 a
barrel, or 28 per cent, higher than WTI.
Figure 1:
Price difference from WTI
Please refer to page 20 of the Resources and Energy Quarterly – December quarter 2011
PDF version
Several factors have contributed to this price premium reversal. One factor is the effect of
increase stocks of WTI crude in Cushing, which have put downward pressure on the WTI
price. Increased production of unconventional oil in the US and Canada, combined with a
recent lull in consumption in the US, and a bottleneck in pipeline capacity out of Cushing,
has caused WTI stocks to climb.
Meanwhile, other factors have placed upward pressure on the price of Brent. Firstly,
production in the North Sea during 2011 has decreased relative to 2010. Secondly,
production shut-ins in Libya during the 2011 civil war disproportionally affected the Brent
market, as Libyan crude is a key source of oil for many European refineries.
In October 2011, the price premium for Brent over WTI declined, reflecting the restart of
Libyan production. As production in Libya continues to increase, this output will place
further downward pressure on the price of Brent.
In 2012, the price premium for Brent is likely to diminish. There are plans to reverse a
pipeline that connects the Gulf of Mexico to Cushing, allowing 150000 barrels a day of crude
to flow to the Gulf coast from the second quarter of 2012, increasing up to 400000 barrels a
day by 2013. News of the pipeline reversal saw the Brent premium fall to as low as nine
dollars in November. The pipeline reversal should relieve the bottleneck, reduce stocks in
Cushing and put upward pressure on the WTI.
Weak world oil consumption growth
In the first nine months of 2011, world oil consumption averaged 88.8 million barrels a day,
a 1.2 per cent increase from the same period in 2010. The growth in oil consumption reflects
15
greater demand in the emerging economies in Asia, particularly China and India, that was
only partially offset by a decrease in consumption in OECD economies. For 2011 as a whole,
world oil consumption is estimated to increase by 1 per cent, relative to 2010, to average
89.2 million barrels a day.
World oil consumption in 2012 is forecast to increase by 1.4 per cent, relative to 2011, to an
average of around 90.5 million barrels a day. OECD oil consumption in 2012 is forecast to
remain at similar levels to 2011, as the US and Europe continue to experience weak
economic growth. Accordingly, all growth in world oil consumption in 2012 is forecast to be
attributed to non-OECD economies.
Figure 2:
World oil consumption
Please refer to page 22 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Emerging economies underpin demand growth
In 2011, oil consumption in emerging economies is estimated to increase by 3 per cent,
relative to 2010, to average 43.4 million barrels a day. The continued consumption growth
reflects resilient domestic demand and petroleum product price controls, which have
mitigated the effect of higher crude oil prices.
The expanding middle class in China and India continue to spur increases in personal vehicle
ownership and underpin growth in oil consumption. In China, oil consumption is estimated
to increase by 5 per cent to average 9.5 million barrels a day in 2011. Domestic price
controls have helped to insulate consumers from high crude oil prices during the first half of
2011. In October 2011, the National Development and Reform Commission reduced retail
prices for petrol and diesel by around 3 per cent, the first reduction in 16 months. China’s oil
consumption in 2012 is forecast to increase by a further 5 per cent and account for over a
third of the increase in world oil consumption growth, underpinned by an assumed
continuation of strong economic growth.
In India, domestic price controls on diesel and robust economic growth have supported
strong growth in oil consumption in 2011, which is estimated to increase by 3 per cent
relative to 2010. Despite falls in international crude prices during the September quarter, a
depreciation of the Rupee deterred officials from lowering domestic diesel prices further. In
2012, oil consumption in India is forecast to grow by a further 3 per cent to average 3.6
million barrels a day. An increase in consumption is expected to be supported by strong
growth in motor vehicles sales.
In the Middle East, Iran’s oil consumption is forecast to contract by 2 per cent in 2011,
relative to 2010, following the removal of domestic petrol and diesel subsidies. Iran accounts
for over a quarter of Middle Eastern oil consumption. Despite decreases in Iranian oil
demand, consumption in the Middle East overall is forecast to increase by 3 per cent in both
2011 and 2012 to average 8.3 million barrels a day in 2012, reflecting an assumption of
sustained strong economic growth in the region.
16
OECD oil consumption to remain unchanged in 2012
Consumption of oil in OECD economies is estimated to contract by 0.9 per cent in 2011,
relative to 2010, to average 45.8 million barrels a day. This primarily reflects a decline in US
and European consumption. However, decreases in the US and Europe are expected to be
partially offset by increased consumption in the Pacific region (Australia, Republic of Korea,
Japan and New Zealand). In 2012, OECD oil consumption is forecast to remain steady at an
average of 45.8 million barrels a day.
Europe’s oil consumption is estimated to decline by 1.3 per cent in 2011, relative to 2010,
and by a further 0.9 per cent in 2012 to average 14.3 million barrels a day. Assumed weak
economic growth and falling intensity of oil use are expected to contribute to lower oil
consumption in Europe.
In 2011, oil consumption in North America is estimated to contract by 1.1 per cent to
average 23.5 million barrels a day. The decease in North American consumption is expected
to be underpinned by weak economic growth in the US, where demand for refined products
fell by 3 per cent year-on-year in the September quarter 2011. For 2011 as whole, oil
consumption in the US is estimated to decrease by 1.3 per cent, relative to 2010, to average
18.9 million barrels a day. US economic growth in 2012 is assumed to increase modestly
relative to 2011, and forecast to support a 0.6 per cent increase in US oil consumption to
average 19.0 million barrels a day. Accordingly, North American oil consumption is forecast
to increase by 0.5 per cent in 2012 to average 23.6 million barrels a day.
In the Pacific region, oil consumption is forecast to increase marginally to average 7.9 million
barrels a day in 2012. The growth in oil consumption is likely to be led by Japan, where oil
consumption is estimated to increase 0.7 per cent in 2011 and 2012 to average 4.5 million
barrels a day in 2012. Increased consumption in Japan is expected to be associated with
reconstruction activities and supported by greater capacity utilisation of oil-fired electricity
generation plants following the March 2011 earthquakes and tsunami.
Modest growth in world oil production
World production of oil is estimated to increase by 2 per cent in 2011, relative to 2010, to
average 88.8 million barrels a day. Increases in OPEC production are expected to account for
the majority of the increase, with production outages constraining output growth in nonOPEC producers. In 2012, world oil production is forecast to increase by a further 2 per cent,
with non-OPEC production accounting for around 60 per cent of total growth.
Moderate OPEC crude production, robust OPEC NGL production
OPEC oil production is estimated to increase by 3 per cent in 2011, and forecast to increase
by an additional 2 per cent in 2012 to average 36.6 million barrels a day. The increase in
OPEC oil production is forecast to be underpinned by moderate increases in crude oil
production and robust growth in natural gas liquids.
In the first nine months of 2011, crude oil production in OPEC members increased 1.3 per
cent year-on-year, despite production shut-ins throughout Libya during the civil war.
Production growth was supported by increased output from Saudi Arabia and the United
Arab Emirates. In the case of Saudi Arabia, oil production averaged 8.9 million barrels a day,
a 12 per cent year-on-year increase. For 2011 as a whole, OPEC crude oil production is
17
estimated to increase by 2 per cent to average 30.1 million barrels a day, reflecting an
expectation of greater Libyan production in the December quarter.
Prior to the outbreak of civil war in Libya, its crude oil production was around 1.6 million
barrels a day. However, once the conflict began, production declined to close to nil.
Following the fall of the Gaddafi regime, oil production in Libya recommenced. In areas with
minimal damage to production and export infrastructure, oil production has reportedly
surpassed 750000 barrels a day. The Libyan National Oil Corporation forecasts that Libya’s
oil production will reach 1 million barrels a day by April next year, and return to pre-civil war
output by the end of 2012.
In 2012, OPEC crude oil production is forecast to increase by 0.7 per cent, relative to 2011,
supported by capacity expansions in Iraq. Increased output from the Rumalia, Zubair and
West Qurna oil fields are expected to underpin growth Iraq’s crude oil production.
Production capacity in Iraq is expected to reach 3 million barrels a day by the end of 2011
and 3.3 million barrels a day by the end of 2012. However, production and exports may be
constrained by bottlenecks in export capacity, including pipelines and single-point moorings.
OPEC production of natural gas liquids and condensate is estimated to grow by 9 per cent in
2011, relative to 2010, and an additional 7 per cent in 2012 to average 6.3 million barrels a
day. Production increases are likely to continue to be sourced from Qatar through the
development of large gas fields.
Growth in non-OPEC production in 2012
Non-OPEC oil production is estimated to increase moderately in 2011, growing by 0.3 per
cent relative to 2010, to average 52.8 million barrels a day. In 2012, oil production is forecast
to increase by 2 per cent to average 53.9 million barrels a day, reflecting an expected return
to production following maintenance, weather-related disruptions, and the start-up and
ramp-up of new oil fields.
North American oil production is estimated to increase by 2 per cent in 2011, relative to
2010, to average 14.4 million barrels a day. A further increase of 2 per cent is forecast for
2012. The increase will be supported by the development of unconventional oil sources
including oil sands in Canada and oil shale in the US.
Canada’s oil production is estimated to increase by 3 per cent in 2011, relative to 2010, and
forecast to increase by 5 per cent in 2012 to average 3.8 million barrels a day. Production
growth will be supported by the start-up and ramp-up of oil sands projects including the
Firebag project in Athabasca (62500 barrels a day) and the Kearl oil sands project (345000
barrels a day). Increases in production are also expected to be supported by the restart of
the Horizon sands facility (110000 barrels a day), which reopened in August 2011 following a
fire earlier in the year.
In the US, oil production is estimated to increase by 3 per cent in 2011, as continued growth
in oil shale, particularly from the Bakken and Eagle Ford formations, offset weather-related
declines in production in North Dakota and the Gulf of Mexico. In 2012, US oil production is
forecast to grow by a further 1.9 per cent to average 8.1 million barrels a day.
Oil production in the Russian Federation is estimated to increase by 1.1 per cent in 2011,
relative to 2010, and forecast to increase by an additional 0.9 per cent in 2012 to average
10.7 million barrels a day. Increased production from the ramp-up of the Vankor oil field is
18
forecast to offset production declines from maturing fields. Production from the Russian
Federation is also expected to be supported by the 60–66 Tax Regime, which came into
effect in October 2011. The reform reduces the marginal tax for crude oil exports from 65
per cent to 60 per cent, enhancing the profitability of upstream projects.
Oil production in Brazil is estimated to increase by 3 per cent in 2011, relative to 2010, to
average 2.2 million barrels a day. Higher production will also be supported by a new well in
the Jubarte field and a ramp-up of production in the Lula field. In 2012, Brazil’s oil
production is forecast to increase by 6 per cent to average around 2.3 barrels a day. Several
new projects in Brazil’s Campos Basin including the Peregrino and Marlin Sul 3 operations
are expected to contribute an additional 200000 barrels a day once they reach peak capacity
in early 2012.
Value of Australian oil exports to increase
Australian crude oil and condensate production is forecast to increase by 2 per cent in 2011–
12, relative to 2010–11, to total 25.3 billion litres. Increased production from the North West
Shelf (NWS) following the completion of the Cossack Wanaea Lambert Hermes
redevelopment project in September 2011 and the start-up and ramp-up of new projects in
the Timor Sea are expected to offset declining output from maturing oil fields. New projects
include the Kitan project, completed in October 2011, and the Montara/Skua project, which
is expected to commence in the first quarter of 2012. Each project is expected to contribute
35000 to 40000 barrels a day at peak capacity.
Australian exports of crude oil and condensate are forecast to increase by 6 per cent in
2011–12 to total 20.8 billion litres, in line with greater production off the north-west coast of
Australia. The value of Australia’s exports is forecast to increase by 21 per cent in 2011–12
to total $14.2 billion, supported by higher export volumes and prices.
Figure 3:
Australia’s crude oil and condensate exports
Please refer to page 26 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 1:
Oil outlook
2010
2011 s
2012 f
% change
87.5
88.3
88.8
89.2
90.5
90.5
1.9
1.4
78
108
109
1.5
79
95
100
4.5
2009–10
2010–11
2011–12 f
ML
ML
A$m
ML
25583 d
18064
9534
27284
24793 d
19636
11772
31766
25340
20806
14214
31057
2.2
6.0
20.7
–2.2
ML
4097
3907
4145
6.1
World
Production b
mbd
Consumption
mbd
Trade weighted crude oil
price
US$/bbl
West Texas Intermediate crude
oil price
US$/bbl
Australia
Crude oil and
condensate
Production b
Exports
– value
Imports
LPG
Production c
19
Exports
– value
ML
A$m
2776
1105
2471
1068
2553
1246
3.3
16.7
b One megalitre a year equals about 17.2 barrels a day. c Primary products sold as LPG. d Energy
Quest. f BREE forecast. s BREE estimate.
Sources: BREE; ABARES; Australian Bureau of Statistics; Energy Information Administration (US
Department of Energy); Energy Quest; International Energy Agency.
Australian gas exports
LNG export value to increase in 2011–12
In 2011–12, Australian liquefied natural gas (LNG) exports are forecast to decrease slightly to
19.9 million tonnes. The decreased production is due to planned maintenance at the NWS
project taking place in September 2011. However, this decreased production is expected to
be almost completely offset by initial production from the Pluto LNG project, which is
scheduled to start in March 2012.
LNG prices under long-term contracts are typically linked to oil prices. As a result in 2010–11,
higher oil prices in the first half of 2011 and increased export volumes increased the value of
Australia’s LNG exports by 34 per cent relative to 2009–10 to $10.4 billion. In 2011–12,
forecast higher oil prices are expected to underpin a 15 per cent increase in the value of
Australia’s LNG exports to $12 billion, despite the slight forecast decrease in export volumes.
Figure 4:
Australia’s LNG exports
Please refer to page 27 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 2:
Australia
Production
LNG exports
– value
Australia’s gas outlook
Gm3
Mt
A$m
2009–10
2010–11
2011–12 f
% change
49.0
17.87
7789
53.4
19.96
10437
56.5
19.90
11978
5.8
–0.3
14.8
f BREE forecast.
Sources: BREE; ABARES; Department of Resources, Energy and Tourism.
20
Thermal coal
Rubhen Jeya

In 2012, average thermal coal prices are forecast to be lower than in 2011. However,
they will remain at historically high levels as import demand remains relatively robust.

World thermal coal imports in 2012 are forecast to increase by 4 per cent, relative to
2011, underpinned by growth in India, China and Japan.

Growth in world thermal coal exports is expected to be underpinned by increased
supplies from Australia, Colombia and Indonesia.

Australia’s thermal coal exports are forecast to increase in 2011–12 by 14 per cent,
relative to 2010–11, reflecting significant additions to production and export
infrastructure capacity over the course of 2011.
Thermal coal spot prices stay relatively steady
In 2011, thermal coal spot prices (on a Newcastle FOB basis) are estimated to average
around US$122 a tonne, an increase of 23 per cent compared to 2010. The increase in prices
has been supported by relatively strong demand from Asian economies and weather-related
production disruptions in Australia, Indonesia and Colombia in the first half of 2011. In 2012,
Newcastle spot prices are forecast to remain high, underpinned by growth in demand in
Japan, China and India. While spot prices are forecast to remain historically high, they are
forecast to average 6 per cent lower than in 2011, reflecting strong growth in exports from
Australia and Indonesia.
In line with lower spot prices, Australia-Japan thermal coal contract prices are assumed to
settle at around US$110 a tonne for Japanese Fiscal Year 2012 (JFY, April 2012 to March
2013). If achieved, this would result in a JFY 2012 price that is 15 per cent lower than the JFY
2011 price, which was around US$130 a tonne.
Thermal coal imports to increase
In 2011, world thermal coal trade is estimated to total 817 million tonnes, an increase of 3
per cent from 2010. The increase in trade has been supported by strong import growth,
particularly from India. The import growth in the Asian region has been underpinned by
export growth from Australia, the US, Indonesia, the Russian Federation and Colombia.
Import demand in the Atlantic market has remained subdued in 2011, reflecting weak
demand in Europe and a growing shift towards alternative and renewable energy sources.
World thermal coal trade in 2012 is forecast to increase by around 4 per cent to 852 million
tonnes, supported by continued strong import demand from Asia combined with a
moderate increase in European import demand. Indonesia and Australia are forecast to
supply a significant proportion of the growth in seaborne thermal coal trade.
China’s imports to increase in 2012…
In the first eight months of 2011, China imported around 78 million tonnes of thermal coal,
which was largely unchanged from the corresponding period in 2010. The lack of import
21
growth reflects high international coal prices that improved the competiveness of
domestically produced coal and that reduced the incentive to import thermal coal in the first
half of 2011. Additionally, high levels of stockpiles at ports and at power stations placed
downward pressure on coal demand for much of the second half of 2011. For 2011 as a
whole, China is estimated to import around 126 million tonnes of thermal coal, a 2 per cent
decrease from 2010.
In 2012, China’s thermal coal imports are forecast to increase by 2 per cent, relative to 2011,
to 128 million tonnes. The moderate increase in imports reflects a forecast reduction in
international coal prices, which would enhance the competiveness of imports compared
with domestically produced coal.
….while India’s import growth to continue to grow strongly in 2012
In 2011, India’s coal consumption has increased strongly, underpinned by the start-up of a
number of coal-fired power stations. However, the growth in India’s coal production has not
been enough to keep pace with growth in consumption and this has resulted in an increase
in imports to make up the balance. Also supporting imports in 2011 has been the need to
blend domestically produced coal with higher quality imported coal, which helps to increase
the efficiency of electricity generators. Reflecting these developments, India’s imports of
thermal coal in 2011 are estimated to increase by 30 per cent, relative to 2010, to 78 million
tonnes.
In 2012, India’s thermal coal imports are forecast to increase by 18 per cent, compared to
2011, to total 92 million tonnes. Growth in thermal coal imports is expected to be
underpinned by continued expansion of coal-fired electricity generation capacity and
production growth not sating additional demand.
Japan and the Republic of Korea’s imports to increase
In 2011, Japan’s imports are estimated to have decreased by 3 per cent, relative to 2010, to
125 million tonnes. The decrease in imports reflects damage to a number of coal-fired power
stations from the March 2011 earthquakes and tsunami. This was partially offset by an
increase in capacity utilisation at unaffected coal-fired power stations.
Japan’s thermal coal imports in 2012 are forecast to increase by 2 per cent to 128 million
tonnes under the assumption that some of the damaged power stations will restart
operation in 2012. Japan’s electricity demand is expected to rise in 2012 in response to
increased economic activity associated with the reconstruction phase. In addition, nuclear
power utilisation is assumed to remain at low rates for much of 2012. Reflecting these
developments, coal-fired electricity generation is expected to operate at a high utilisation
rate, underpinning thermal coal imports.
Figure 1:
Japan’s electricity generation
Please refer to page 30 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
22
Europe’s thermal coal imports to rise moderately
In 2011, the European Union's (EU’s) thermal coal imports are estimated to have increased
by around 3 per cent, relative to 2010, to total 155 million tonnes. This increase has been
underpinned by imports into the United Kingdom, where thermal coal imports are estimated
to have increased by 54 per cent to 19 million tonnes in the first nine months of 2011. The
increase in imports into the United Kingdom reflects disruptions to gas supplies from the
North Sea which encouraged the use of coal for electricity generation.
Imports into the EU in 2012 are forecast to increase by around 1 per cent, relative to 2011,
to 157 million tonnes. Weak economic growth across the region is expected to limit growth
in coal-fired electricity generation. In addition, gas supplies from the North Sea are assumed
to return to normal levels, which would put downward pressure on the United Kingdom's
demand for imported coal. However, the continued and gradual closure of Germany's coal
mines is one factor that may support the EU's thermal coal import demand.
Exports from Indonesia and the Russian Federation increasing
In the first eight months of 2011, Indonesia’s exports of thermal coal increased by 4 per
cent, compared with the corresponding period in 2010, to 206 million tonnes. The increase
in exports was underpinned by higher production associated with favourable weather
conditions in the first half of the year. Indonesia’s exports are estimated to increase by 5 per
cent to 298 million tonnes in 2011.
In 2012, Indonesia’s exports are forecast to increase by a further 3 per cent to 306 million
tonnes, underpinned by import demand from China, India and emerging Asian economies.
The increase in exports is expected to be supported by increased production from PT Bumi’s,
PT Adaro Energy’s and PT Indika Energy’s coal mines along with output expansions from
mines located in the East Kalimantan region.
… while US exports decline in 2012
In the first eight months of 2011, thermal coal exports from the Unites States increased by
68 per cent year-on-year to total around 22 million tonnes. During this time, exports to
Europe increased by more than 150 per cent to around 10 million tonnes, while exports to
Asia doubled to around 7 million tonnes. The strong increase in exports reflected high
international coal prices and relatively weak coal demand in the US associated with
increased consumption of natural gas and renewables for electricity generation. For 2011 as
a whole, US exports are forecast to increase by 35 per cent to 31 million tonnes.
In 2012, US thermal coal exports are forecast to decrease by 11 per cent, relative to 2011, to
total 28 million tonnes as import markets will continue to source coal from traditional
producers, such as Australia, Indonesia and Columbia, thereby reducing demand for thermal
coal exports from the US. Further increases in US thermal coal exports are expected to be
limited by the availability of port and rail infrastructure.
Figure 2:
US exports to various regions
Please refer to page 31 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
23
Growth in exports from South Africa and Colombia in 2012
During the first nine months of 2011, South Africa’s exports of thermal coal declined by
about 3 per cent year-on-year to 49 million tonnes. The decrease in production reflected
weak import demand in the Atlantic market and weather related disruptions in the first half
of 2011. For 2011 as a whole, South Africa’s exports of thermal coal are forecast to decline
by 3 per cent, relative to 2010, to around 66 million tonnes.
In 2012, thermal coal exports from South Africa are forecast to increase by 5 per cent to 69
million tonnes. This growth reflects the assumption that production will not be disrupted by
industrial action or bad weather, as it was in 2011. However, further increases in South
Africa’s thermal coal exports are expected to be limited by infrastructure bottlenecks,
particularly within the rail system.
In the first nine months of 2011, Colombia’s exports of thermal coal increased by 5 per cent
from the previous corresponding period to 56 million tonnes. The increase in exports was
underpinned by growth in production in the Cesar Basin, including Glencore’s Pordeco mine
and the Cerrejon and Drummond coal operations. For 2011 as a whole, Colombia’s thermal
coal exports are estimated to increase by 3 per cent to 71 million tonnes.
In 2012, Colombia’s thermal coal exports are forecast to increase by 6 per cent, relative to
2011, to 76 million tonnes. The increase in exports is expected to be supported by higher
production from mines which commenced operations in 2011.
Australia’s thermal coal exports to increase in 2011–12
In 2011–12, Australia’s thermal coal production is forecast to increase by 9 per cent, relative
to 2010–11, to 225 million tonnes. Supporting Australia’s thermal coal production will be
increases in production for a number of new coal mines that started up in 2010–11. New
projects located in New South Wales include Mangoola (8 million tonnes a year) and
Moolarben stage 1 (8 million tonnes a year), and the expansion of the Mount Arthur North
open-cut mine (3.5 million tonne expansion). In Queensland, the start-up of the Ensham
underground mine (1.5 million to 2.5 million tonnes a year) will also contribute to Australia’s
thermal coal production.
Figure 3:
Australia’s thermal coal exports
Please refer to page 33 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In 2011–12, Australia’s thermal coal export volumes are forecast to increase by 14 per cent,
relative to 2010–11, to total 163 million tonnes. The growth in export volumes will be
supported by increased port capacity associated with the start-up of the Port Waratah Coal
Services Kooragang Island Coal Terminal expansion (11 million tonnes a year), the X50
expansion at Abbot Point (25 million tonnes a year) and higher throughput at the Newcastle
Coal Infrastructure Group Coal Terminal as it approaches capacity.
In 2011–12, the value of Australia’s thermal coal exports is forecast to increase by 34 per
cent, relative to 2010–11, to $18.8 billion, supported by higher export volumes.
24
Table 1:
Thermal coal outlook
2010
2011 s
2012 f
% change
US$/t
98
130
110
–15.3
Coal trade
Mt
794
817
852
4.3
Imports
Asia
– China
– Chinese Taipei
– India
– Japan
– Korea, Rep. of
– Malaysia
– other Asia
Europe
– European Union 27 c
– other Europe
Other
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
532
129
65
60
129
91
19
40
193
150
43
70
552
126
67
78
125
94
20
43
199
155
43
65
581
128
67
92
128
95
21
50
202
157
45
68
5.2
2.0
0.6
17.9
2.4
1.1
7.1
15.6
1.6
0.8
4.4
4.4
Exports
Australia
China
Colombia
Indonesia
Russian Federation
South Africa
United States
Other
Mt
Mt
Mt
Mt
Mt
Mt
Mt
Mt
141
20
69
285
95
68
23
94
148
15
71
298
97
66
31
85
171
13
76
306
99
69
28
83
15.5
–12.0
6.4
2.7
1.5
4.5
–10.6
–2.4
2009–10
2010–11
2011–12f
World
Contract prices b
Thermal coal
Australia
Production
Mt
198.3
206.1
224.7
9.0
Exports
– value
Mt
A$m
135.0
11886
143.3
13956
162.6
18760
13.5
34.4
b Japanese Fiscal Year, starting April 1, fob Australia basis, BREE Australia–Japan average contract
price assessment. For steaming coal with a calorific value of 6700 kcal/kg (gross air dried. c Regarded
as 27 countries for all years. f BREE forecast. s BREE estimate.
Sources: BREE; ABARES; International Energy Agency; Coal Services Pty Ltd; Queensland Department
of Mines and Energy.
25
Resources outlook
Steel and steel-making raw materials
Rubhen Jeya and Tom Shael

In 2012, iron ore contract prices for 62 per cent iron content shipped from Australia are
forecast to average around US$139 a tonne, 9 per cent lower than the estimate for
2011. In the same period, contract prices for high-quality hard coking coal are forecast
to average US$226 a tonne, a 22 per cent decrease from 2011. These decreases reflect
an increase in supply of both of these commodities on the seaborne-traded market.

Demand for steel and its raw material inputs, iron ore and metallurgical coal, are
forecast to increase in 2012. However, this growth is expected to be relatively subdued
due to slower world economic growth.

In 2011–12, Australia’s metallurgical coal exports are forecast to increase by 7 per cent,
relative to 2010–11, to total 150 million tonnes. Iron ore exports are forecast to increase
by 13 per cent to total 460 million tonnes. For both steel-making materials, higher
export volumes will more than offset lower contract prices for 2011–12, resulting in a 13
per cent increase in export earnings for metallurgical coal and a 12 per cent increase for
iron ore.
Raw material prices
Iron ore spot prices have declined markedly since October 2011 due to expectations about
slow growth in the world economy, continued debt issues in Europe and a slight reduction in
growth in China. However, strong prices in the June and September quarters of 2011
bolstered the average 2011 contract price for 62 per cent iron content ore shipped from
Australia to US$153 a tonne, a 36 per cent increase compared to 2010.
In 2012, recently completed projects in Australia are expected to increase seaborne supply,
which, in combination with relatively weaker growth in demand from steel producers in Asia
and Europe, is forecast to place downward pressure on iron ore prices. As a result, the 2012
contract price is forecast to average around US$139 a tonne, a 9 per cent year-on-year
decline.
Contract prices for premium quality hard coking coal averaged US$289 a tonne in 2011,
representing a 52 per cent increase on the average contract price in 2010. This increase
partly reflects weather related production disruptions in Queensland in late 2010 and early
2011 that coincided with relatively strong steel production in China and in Japan, prior to the
March 2011 earthquakes and tsunami.
In 2012, contract prices are forecast to decrease by 22 per cent to average US$226 a tonne.
This decrease reflects a combination of weaker import demand growth and increased
exports from Queensland as mines recover from flood-related production disruptions. In
addition, increased supply from a number of metallurgical coal expansions around the world
that have recently been completed or are scheduled for completion within the outlook
period are expected to place downward pressure on prices.
26
Figure 1:
Steel-making raw material contract prices (FOB Australia)
Please refer to page 36 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Steel
Table 1:
World steel outlook
2009
2010
2011 s
2012 f
Crude steel consumption (Mt)
European Union 27
United States
Brazil
Russian Federation
China
Japan
Korea, Rep. of
Chinese Taipei
India
World steel consumption
129
160
166
171
62
90
94
97
21
30
31
33
28
42
44
46
571
600
624
662
57
68
69
76
47
55
56
57
14
21
24
25
61
66
76
84
1223 1389
1451
1527
Crude steel production (Mt)
European Union 27
United States
Brazil
Russian Federation
China
Japan
Korea, Rep. of
Chinese Taipei
India
World steel production
139
173
177
181
58
81
86
90
27
33
35
38
60
67
69
72
568
627
683
734
88
110
108
122
49
58
62
64
16
20
21
22
57
67
72
78
1220 1415
1502
1594
f BREE forecast. s BREE estimate.
Sources: BREE; World Steel Association.
In 2011, world steel consumption is estimated to increase by 4 per cent to 1.45 billion
tonnes. The world’s three largest steel consumers, China, the European Union (EU) and the
US, all recorded consumption growth. However, this growth has been moderate, and
reflects weak economic activity in the second half of 2011 relative to the first half of 2011.
World steel consumption in 2012 is forecast to increase by 5 per cent, relative to 2011, to
1.5 billion tonnes. China and Japan will be the main contributors to consumption growth,
while growth in the EU and US will be subdued, reflecting assumed weak economic growth.
China to remain the largest producer and consumer of steel in 2012
In 2011, China’s steel consumption is estimated to increase by around 4 per cent to a total of
624 million tonnes, which is equivalent to around 43 per cent of world steel consumption.
This increase in consumption reflected the effect of growth in infrastructure development
and other steel-intensive infrastructure, particularly in the first half of 2011. Also supporting
27
steel consumption growth in China was the commencement of a social housing construction
program that will consist of building 10 million units of affordable housing.
In 2012, China’s steel consumption is forecast to increase by 6 per cent, relative to 2011, to
662 million tonnes. Growth in steel consumption is expected to be underpinned by
programs to expand infrastructure and social housing construction.
In OECD economies, steel production has increased during 2011. However the rate of
growth has been lower than the growth rate seen in 2010. In both the US and the EU, steel
consumption is estimated to increase by 4 per cent year on year. In Japan, steel
consumption in 2011 is estimated to increase by one per cent, relative to 2010, to 69 million
tonnes. Lower consumption in the first half of 2011 following the March 2011 earthquakes
and tsunami was offset by growth in the second half of 2011 from the commencement of
rebuilding of damaged infrastructure.
In 2012, reduced government spending and investment in infrastructure in a number of
large European economies and in the US is expected to result in relatively slow growth in
OECD steel consumption. Steel consumption in both the US and the EU is forecast to
increase by 3 per cent, year-on-year, to 97 million tonnes and 171 million tonnes,
respectively. In Japan, steel consumption in 2012 is forecast to increase by 10 per cent,
relative to 2011, to 76 million tonnes as a result of a significant amount of rebuilding activity
across earthquake- and tsunami-affected regions.
World steel production in 2011 is estimated to have increased by 6 per cent, relative to
2010, to 1.5 billion tonnes, as steel producers responded to strong steel consumption in the
first half of 2011. In 2012, world steel production is forecast to increase by a further 6 per
cent to 1.6 billion tonnes.
China’s steel production in 2011 is estimated to increase by 9 per cent, compared with 2010,
to 683 million tonnes. The 56 million tonne increase represents around two-thirds of the
total estimated increase in world steel production. China maintained a high rate of steel
production throughout most of the first three quarters of 2011 in response to increased
steel demand. However, in the December quarter steel production is estimated to have
declined as steel consumption weakened and steel prices fell. In 2012, China’s steel
production is forecast to increase by 7 per cent to 734 million tonnes. This relatively strong
rate of production growth reflects robust steel consumption growth, albeit at a rate weaker
than in 2011.
In OECD economies in 2011, steel production increased by 6 per cent in the US and by 2 per
cent in the EU, although growth was still significantly lower than the growth rate
experienced between 2009 and 2010. In Japan, steel production is forecast to decline by 2
per cent in 2011, primarily as a result of production losses due to damage caused by the
March 2011 earthquakes and tsunami, which more than offset production increases in the
second half of 2011.
In 2012, steel production in the OECD is forecast to increase, albeit at a moderate rate,
reflecting weak consumption growth. In the US and the EU, steel production is forecast to
increase by 5 per cent and 2 per cent respectively. By contrast, Japan’s steel production in
2012 is forecast to increase by 13 per cent, compared to the previous year, to a total of 122
million tonnes. The sharp increase in production will be required to meet a forecast increase
in steel demand associated with reconstruction following the March 2011 earthquakes and
tsunami.
28
Iron ore
Table 2:
World iron ore trade
2009
2010
2011 s
Iron ore imports (Mt)
European Union 27
Japan
China
Korea, Rep. of
Chinese Taipei
World imports
95
133
105
134
630
619
42
56
12
19
948
1055
1093
142
132
645
58
20
Iron ore exports (Mt)
Australia
Brazil
India
Canada
South Africa
Sweden
World exports
363
402
266
311
117
96
31
33
45
48
16
21
948
1055
1093
431
330
85
34
53
21
2012 f
149
147
692
60
21
1172
481
361
76
35
57
22
1172
f BREE forecast. s BREE estimate.
Sources: BREE; UNCTAD.
In the first half of 2011, demand for iron ore imports was buoyed by higher steel production
particularly in China. However, lower steel production in China in the latter part of 2011
reduced demand for imported iron ore. For 2011 as whole, world trade of iron ore is
estimated to increase by 4 per cent, relative to 2010, to 1.1 billion tonnes.
In 2012, iron ore imports are forecast to increase further, reflecting steel production growth
in China and Japan. World trade of iron ore in 2012 is forecast to increase by 7 per cent,
relative to 2010, to 1.2 billion tonnes.
China remains a major importer of iron ore
China is estimated to import 645 million tonnes of iron ore in 2011, representing a 4 per
cent increase over 2010 levels. While domestic iron ore production increased by an
estimated 9 per cent in 2011, it was insufficient to meet growth in iron ore demand. Further
increases in China's iron ore production were limited by high cost and relatively low quality
ores.
In 2012, China’s imports of iron ore are forecast to increase by 7 per cent, relative to 2011,
to total 692 million tonnes. The faster rate of growth reflects expected weaker domestic
production. With iron ore prices forecast to decline, this will result in high cost Chinese
mines closing down and their production being substituted for with imports, which can be
produced at a lower cost.
Imports into developed economies to moderate
In OECD economies, iron ore imports in 2011 are estimated to have increased by 3 per cent,
relative to 2010, to 332 million tonnes, largely underpinned by growth in imports into the
29
EU. In 2011, EU imports are estimated to increase by 7 per cent to 142 million tonnes
reflecting higher steel production. In Japan, iron ore imports in 2011 are estimated to
decrease by 1 per cent, relative to 2010, to total 132 million tonnes. The decline in imports
reflects the decrease in steel production in 2011 immediately following the earthquakes and
tsunami.
In 2012, OECD iron ore imports are forecast to increase by 7 per cent, relative to 2011, to
356 million tonnes. Japan’s iron ore imports are forecast to increase by 11 per cent, relative
to 2012, to 147 million tonnes, underpinned by forecast growth in its steel production.
Growth in EU imports in 2012 is forecast to moderate to 5 per cent, relative to 2011, as steel
production growth slows.
Australia and Brazil to continue dominating world seaborne trade in 2012
While exports from the major iron ore exporting countries have increased in 2011, a ban on
production from the Indian state of Karanataka and weather related supply disruptions in
Western Australia have limited further growth of iron ore exports. In 2012, forecast growth
in exports from Australia and Brazil, is expected to underpin the growth in world iron ore
exports.
Australia’s iron ore exports in 2011 are estimated to increase by around 7 per cent, relative
to 2010, to 431 million tonnes as weather-related supply disruptions in Western Australia in
the first half of the year limited growth. Nevertheless, the growth in exports was supported
by the start-up of new projects including from Fortescue’s Chichester Hub expansion.
In 2012, Australia's iron ore exports are forecast to increase by 12 per cent, relative to 2011,
to total 481 million tonnes. Increased exports in 2012 are expected to be supported by
increased production from a number of projects which started up in 2011 or are scheduled
to start-up in 2012. These include Mt Gibson Iron’s Extension Hill Direct Shipping Ore (DSO)
project, Rio Tinto’s Hamersley Iron Brockman 4 (Stage 2), BHP Billiton's Rapid Growth 5
project, and Fortescue Metals Group’s expansion at Chichester Hub.
Brazil's iron ore exports in 2011 are estimated to have increased by 6 per cent, relative to
2010, to total 330 million tonnes. This growth is underpinned by record production from
Vale’s Carajas operation, following the completion of a 10 million tonne annual capacity
expansion in 2010. In 2012, Brazil’s exports are forecast to increase by a further 9 per cent,
relative to 2011, to total 361 million tonnes, underpinned by full capacity production across
many operations, including those in the south-eastern, southern and northern systems.
In July 2010, a ban on production from the state of Karnataka, which accounted for about
one-quarter of India’s total iron ore production, was put in place by the Indian government
in an attempt to stop illegal mining. While the ban was partially lifted in some regions in
August 2011, losses in production in the first-half of 2011 negatively impacted India’s iron
ore exports. As a result, India’s iron ore exports for 2011 are estimated to have declined by
11 per cent, relative to 2010, to total 85 million tonnes. Reflecting the assumption that
legislative uncertainties and production losses will continue throughout 2012, Indian exports
are forecast to decrease by a further 11 per cent to total 76 million tonnes.
Australian exports
In 2011–12, Australia’s exports of iron ore are forecast to increase by 13 per cent, relative to
2010–11, to total 460 million tonnes, largely as a result of higher production at projects in
30
the Pilbara region of Western Australia. Australian export earnings from iron ore in 2011–12
are forecast to increase by 12 per cent, compared to 2010–11, to total $60.4 billion. Higher
export volumes and contract prices in the second half of 2011 will more than outweigh the
forecast lower contract prices for the first half of 2012.
Figure 2:
Australia’s iron ore exports
Please refer to page 62 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Metallurgical coal
Table 3:
World metallurgical coal trade
2009
2010
2011 s
Metallurgical coal imports (Mt)
European Union 27
Japan
China
Republic of Korea
Chinese Taipei
India
Brazil
World imports
220
Metallurgical coal exports (Mt)
Australia
Canada
United States
Russian Federation
World exports
135
159
22
28
34
51
13
14
220
273
272
36
53
34
21
4
25
9
45
58
48
28
5
30
12
273
2012 f
47
55
51
30
6
32
14
272
49
61
53
31
7
38
15
295
134
30
55
17
160
33
51
18
295
f BREE forecast. s BREE estimate.
Sources: BREE; IEA.
India and China to continue to rely on imported metallurgical coal in 2012
World metallurgical coal trade in 2011 is estimated to have decreased by less than 1 per
cent, relative to 2010, to 272 million tonnes. The decline reflects reduced supply from
Queensland following flooding in early 2011, a reduction in demand immediately following
the Japanese earthquakes and tsunami, and high prices that increased the competitiveness
of Chinese domestic supply. In 2012, the world trade of metallurgical coal is forecast to
increase by 8 per cent, compared to 2011, to total 295 million tonnes. This is expected to be
underpinned by growth in imports to Japan and India.
In 2011, imports into Japan are estimated to have fallen by 5 per cent to 55 million tonnes
reflecting lower steel production, particularly in the first half of 2011. Japan's imports in
2012 are forecast to increase by 11 per cent to 61 million tonnes, underpinned by an
increase in steel production.
India’s metallurgical coal imports in 2011 are estimated to increase by 7 per cent, relative to
2010, to total 32 million tonnes in line with increased steel production. In 2012, India’s
31
metallurgical coal imports are forecast to increase by 19 per cent compared to the previous
year, to total 38 million tonnes. This largely reflects an expected expansion of the steel
manufacturing sector, and limited domestic reserves of sufficiently high-quality metallurgical
coal.
In 2011 and 2012, China is expected to increase its reliance on imports relatively to
domestically produced metallurgical coal. The level of imports is dependent on the ability of
domestic coal producers to supply Chinese steel mills at a competitive price. Infrastructure
bottlenecks, other logistical constraints and an increase in demand for higher quality, lower
impurity metallurgical coal by steel mills will increase China’s dependence on imported
metallurgical coal. Reflecting an increase in steel production, China’s imports of
metallurgical coal in 2011 are forecast to increase by 6 per cent, relative to 2010, to total 51
million tonnes. China’s imports of metallurgical coal in 2012 are forecast to increase by a
further 4 per cent, relative to 2011, to total 53 million tonnes.
Australia remains the major exporter of metallurgical coal despite weather-related
losses
Australia is expected to be a significant contributor to world seaborne-traded metallurgical
coal supply, and is estimated to account for half of total world trade in 2011. This proportion
is lower than the 58 per cent it was in 2010, and has been a result of adverse weather in
Queensland and northern NSW in late 2010 and early 2011 that negatively impacted
production. In 2012, Australia’s exports are forecast to increase by 19 per cent, relative to
2011, to 160 million tonnes under the assumption of a return to average seasonal conditions
and planned expansions to production capacity Additional capacity that is expected to
contribute to higher production in 2012 include Wesfarmers’ Curragh mine and Xstrata’s
Newland Northern underground mine.
Canada’s exports in 2011 are estimated to total 30 million tonnes, an increase of 7 per cent
on the previous year. Strong demand and high prices have encouraged Canadian producers
to maximise production at existing mines. In 2012, Canada’s exports of metallurgical coal are
forecast to increase by a further 10 per cent to total 33 million tonnes. This reflects
continuing capacity expansions at Teck’s operations, including an upgrade and expansion at
its Elkview mine, and expected lower production losses associated with a lighter planned
maintenance program.
Australian exports
In 2011–12, Australia’s metallurgical coal exports are forecast to increase by 7 per cent,
relative to 2010–11, to total 150 million tonnes, reflecting increased production in
Queensland. Higher export volumes and contract prices will more than offset a stronger
Australian dollar to support a 13 per cent increase in Australia’s metallurgical coal export
earnings to $34 billion.
Figure 3:
Australia’s metallurgical coal exports
Please refer to page 44 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
32
Table 4:
Steel, iron ore and metallurgical coal outlook
World
Contract prices b
Iron ore c
Metallurgical coal d
US$/t
US$/t
2010
2011 s
2012 f
% change
112
191
153
289
139
226
–9.1
–21.6
2009–10
2010–11
2011–12 f
Australia
Production
Iron and steel
Iron ore
Metallurgical coal
Mt
Mt
Mt
6.89
423
163
7.31
450
146 s
5.70
489
156
–22.0
8.7
6.6
Exports
Iron and steel es
– value
Iron ore
– value
Metallurgical coal
– value
Mt
A$m
Mt
A$m
Mt
A$m
1.55
1120
390
34515
157
24526
1.78
1303
407
54197
140
29796
1.18
879
460
60412
150
33595
–33.7
–32.5
13.0
11.5
7.1
12.8
b fob Australian basis, BREE Australia–Japan average contract price assessment. c Fines contract, 62%
iron content basis. d High–quality hard coking coal. For example, Goonyella export coal. e Includes all
steel items in ABS, Australian Harmonized Export Commodity Classification, chapter 72, ‘Iron and
steel’, excluding ferrous waste and scrap and ferroalloys. f BREE forecast. s BREE estimate.
Sources: BREE; ABARES; International Iron and Steel Institute; Coal Services Australia; Queensland
Coal Board; United Nations Conference on Trade and Development.
33
Gold
Adam Bialowas

In 2012, gold prices are forecast to increase by 17 per cent relative to 2011, to US$1850
a tonne, underpinned by investment demand.

World gold mine production is forecast to increase in 2012 by 3 per cent compared with
2011, supported by increased production in Latin America and Africa.

In 2011–12, the value of Australia's gold exports are forecast to increase by 45 per cent
to $18.9 billion, driven by an increase in both export volumes and gold prices.
Gold prices have been volatile in second half 2011
In the September quarter 2011, the gold price averaged US$1701 an ounce, an increase of
over 13 per cent relative to the June quarter 2011, and 39 per cent higher than the
September quarter 2010. While the price of gold increased during the September quarter, it
also displayed significant volatility, with the London AM fix prices registering as high as
US$1897 an ounce and as low as US$1493 an ounce.
Figure 1:
Gold prices
Please refer to page 46 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
The increase in average gold prices and volatility throughout 2011 (see Figure 2) largely
reflects the ongoing developments in global financial markets associated with sovereign
debts in a number of European economies. This, in turn, has increased investment demand
for gold for institutional investors and central banks because of its ‘safe haven’ properties.
In 2011, gold prices have also been supported by an increase in fabricated gold demand,
such as jewellery and dental applications. Much of this additional demand has come from
China and India, supported by rising incomes and consumers seeking a safe store of value for
their wealth. Against a backdrop of strong demand, world gold supply growth has been
limited. World mine production is estimated to have only increased by 3 per cent in 2011,
relative to 2010, while central banks have become net buyers of gold, whereas for most of
the last decade they were net sellers.
For 2011 as a whole, the gold price is estimated to average US$1577 an ounce, an increase
of 29 per cent compared to the average price in 2010.
Figure 2:
Percentage change in daily gold price
Please refer to page 47 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
34
Gold prices to remain high in 2012
The world gold price in 2012 is forecast to average $US1850 an ounce, 17 per cent higher
than in 2011. Starting from a much higher base than in 2011, the price of gold is expected to
be supported by a number of factors including low interest rates in the US and Europe;
changes to the balance of some central bank portfolios; and continued investment and
fabrication demand from consumers in developing economies.
The duration and extent of the instability associated with global credit markets pose risks for
the gold price over the outlook period. Extended periods of financial market instability could
increase investment demand for gold and, in turn, could place further upward pressure on
the gold price.
In the US, the Federal Reserve's commitment to keep interest rates low into 2013 is
expected to support the price of gold throughout 2012. It is also expected that the low rate
of returns on US treasuries relative to the expected returns from gold over the period will
result in increased investment demand for gold.
The erosion in confidence in fiat currencies may also provide support for the gold price.
Traditionally, central banks in many less developed countries have held a large proportion of
their reserves in US dollars and/or euros. The poor performance of these reserve currencies
against local currencies may lead central banks to rebalance their portfolios towards other
assets, such as gold.
Fabrication demand to support consumption in 2012
Fabrication demand consists of gold used in jewellery, electronics, dental applications,
medals, coins and other industrial uses. In 2011, fabrication demand is estimated to increase
by 2 per cent, relative to 2010, to 2845 tonnes. The majority of this increase occurred in
China and India where continued growth in household incomes has underpinned increased
jewellery demand. Additionally, within these markets, some purchases of jewellery have a
quasi-investment component. Consequently the rapid increase in the price of gold may have
induced further demand for gold (in the form of jewellery) in the expectation that prices
may increase further.
In 2012, gold fabrication demand is forecast to increase by a further 4 per cent to 2971
tonnes, largely supported by continued strong jewellery demand from India and China.
However, important to the growth in consumption will be the outlook for gold price
volatility in 2012. If gold price volatility currently observed continues into 2012 then there
may be a dampening effect on gold fabrication consumption as consumers wait for a clearer
market signal before buying.
Emerging economies to support official Sector purchases
In 2011, the official sector (central banks) is estimated to have made net purchases of gold
of around 400 tonnes. This is a five-fold increase on 2010 levels and compares to net sales of
34 tonnes in 2009.
A major factor behind the transition of the official sector from a net seller to net purchaser
of gold has been has been the escalating concern over the dependability of traditional
reserve currencies. One of the major assets commonly held by central banks has been major
35
currencies such as the US dollar, the euro and the Yen. The poor performance of many of
these currencies against domestic currencies has led central banks to reconsider using gold
as a strategic asset.
Evidence of this transition is given by the net purchases made by many emerging economies
that have traditionally held a low percentage of their overall foreign reserves in the form of
gold. For instance, in the September quarter 2011, the Russian Federation added 15 tonnes
to its gold holdings; Thailand purchased 25 tonnes and Bolivia 14 tonnes.
In 2012, total net purchases by the official sector are expected to remain strong, increasing
by 13 percent to 450 tonnes. Evidence of the intent of some countries to continue increasing
their gold holdings can be seen by Venezuela’s nationalisation of its gold industry and
Kazakhstan’s commitment to purchase the nations entire bullion output until at least
2014/15. However, purchases depend on the individual policies of gold-holding countries,
which can change depending on perceptions of the global economic outlook.
World mine production to increase in 2012
Global gold mine production is estimated to increase by 3 percent in 2011, relative to 2010,
to total 2763 tonnes. A number of large gold producing economies increased production in
2011; however the strongest growth occurred in Africa and the Russian Federation.
African production was boosted through a number of projects that either commenced or
ramped up production throughout 2011. Projects included Randgold Resources’ Tongon
mine in Côte d’Ivoire (9 tonnes a year), Iamgold’s Essakane mine in Burkina Faso (10 tonnes
a year) and Newmont’s Ahafo mine in Ghana (18 tonnes in 2011) which was able to increase
production by targeting higher ore grades.
Additionally, South Africa's gold production in 2011 is estimated to increase by 1 per cent to
205 tonnes. This represents a reversal of a long term trend which has seen a steady decline
in output as a result of high production costs and lower ore grades. Sustained high gold
prices however, have led to redevelopment of a number of sites where mining has once
again become economically viable.
In the Russian Federation, gold production in 2011 is estimated to increase by 5 per cent,
relative to 2010, to 213 tonnes. This growth has been underpinned by increases in
production at Polyus Gold’s Blagodatnoye and Petropavlovsk’s Malomir operations.
In 2012, world gold mine production is forecast to increase by a further 3 per cent to 2850
tonnes. Increased production is expected to come from Indonesia and Latin America, where
operations were disrupted by a series of industrial disputes in 2011. In addition, African
production is forecast to increase, underpinned by higher production from mines which
started operation in 2011.
Australian gold production
In 2011–12, Australian gold production is forecast to grow for a fourth consecutive year,
increasing by 3 per cent to 274 tonnes. In the second half of 2011, production has
commenced at a number of expanded or new operations, including Castlemaine Goldfields’
Ballarat project (1.5 tonnes a year); Ramelius Resources’ Mt Magnet (2.5 tonnes a year); and
a redevelopment of Navigator Resources’ Bronzewing operations (3 tonnes a year).
Additionally, a number of operations are scheduled to start-up in the first half of 2011
36
including Crocodile Gold’s Cosmo Deeps (3 tonnes a year) in the Northern Territory and St
Barbara’s King of the Hills expansion (additional 1.5 tonnes a year) in Western Australia.
Exports to rise in 2011–12
Australian gold exports consist of refined gold from Australian mine production and imports
of gold dore (impure gold) and scrap gold, which are shipped in from overseas and then
refined into gold bullion and re-exported.
In 2011–12 the volume of Australian gold exports are forecast to increase by 12 per cent,
relative to 2010–11, to 336 tonnes. The forecast increase in exports is expected to be
supported by an increase in domestic mine production and an assumed increased availability
of scrap and gold dore from international sources as a result of continued high prices for
gold.
In 2011–12, forecast higher export volumes and higher gold prices are expected to result in
export earnings increasing by 45 per cent, relative to 2010–11, to a record $18.9 billion.
Figure 3:
Australia’s gold exports
Please refer to page 50 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 1:
World
Fabrication
consumption
Mine production
Scrap sales
Net stock sales
– official sector
– private sector
– producer
hedging
Price b
Australia
Mine production
Exports
– value
Price
Gold outlook
2010
2011 s
2012 f
% change
t
2779
2845
2971
4.4
t
t
t
t
t
2689
1645
(1555)
(73)
(1374)
2763
1689
(1607)
(400)
(1175)
2850
1690
(1569)
(450)
(1109)
3.1
0.1
–2.4
12.5
–5.6
t
(108)
(32)
(10)
–68.8
1577
1850
17.3
2009–10
2010–11
2011–12 f
240
335
12996
1236
265
301
13014
1389
274
336
18874
1755
US$/oz 1225
t
t
A$m
A$/oz
3.4
11.6
45.0
26.4
b London Bullion Market Association AM price. f BREE forecast. s BREE estimate.
Note: Net purchasing and dehedging shown in brackets.
Sources: BREE; ABARES; Gold Fields Mineral Services; Australian Bureau of Statistics; London Bullion
Market Association.
37
Aluminium
George Stanwix

Aluminium prices are estimated to average around US$2440 a tonne in 2011, 12 per
cent higher than in 2010. In 2012, aluminium prices are expected to decrease to 9 per
cent below 2011 average levels, averaging around US$2200 a tonne. Alumina spot prices
have averaged around US$390 a tonne in the year to November 2011 and are forecast
to decline in 2012.

World aluminium consumption growth is forecast to increase by 4 per cent in 2012,
relative to 2011, to 43 million tonnes. The increase in world aluminium consumption is
expected to be underpinned by growth in demand in emerging Asian economies.

In 2012, world aluminium production is forecast to increase by 8 per cent to 46 million
tonnes, supported by the start-up of new capacity in key producing regions.

Australian aluminium export earnings in 2011–12 are forecast to total around $4 billion,
4 per cent lower than in 2010–11, due to forecast lower aluminium prices. The value of
alumina exports is forecast to increase by 18 per cent in 2011–12 to $6.2 billion,
underpinned by higher export volumes.
Aluminium prices to decrease in 2012
In the first eleven months of 2011, aluminium prices averaged US$2432 a tonne, 13 per cent
higher than the average price of US$2160 a tonne in the corresponding period in 2010. In
2011, higher aluminium prices have been supported by strong demand for semi-fabricated
aluminium products, particularly in developing economies. Aluminium prices in 2011 have
also been buoyed by strong aluminium consumption growth in China, in particular for use in
its electricity transmission network and automobile production. However, strong world
production growth and relatively high aluminium inventories so far in 2011 have limited
further increases in the aluminium price. Aluminium stocks at the end of 2011 are estimated
to have increased by 28 per cent, relative to 2010, to 10.5 weeks of consumption. For 2011
as a whole, Aluminium prices are estimated to average around US$2440 a tonne.
In 2012, aluminium prices are forecast to average around US$2200 a tonne, a decrease of 9
per cent compared with 2011. The decrease in prices reflects weaker consumption growth
associated with slower economic growth in most large aluminium consuming economies.
World aluminium production is forecast to exceed consumption resulting in an increase of
stocks in 2012. At the end of 2012, world stocks are forecast to increase year-on-year by 37
per cent to 14.4 weeks of consumption. While stocks levels above 10 weeks of consumption
are historically high, a large proportion of LME stocks are covered by financing transactions
and are not readily available to the market.
Figure 1:
LME aluminium prices and stocks
Please refer to page 52 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
38
Moderate outlook for aluminium consumption
In 2011, world aluminium consumption is forecast to increase by around 4 per cent,
compared to 2010, to total 41 million tonnes. Over the outlook period, changes in the rates
of economic and industrial production growth are expected to be the main influences on
aluminium consumption. Based on assumed economic growth in the various aluminium
markets over the outlook period, consumption is likely to expand the most in Asia.
Aluminium demand will be underpinned by growth in transport and housing construction
activity and demand for packaging applications in emerging Asian economies. In 2011,
aluminium consumption is estimated to increase only modestly in OECD economies, in line
with assumed moderate economic growth. World consumption of aluminium is forecast to
increase by a further 4 per cent in 2012 to total 43 million tonnes.
Continuing strong aluminium consumption growth in China
China’s consumption is forecast to make up around 44 per cent of world consumption in
2011. Particularly important for Chinese aluminium consumption is motor vehicle
production and investment in fixed assets. In China, production of cars has grown by 4 per
cent in the first ten months of 2011, relative to the corresponding period in 2010 (see Figure
2). Investment in fixed assets, of which construction is a major component, was also up 29
per cent through the first ten months of 2011 compared to the same period in 2010. China’s
aluminium consumption is forecast to increase by 9 per cent in 2011 relative to 2010 to total
17 million tonnes.
In 2012, China’s aluminium consumption is again expected to grow, associated with
increases in industrial production and further expansion in aluminium consuming industries,
including construction, packaging, transport, and large-scale upgrading of power networks in
urban areas. However, China's aluminium consumption in 2012 is forecast to grow at a
slower rate compared with 2011, reflecting relatively weaker economic growth and a lower
rate of growth in manufacturing exports. Reflecting these developments, China's aluminium
consumption in 2012 is forecast to increase by 5 per cent to 18 million tonnes.
Figure 2:
China’s monthly motor vehicle production
Please refer to page 53 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Moderate aluminium consumption growth in the OECD
In 2011, the US is expected to be the main contributor to aluminium demand in the OECD,
more than offsetting lower consumption in the European Union (EU) and Japan. Aluminium
consumption in OECD economies in 2011 is forecast to increase by around 1 per cent
relative to 2010, to 16 million tonnes.
Growth in aluminium consumption in the EU in 2011 is expected to be moderate compared
to other regions because of weak economic growth in the euro zone. However, a weaker
euro/US Dollar exchange rate in 2012 may assist EU exports and, in particular, car producers
in Germany, France and Italy to increase export sales that would increase EU aluminium
consumption. In the US, increased aluminium consumption in 2011 is expected to be
supported by increased production in the transport sector, as it rebounds following very low
production levels in 2008 and 2009. In the first nine months of 2011 US annualised motor
39
vehicle production increased by 8.3 per cent, relative to 2010, to 8.8 million units (see figure
3).
Figure 3:
Annualised US monthly motor vehicle production
Please refer to page 53 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In Japan, industrial production is assumed to decline by 4 per cent in 2011, compared to
2010, largely as a result of the devastating impacts of the March 2011 earthquakes and
tsunami. Consequently, aluminium consumption in Japan is forecast to decrease by 2 per
cent in 2011, compared with 2010. In 2012, however, aluminium consumption growth in
Japan is forecast to increase by 9 per cent, relative to 2011, in line with assumed stronger
economic growth associated with rebuilding efforts following the 2011 natural disaster.
Aluminium production to expand in key producing regions
World aluminium production in 2011 is forecast to increase by 5 per cent, relative to 2010,
to total 43 million tonnes, and increase by a further 8 per cent to 46 million tonnes in 2012.
Aluminium production growth is expected to be supported by the start-up of new capacity in
India and the Middle East.
In 2011, China's aluminium production is estimated to increase by 6 per cent, compared with
2010, to around 17 million tonnes. The increase in production in China is related to the
restart of idled smelter capacity in the Henan and Guangxi provinces and increased output
from newly commissioned projects in the Gansu, Shandong and Henan provinces. In 2012,
China's aluminium production is forecast to increase by 4 per cent relative to 2011, to
around 18 million tonnes. Higher production will be supported by increased output from
smelters that have started up in 2011 and those scheduled to start-up in 2012. However, this
will be partially offset by lower production from some existing smelters, reflecting increases
in domestic electricity tariffs, higher raw material costs, and wage inflation.
In 2011, India’s aluminium production is estimated to increase by 12 per cent to 1.8 million
tonnes in 2011, and by a further 67 per cent to 3 million tonnes in 2012. In India, a number
of new projects to be commissioned during 2012 will contribute to higher production. Key
projects include Vedanta Resources’ Jharsuguda II smelter (capacity of 1.25 million tonnes a
year); Hindalco’s and Aditya’s Orissa smelter (359000 tonnes a year); Hindalco’s Mahan MP
smelter (359000 tonnes a year); and BALCO’s Korba smelter (325000 tonnes a year).
Aluminium production growth in the Middle East will be supported by the expansion in
production from recently commissioned smelters, including Norsk Hydro’s and Qatar
Aluminum’s Qatalum smelter (585000 tonnes a year) and DUBAL and Mubadala’s EMAL
smelter (750000 tonnes a year). Aluminium production in the Middle East is forecast to
increase by 15 per cent to 3.8 million tonnes in 2011, and by a further 10 per cent to 4.2
million tonnes in 2012.
Australian aluminium exports: quantity up, value down
In 2011–12, Australia's aluminium production is forecast to increase by 2 per cent, relative
to 2010–11, to 2 million tonnes. Increases in Australian aluminium production have been
associated with gradual increases in efficiency at aluminium smelters.
40
Australia's aluminium exports are forecast to increase by 3 per cent in 2011–12, relative to
2010–11, to total 1.7 million tonnes. This increase in exports reflects the moderate growth in
aluminium production. In 2011–12, export earnings from aluminium are forecast to decline
by 4 per cent to $4 billion as higher export volumes will be more than offset by forecast
lower world prices.
Figure 4:
Australia’s aluminium exports
Please refer to page 55 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Alumina
Alumina prices are expected to ease in 2012
In the year to end-November 2011, the alumina spot price averaged around US$390 a tonne.
Alumina prices have been supported by strong alumina demand associated with an increase
in aluminium production. For 2011 as a whole, alumina spot prices are forecast to average
US$384 a tonne, an increase of 15 per cent from the average price in 2010. In 2012, alumina
prices are forecast to decrease by 7 per cent to US$359 a tonne as world alumina production
increases. Lower aluminium prices will limit the willingness of aluminium producers to pay
higher prices for alumina.
Alumina production to remain strong
In 2011, world alumina production is estimated to increase by 8 per cent, relative to 2010, to
87 million tonnes, and by a further 7 per cent, compared to 2011, to 94 million tonnes in
2012. The increase in production in 2011 and 2012 reflects the start-up of new and
expanded refineries in India and the Middle East.
Australia’s alumina export earnings and production to increase in 2012
In 2011–12, Australia’s alumina production is forecast to increase by 4 per cent to around 20
million tonnes, as production at Rio Tinto’s Queensland Alumina refinery is assumed to
return to capacity following flood related impacts in the first half of 2011. In addition,
production at BHP Billiton’s Worsley refinery is expected to increase with the completion of
a 1.5 million tonne a year expansion.
Underpinned by higher production, Australian export volumes of alumina in 2011–12 are
forecast to increase by 4 per cent, relative to 2010–11, to 16.8 million tonnes. In 2011–12,
higher export volumes are forecast to offset lower prices, resulting in export earnings from
alumina increasing by 18 per cent, relative to 2010–11, to $6.2 billion.
Figure 5:
Australia’s alumina exports
Please refer to page 56 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
41
Table 1:
Aluminium and alumina outlook
World aluminium
Production
Consumption
Closing stocks b
– weeks
consumption
Price c
World alumina
Spot price
Australia
Production
Bauxite
Alumina
Aluminium
Exports
Alumina
– value
Aluminium
– value
2010
2011 s
2012 f
% change
41093
39661
6501
43049
41217
8334
46391
42827
11897
7.8
3.9
42.8
8.5
10.5
14.4
37.1
US$/t 2170
USc/lb 98
2437
111
2211
100
–9.3
–9.3
US$/t
333
384
359
–6.5
2009–10
2010–11
2011–12 f
Mt
kt
kt
68
20057
1920
69
19544
1937
69
20361
1979
1.3
4.2
2.2
kt
A$m
kt
A$m
16653
4969
1624
3838
16227
5218
1686
4178
16799
6156
1741
4029
3.5
18.0
3.3
–3.6
kt
kt
kt
b Producer and LME stocks. c LME cash prices for primary aluminium. f BREE forecast. s BREE
estimate.
Sources: BREE; ABARES; London Metal Exchange; World Bureau of Metal Statistics.
42
Copper
Adam Bialowas

In 2012, the world copper price is forecast to average around US$8538 a tonne, a
decrease of 4 per cent compared with 2011.

World copper consumption in 2012 is forecast to increase year-on-year by 4 per cent,
underpinned by growth in developing economies.

World copper mine production in 2012 is forecast to increase by 8 per cent, relative to
2011 reflecting increased production in Africa and Latin America.

In 2011–12, the volume of Australia’s copper exports are forecast to increase by 10 per
cent, relative to 2010–11, underpinned by the start-up of new copper mines.
Copper prices
Over the first three quarters of 2011, the copper price averaged around US$9300 a tonne, a
30 per cent increase from the corresponding period in 2010 The higher prices reflected
strong growth in consumption, particularly in the first half of 2011, coupled with a series of
disruptions at some of the world’s largest copper mines that significantly impacted
production. Throughout October, however, copper prices repeatedly traded below US$7000
a tonne as a result of uncertainty surrounding the global economic outlook and possible
implications for commodity demand. By early December, copper prices were trading around
US$7700 a tonne. For 2011 as a whole, world copper prices are estimated to average
US$8868 a tonne, an 18 per cent increase relative to 2010.
World production of refined copper is estimated to be 19.5 million tonnes in 2011, a 1 per
cent increase relative to 2010. Reflecting a surplus in production, world copper stocks at the
end of 2011 are expected to increase on 2010 levels from an equivalent of 2.8 weeks of
consumption to around 3.3 weeks of consumption.
Figure 1:
LME copper prices
Please refer to page 57 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In 2012, world copper prices are forecast to average US$8538 a tonne, a decrease of 4 per
cent from 2011. The decrease in the average 2012 price reflects the significant decrease in
copper prices in the December quarter of 2011 being sustained into the first half of 2012.
This downturn in price is expected to continue into the first quarter of 2012, which is
forecast to average significantly lower than the corresponding quarter in 2011. However,
copper prices are forecast to increase throughout the remainder of 2012.
The pace of world economic recovery in 2012, especially in OECD economies, is a key risk
factor associated with the copper price forecast. If economic growth increases at a quicker
pace than is currently assumed, world copper demand, and therefore prices, could be higher
than are currently forecast. Alternatively, if economic growth in the key copper consuming
nations of China, Germany and the US proves to be weaker than currently assumed, copper
prices could average lower than forecast.
43
Consumption to be supported by Chinese demand in 2012
In 2011, world copper consumption is forecast to increase marginally relative to 2010, to
19.3 million tonnes. This growth has been primarily supported by demand in the Russian
Federation, while consumption in the OECD and China has remained relatively flat. World
copper consumption in 2012 is forecast to increase by 4 per cent to 20 million tonnes. In
2012, almost all of the growth is forecast to come from emerging economies, particularly
China.
In 2011, China's copper consumption is estimated to have remained unchanged at around
7.5 million tonnes, as lower consumption in the first half of the year was matched by an
increase in consumption in the second half of the year. Lower consumption (as measured by
production and imports) in the first half of 2011, reflected tighter lending conditions and
high prices that encouraged consumers to draw down stocks given a tight world supply.
China's copper consumption in 2012 is forecast to increase by 6 per cent, relative to 2011, to
total 7.9 million tonnes. The increase in consumption reflects continuing GDP growth that
will support the expansion of housing, infrastructure and electricity grid construction, all of
which are copper-intensive activities.
In 2011, refined copper consumption by OECD economies is expected to decline by 1 per
cent to 7.9 million tonnes. OECD copper consumption increased 3 per cent in the first half of
2011, relative to the corresponding period in 2010, as manufacturing activity was relatively
strong in both the US and Germany. However, copper consumption in the OECD in the
second half of 2011 is estimated to have decreased, compared with the second half of 2010,
due to weaker economic growth and concerns over the euro zone sovereign debt crisis
affecting the real economy.
In 2012, OECD copper consumption is forecast to increase by 2 per cent to total 8.1 million
tonnes. Japan is the only OECD economy where significant copper consumption growth is
forecast in 2012, where growth will be underpinned by the reconstruction of infrastructure
damaged by the March 2011 earthquakes and tsunami.
Mine production to be supported by Latin American output
In 2011, world copper production is forecast to increase by less than 1 per cent, relative to
2010, to 16.3 million tonnes. The weak growth in copper production reflects higher output in
Africa being partially offset by lower output in Indonesia and Latin America. In 2012, world
copper production is forecast to increase by 8 per cent to 17.5 million tonnes, supported by
production from new projects and an assumption that industrial action will ease in Latin
America.
In Latin America, copper production in 2011 is estimated to decrease by 1 per cent, relative
to 2010, to around 7 million tonnes. Production, particularly in Chile and Peru, was affected
by lower ore grades and industrial action at a number of key mines. With industrial action
assumed to ease in 2012, copper production is forecast to increase by 11 per cent, relative
to 2011, to 7.7 million tonnes. Higher production in Latin America in 2012 will also be
supported by increasing production from the Antamina mine in Peru, where production
started in 2011.
In 2011, Africa’s copper production is forecast to increase by 3 per cent to 1.4 million tonnes
supported by the start-up of production at Tiger Resources’ Kipoi project (35000 tonnes
44
annual capacity) and the expansion of Anvil Mining’s Kinsevere operation (60000 tonnes
annual capacity). Both of these projects are located in the Democratic Republic of Congo.
African copper production in 2012 is forecast to increase by 20 per cent, relative to 2011, to
1.6 million tonnes as the above mentioned mines increase production towards capacity.
Indonesia’s copper production in 2011 is forecast to decrease by 28 per cent, relative to
2010, to 626000 tonnes. The lower production reflects a combination of lower ore grades
and significant industrial action at the country’s largest mine, Grasberg. In 2012, Indonesia’s
production is forecast to decrease by a further 11 per cent to 555000 tonnes reflecting lower
ore grades and the possibility of industrial action continuing into the early part of 2012.
World refined copper production in 2011 is estimated to increase by 1 per cent, relative to
2010, to 19.5 million tonnes and by a further 3 per cent to 20.1 million tonnes in 2012. The
majority of the increase in production in 2012 is expected to come from projects based on
solvent extraction-electrowinning (SX-EW) technology.
Australian story
Australia’s copper mine production in 2011–12 is forecast to increase by 11 percent, relative
to 2010-11, to around 1.1 million tonnes (in copper content terms). New production is
expected to come from Oz Minerals’ Ankata expansion at its Prominent Hill operation
(25000 tonnes a year), Sandfire Resources’ DeGrussa operation (77000 tonnes a year) and
Hillgrove Resources’ Kanmantoo project (20000 tonnes a year).
Relative to 2010–11, Australia’s refined copper production is forecast to increase by 3
percent in 2011–12 to 498000 tonnes. The increase in production reflects the restart of CST
Mining’s Lady Annie SX-EW operation.
Consistent with increases in mine production, Australia’s copper exports in 2011–12 are
forecast to increase by 10 percent, compared with 2010-11, to total 935000 tonnes in metal
content terms. In 2011–12 the value of Australia’s copper exports are forecast to increase by
3 per cent, relative to 2010–11, to $8.7 billion. The increase in export values reflects higher
export volumes, combined with steady prices.
Figure 2:
Australia’s copper exports
Please refer to page 60 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 1:
Copper outlook
2010
World
Production
– mine
– refined
Consumption
Closing stocks
– weeks consumption
Price
kt
kt
kt
kt
16147
19222
19204
1017
2.8
US$/t 7529
USc/lb 341.5
2009–10
Australia
45
2011 s
2012 f
% change
16263
19475
19270
1222
3.3
8868
402.3
17501
20136
20041
1317
3.4
8538
387.3
7.6
3.4
4.0
7.8
3.0
–3.7
–3.7
2010–11
2011–12 f
Mine output
Refined output
Exports
– ores and concentrates b
– refined
– total value
kt
kt
819
395
952
485
1053
498
10.6
2.7
kt
kt
A$m
1928
271
6506
1751
375
8416
2052
381
8653
17.2
1.6
2.8
b Quantities refer to gross weight of all ores and concentrates. f BREE forecast. s BREE estimate.
Sources: BREE; ABARES; Australian Bureau of Statistics; International Copper Study Group; World
Bureau of Metal Statistics.
46
Nickel
Tom Shael

In 2012, nickel prices are forecast to average US$19900 a tonne, a decrease of 13 per
cent compared with 2011. Over the course of 2012, weaker nickel consumption growth
relative to growth in new supply from the start-up of new nickel mines is expected to
place downward pressure on prices.

World nickel consumption is forecast to increase by 5 per cent, relative to 2011, to total
over 1.6 million tonnes, whereas world refined nickel production is forecast to increase
by 8 per cent to just over 1.7 million tonnes.

In 2011–12, Australia’s nickel export volumes are forecast to increase by 11 per cent,
relative to 2010–11, to total 233000 tonnes. The increase in export volumes will be more
than offset by forecast lower prices, resulting in an overall decrease of 9 per cent,
relative to 2010–11, in the value of nickel exports to around $3.7 billion.
Prices to remain buoyant in 2012
In 2011, nickel prices peaked at US$29030 a tonne in late February before trading as low as
US$16935 a tonne in late November. The fall in prices between February and November
reflected increasing uncertainty regarding the global economic outlook and deteriorating
prospects for stainless steel consumption growth and expectations for future nickel demand.
For 2011 as a whole, nickel prices are estimated to average around US$22800 a tonne.
In 2012, nickel prices are forecast to decrease by 13 per cent, relative to 2011, averaging
slightly below US$19900 a tonne. The decrease in price reflects nickel production growth
increasing at a faster rate than consumption growth. The role of nickel pig iron in supplying
China’s domestic market (see Box 1 below) combined with high marginal costs of new
projects (mostly high-pressure acid leaching (HPAL) laterite projects) is expected to limit the
likelihood of nickel prices trading below US$18000 a tonne for a sustained period.
Stocks on the London Metals Exchange (LME) have been declining steadily since October
2010, and were around 91000 tonnes (or 3 weeks of consumption) in early December 2011.
Similar to what occurred when nickel prices fell heavily in late 2008 and early 2009; the
drawdown on LME stocks is associated with a significant increase in Chinese imports of
refined nickel, as Chinese producers and traders re-stock and/or increase stockpiles of the
metal while prices are relatively low. However, this is not expected to continue as port
stocks of low-grade nickel ore, which is primarily suited for making nickel pig iron, have been
reported to be as high as 12 million tonnes.
Figure 1:
LME nickel prices and stocks
Please refer to page 62 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
47
Box 1: Nickel Pig Iron and its impact on the nickel market
Nickel pig iron (NPI) is a ferronickel pig iron produced by smelting low grade nickel ores
(often nickel laterite). It has been increasingly used by Chinese stainless steel producers as a
substitute for conventional refined ferronickel (25–40 per cent nickel).
NPI is produced in two forms, a low nickel variety containing 4–6 per cent nickel and a high
nickel variety containing 8–13 per cent nickel. The low and high nickel varieties have,
respectively, been recently trading between 77–82 per cent and 85–90 per cent of the LME
nickel price.
In terms of costs, NPI is estimated to have a marginal cost of production of around
US$15000 a tonne of refined nickel equivalent when it is produced in an electric arc furnace
(EAF), and around US$21000 a tonne in a blast furnace. Given capacity constraints faced by
each type of smelting, average marginal costs for the industry as a whole are estimated to
be around US$18000 a tonne.
In 2011, around 260000 tonnes, or 40 per cent of China’s nickel consumption—equal to 16
per cent of world consumption—is estimated to be met with NPI. In a stable world nickel
market (i.e. no large increases in supply and/or large reductions in demand), the effect of
China’s dependence on NPI combined with their large share of world demand can have two
impacts, depending on the nickel price. When nickel prices are around or below US$18000 a
tonne, marginal NPI producers will reduce output or shut down, forcing Chinese stainless
steel producers to source conventional refined nickel from the international market to sate
their demand. This will drive up the international nickel price.
Conversely, when prices are high (i.e. greater than US$21000 a tonne), NPI producers will
increase production, and new capacity may even be commissioned if the price remains high
for long enough. This will in turn reduce China’s demand for conventional refined nickel
imports and effectively increase its supply outside of China, placing downward pressure on
international prices. Therefore, in the presence of steady demand and supply from outside
of China, NPI places to some degree a minimum and maximum price on nickel and, thus, is
expected to limit the occurrence of large and sustained price swings in the short-run.
Consumption to moderate with weaker economic growth
In 2011, world nickel consumption is estimated to increase by 6 per cent, relative to 2010, to
total 1.6 million tonnes. The growth in world consumption has been almost entirely
supported by China. In the European Union (EU), consumption in 2011 has plateaued or
decreased (in the case of Italy and Finland) relative to 2010, as weak economic growth has
limited demand for nickel-intensive products such as stainless steel.
Table 1:
World nickel consumption
Country
China
Chinese Taipei
European Union 27
India
Japan
Korea, Rep. of
Yearly consumption (kt)
2008
2009
2010
360
442
55
71
374
295
32
32
158
121
56
67
48
2011 s
575
70
326
34
149
74
2012 f
675
43
334
34
151
75
740
45
337
37
154
75
United States
127
World nickel consumption
1278
90
1241
120
1464
124
1557
127
1642
f BREE forecast. s BREE estimate.
Sources: BREE; INSG.
China’s consumption of nickel in 2011 is estimated to increase by 17 per cent, relative to
2010, to total 675000 tonnes. In 2012, China’s consumption is forecast to grow by a further
10 per cent to total 740000 tonnes and account for 45 per cent of world consumption. The
slower forecast growth rate for 2012 reflects assumed moderately weaker economic growth
and slowing growth in industrial production that will affect demand for stainless steel and
nickel.
Figure 2:
Chinese and world nickel consumption
Please refer to page 64 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In 2012, world nickel consumption is forecast to increase by 5 per cent, relative to 2011, to
total over 1.6 million tonnes. Growth in 2012 will largely be underpinned by China, with only
small increases in consumption forecast to occur in other traditional markets such as the EU,
the US and Japan.
In 2012, nickel consumption in developed economies is forecast to increase, albeit modestly.
In the EU, the US and Japan, nickel consumption is forecast to grow by 1 per cent, 2 per cent
and 2 per cent, respectively. Growth in the EU will be supported by small increases in several
smaller countries, which will more than offset a forecast 2 per cent decrease in consumption
in Germany, the largest consumer of nickel in Europe. The increase in consumption in Japan
will be supported by post-tsunami reconstruction continuing from the second half of 2011
into 2012.
World mine production to moderate in 2012 after strong growth in 2011
In 2011, world nickel mine production is estimated to increase by 20 per cent, relative to
2010, to total 1.9 million tonnes. The major contributors to this increase have been Brazil
and Canada and nickel laterite producers that include Indonesia and the Philippines.
Table 2:
World nickel mine production
Country
Australia
Brazil
Canada
Indonesia
Philippines
Russian Federation
World mine production
Yearly production (kt)
2008
2009
2010
199
166
38
38
260
137
219
203
79
119
268
262
1549
1347
f BREE forecast. s BREE estimate.
Sources: BREE; INSG.
49
1578
2011 s
171
59
158
236
190
270
2012 f
213
140
210
285
230
270
1887
218
150
220
295
230
280
1986
In 2011, Brazil’s nickel mine production is estimated to surge by 137 per cent, relative to
2010, to total 140000 tonnes. The increase in production has been underpinned by the startup of Vale’s Onça Puma mine (48000 tonnes a year) in March 2011 and an increase to
production capacity at Anglo American’s Barro Alto (41000 tonnes a year). Brazil’s nickel
mine production in 2012 is forecast to increase by a further 7 per cent to a total of 150000
tonnes, largely reflecting increased production at Onça Puma and Barro Alto.
Canada’s nickel mine production is estimated to increase by 33 per cent in 2011, relative to
2010, to total 210000 tonnes, and by a further 5 per cent to 220000 tonnes in 2012. The
majority of Canada’s growth in 2011 and 2012 is expected to come from production
increases at Vale’s Sudbury and Voisey Bay operations after production restarted in mid2010, following two years of labour-related supply disruptions.
World nickel mine production in 2012 is forecast to increase by 5 per cent, relative to 2011,
to total just below 2 million tonnes. This will be largely underpinned by nickel laterite
production from new projects in South-East Asia and Africa. In Madagascar, Sherritt
International, in a joint venture with Sumitomo and Korea Resources, continued
commissioning its 60000 tonne a year Ambatovy nickel-cobalt laterite project in 2011, with
first production expected in 2012. MCC’s joint venture Ramu project (31 150 tonnes a year)
in Papua New Guinea and Vale’s Goro nickel project (60000 tonnes a year) in New Caledonia
are also expected to add to world mine production in 2012.
World refined production to grow steadily over 2011 and 2012
World production of refined nickel is estimated to increase by 9 per cent, relative to 2010, to
total 1.6 million tonnes in 2011. Around half of this increase is expected to originate in Asia,
where production increased by an estimated 65000 tonnes to total 603000 tonnes. A large
73000 tonne increase in China’s production was partially offset by an 8000 tonne decline in
Japan’s production associated with earthquake damage to Pacific Metal’s Hachinohe
refinery. Growth in the Americas, which will contribute one third of world growth in 2011,
will be supported by increases in production in Canada (37000 tonnes) and Brazil (11000
tonnes).
In 2012, world production of refined nickel is forecast to increase by a further 8 per cent to
total 1.7 million tonnes. The largest contributors to this increase are expected to be in Brazil
(30000 tonnes), Australia (28000 tonnes) and Japan (12000 tonnes). Production in China is
expected to grow at a modest 1 per cent as forecast low nickel prices put pressure on
higher-cost NPI producers (see Box 1 above).
Table 3:
World nickel refined production
Country
Australia
Canada
China
Japan
Norway
Russian Federation
World refined production
Yearly production (kt)
2008 2009
2010
109
131
168
117
200
254
158
144
89
89
258
245
1382
1322
50
1446
2011 s
102
105
332
166
92
262
2012 f
113
142
405
158
92
262
1580
141
150
410
170
92
267
1709
f BREE forecast. s BREE estimate.
Sources: BREE; INSG.
Australia’s mine and refined production to increase in 2011–12
In 2011–12, Australia’s nickel mine production is forecast to increase by 14 per cent, relative
to 2010–11, to total 221000 tonnes. Underpinning this growth will be new production from
First Quantum’s recently redeveloped 39000 tonne a year Ravensthorpe mine.
In 2011–12, refined production is forecast to increase by 29 per cent to a total of 130000
tonnes. This reflects higher forecast production from the three existing refineries—BHP
Billiton’s Kwinana, Queensland Nickel’s Yabulu and Minara Resources’ Murrin Murrin—
associated with increased availability of feedstock.
Australian export earnings to suffer from lower prices
In 2011–12, the volume of nickel exported is forecast to increase by 11 per cent, relative to
2010–11, to total 233000 tonnes, supported by strong growth in mine and refined
production.
Australia’s nickel export earnings in 2011–12 are forecast to decrease by 9 per cent, relative
to 2010–11, to around $3.7 billion. Higher export volumes will be more than offset by lower
prices compared with 2010–11 and an assumed strong Australian dollar.
Figure 3:
Australia’s nickel exports
Please refer to page 67 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 4:
World
Mine production
Refined
production
Consumption
Closing stocks
– weeks
consumption
Price
Australia
Production
Mine bs
Refined
Intermediate
Exports cs
– value
Nickel outlook
2010
2011 s
2012 f
% change
kt
1578
1887
1986
5.2
kt
1446
1580
1709
8.2
kt
kt
1464
213
1557
236
1642
304
5.5
28.8
7.6
7.9
9.6
21.5
22831
1036
19875
902
–12.9
–12.9
2009–10
2010–11
2011–12 f
160
120
43
221
3875
194
101
60
210
4097
221
130
55
233
3748
US$/t 21800
USc/lb 989
kt
kt
kt
kt
A$m
13.9
28.7
–8.3
11.0
–8.5
b Nickel content of domestic mine production. c Includes metal content of ores and concentrates,
intermediate products and nickel metal. f BREE forecast. s BREE estimate.
51
Sources: BREE; ABARES; Australian Bureau of Statistics; International Nickel Study Group; London
Metal Exchange; World Bureau of Metal Statistics.
52
Zinc
Clare Stark

In 2012, zinc prices are forecast to average around US$2050 a tonne, 6 per cent lower
than in 2011.

World refined zinc production is forecast to exceed world zinc consumption resulting in
an increase in stocks.

Relatively strong zinc consumption in developing economies, particularly China and
India, is expected to offset weaker demand in OECD economies.

In 2011–12, Australian zinc export volumes (metallic content) are forecast to increase by
2 per cent to around 1.54 million tonnes, while export earnings are forecast to decrease
10 per cent reflecting forecast lower world prices and an assumed stronger Australian
dollar in 2011–12 compared to 2010–11.
Prices to moderate
In 2011, world zinc prices peaked in February at US$2546 a tonne, before falling to around
US$1750 a tonne in October, the lowest level since July 2010. In the first half of 2011, zinc
prices averaged US$2320 a tonne. World zinc prices declined steadily in the second half of
2011, and are estimated to average around US$2060 a tonne. The lower prices reflect
uncertainty surrounding the outlook for world economic growth associated with large public
sector debt in a number of European economies. For 2011 as a whole, zinc spot prices are
estimated to average US$2190 a tonne, 2 per cent higher than the average price in 2010.
In 2012, world zinc prices are forecast to decrease by 6 per cent, compared to 2011, to
average around US$2050 a tonne. The lower zinc prices in 2012, compared with 2011,
reflect relatively weak consumption growth in OECD economies and relatively high zinc
stocks.
Stocks to remain high
London Metal Exchange (LME) stocks at the end of October 2011 are estimated to be around
775000 tonnes, having fallen from a 15-year high of around 895000 tonnes in early July
2011. However, stocks remain well above the average of around 426000 tonnes over the
past 15 years. The high stocks reflect production growing at a faster rate than consumption
in 2011 and the emergence of a carry trade where large volumes of metals, including zinc,
are used as security for bank lending.
The world zinc market is forecast to remain in surplus in 2012, although the supply-demand
balance will tighten, with production exceeding consumption by around 1 per cent or
135000 tonnes. Total zinc stocks at the end of 2012 are forecast to increase compared with
the end of 2011, both in terms of volume and relative to weeks of world consumption. In
2012, zinc stocks are forecast to increase 7 per cent relative to 2011 to total 2 million
tonnes, or around 7.8 weeks of consumption.
A significant risk to the outlook for world zinc trade is world and regional economic growth
over the next 12 months. If economic growth in 2012 is lower than assumed, particularly in
53
large zinc consuming economies, it could lead to lower zinc consumption and place
downward pressure on zinc demand. This, in turn, could result in zinc prices being lower
than forecast. For further details on macroeconomic assumptions and associated risks see
the macroeconomic outlook and energy and minerals overview.
Figure 1:
LME zinc prices and stocks
Please refer to page 69 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Consumption underpinned by emerging economies…
World zinc consumption in 2011 is estimated to increase by 2 per cent, relative to 2010, to
total 12.8 million tonnes. Growth has been underpinned by strong consumption in emerging
economies associated with continuing investment in zinc intensive infrastructure and
housing construction. The International Zinc Association estimates that construction activity
accounts for almost half of world zinc consumption, with vehicle manufacturing accounting
for a further 25 per cent. Increasing per capita incomes in these economies has supported
demand for consumer durables such as household appliances, which are also zinc intensive
to manufacture.
… particularly China
China continued to underpin world refined zinc demand in 2011, consuming an estimated
5.5 million tonnes of zinc, or around two fifths of world zinc consumption. China’s
consumption of zinc was supported by strong growth in the construction industry where
galvanised (zinc coated) steel is extensively employed. Figure 2 illustrates the substantial
growth in floor space of all buildings under construction, excluding rural households, in
China between 2010 and 2011.
Figure 2:
Floor space under construction, China
Please refer to page 70 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In 2011, zinc consumption in the OECD is estimated to increase by around 3 per cent,
relative to 2010, to total around 5 million tonnes, despite an estimated 1 per cent decline in
zinc consumption in Japan. Zinc consumption in Japan in the first half of the year was
impacted by the March 2011 earthquakes and tsunami which affected manufacturing
activity.
In the US, refined zinc consumption in 2011 is estimated to have increased by 3 per cent,
relative to 2010, to 920000 tonnes. This growth in zinc consumption has been supported by
growth in the volume of motor vehicle assemblies (see Figure 3), where zinc is used to
galvanise steel sheets for use in the bodies of cars and trucks.
Figure 3:
Total motor vehicle assemblies, US
Please refer to page 70 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
54
China continues to drive zinc consumption in 2012…
In 2012, world zinc consumption is forecast to increase by a further 4 per cent to total 13.3
million tonnes. Growth in refined zinc consumption will continue to be supported by
emerging economies, particularly China which is forecast to contribute around 60 per cent of
the growth in world zinc consumption in 2012. In China and other developing economies
zinc consumption growth will be supported by zinc-intensive investment in housing
construction, telecommunications, and transport infrastructure.
… supported by moderate growth in OECD
In the OECD, zinc consumption in 2012 is forecast to increase by 3 per cent to around 5.2
million tonnes. The relatively moderate rate of growth reflects assumed weak economic
growth, particularly in the European Union.
In Japan, zinc consumption in 2012 is forecast to increase by 5 per cent, relative to 2011, to
total 540000 tonnes. Underpinning this growth will be a recovery in manufacturing activity
as well as the acceleration of rebuilding activity associated with significant damage to
utilities, buildings, and infrastructure following the March 2011 earthquakes and tsunami
accelerates.
Global production increasing steadily…
In 2011, world zinc mine production is estimated to increase by 4 per cent relative to 2010,
to total 12.8 million tonnes. New production capacity was commissioned at a number of
mines during the year, including Hindustan Zinc’s Rampura Agucha mine expansion in India
(100000 tonnes a year), Lundin Mining recommissioning the Neves-Corvo mine in Portugal
(50000 tonnes a year), and Xstrata, BHP Billiton, Teck and Mitsubishi’s joint venture
Antamina mine in Peru (300000 tonnes a year).
World zinc mine production is forecast to increase by a further 5 per cent in 2012 to total
13.4 million tonnes. Forecast major additions to new world zinc mine capacity in 2012
include Blackthorn Resources and Glencore International’s Perkoa mine in Burkina Faso
(capacity of 90000 to 100000 tonnes a year), Hudbay Mineral’s Lalor mine in Canada (35000
tonnes a year) and Toho’s Rasp mine in Australia (70000 to 90000 tonnes a year). However,
not all of this additional capacity is expected to be operating at full capacity by the end of
2012.
In 2011, world refined zinc production is estimated to total 13.2 million tonnes, an increase
of 3 per cent relative to 2010. The majority of world refined zinc production has occurred in
China where around 460000 tonnes of additional refining capacity has been added in the
Shaanxi, Hunan, Sichuan, Jiangxi, and Yunan provinces during 2011. World production of
refined zinc is forecast to increase by a further 2 per cent in 2012, to total 13.5 million
tonnes, supported by further increases in Chinese refined capacity.
Australian production to increase in 2011–12
Australian zinc mine production in 2011–12 is forecast to increase by 7 per cent relative to
2010–11 to total 1.6 million tonnes. Higher production will be supported by the
commencement of operations at Xstrata’s Black Star Open Cut Deeps expansion (120000
tonnes a year at capacity) and Handlebar Hill Open Cut expansion (88000 tonnes a year at
55
capacity) in Mount Isa, Queensland. The expansion of output at Bass Metal’s Hellyer mine in
Tasmania (55000 tonnes a year) and Kagara’s Vomacka mine in north Queensland (20000
tonnes a year) which commenced production in 2010–11 will also contribute to increased
production.
In 2011–12, Australian refined zinc production is forecast to increase by around 5 per cent
relative to 2010–11 to total 523000 tonnes, reflecting greater availability of feedstock
associated with increased production of ores and concentrates.
Australian exports volumes to remain steady while values fall
Australian exports of zinc (total metallic content) in 2011–12 are forecast to increase by 2
per cent from 2010–11 to around 1.54 million tonnes. However, earnings from zinc exports
are forecast to decline by 10 per cent relative to 2010–11 to $2.1 billion, reflecting forecast
lower world prices and an assumed stronger dollar.
Figure 4:
Australia’s zinc exports
Please refer to page 72 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 1:
Zinc outlook
2010
World
Mine production
Refined production
Consumption
Closing stocks
– weeks consumption
Price
Australia
Mine output
Refined output
Exports
– ores and concentrates b
– refined
– total metallic content
– total value
2011 s
2012 f
% change
12766
13163
12846
1879
7.6
2192
99
13374
13480
13345
2014
7.8
2053
93
4.8
2.4
3.9
7.2
2.6
–6.3
–6.3
2009–10
2010–11
2011–12 f
kt
kt
1362
515
1479
499
1584
523
7.1
4.8
kt
kt
kt
A$m
2271
425
1482
2214
2327
410
1499
2375
2325
451
1535
2144
–0.1
10.0
2.4
–9.7
kt
kt
kt
kt
12273
12825
12543
1562
6.5
US$/t 2158
USc/lb 98
b Quantities refer to gross weight of all ores and concentrates. f BREE forecast. s BREE estimate
Sources: BREE; ABARES; Australian Bureau of Statistics; International Lead and Zinc Study group.
56
Resources
and Energy
Quarterly
Reviews
57
Sovereign debt crises, the real economy and the euro
zone crisis
Quentin Grafton
Sovereign debt crises
Sovereign debt crises are surprisingly common. The current euro (€) crisis is just the latest of
many that have hit various countries over the past century, including the 1982 Mexican peso
crisis and the 1998 Russian Federation default crisis that led to huge devaluations in their
respective currencies.
Sovereign debt crises have different origins and, sometimes, involve contagion whereby a
crisis in one country spills over to other nations with similar economies, or to neighbouring
countries (Kaminsky, Reinhart and Végh 2003). For example, the Asian financial crisis began
on 2 July 1997 in Thailand, but quickly spread to the Philippines, Indonesia and South Korea,
among other countries. Similarly, in 1994/95 the so-called ‘Tequila Crisis,’ precipitated by a
devaluation of the Mexican peso, triggered a sell-off of Mexican assets and then affected
other Latin American countries. A number of countries are also serial defaulters such Brazil
and Greece. For example, until the current euro crisis, Greece had already experienced
previous debt crises with its first in 1826 and an episode in 1932 that was not fully resolved
until 1964 (Reinhart and Rogoff 2011).
Sovereign debt crises typically occur for two reasons: one, a lack of liquidity when there are
insufficient short-term or liquid assets to pay liabilities as they come due—that is, a cashflow problem—and, two, a solvency crisis or a debt overhang (Krugman 1988) that arises
when the value of a country’s assets is insufficient to cover its liabilities. A solvency crisis
poses particular challenges because the debt discourages additional investment as it raises
the private sector’s expected future tax burden. In some circumstances debt relief can
benefit both borrowers and debtors if by reducing the nominal or face value of the debt, the
market value of the debt increases. Debt relief, however, cannot occur without coordination
among the debtor country’s principal creditors.
While many sovereign debt crises have been liquidity crises, the current euro crisis combines
both. For instance, Greece is insolvent such that with its current debt loads (about €350
billion) and interest rates (Greek 10-year bond yield is currently around 30 per cent) it is
impossible for it to sustainably service its existing debt. Greek insolvency has resulted in a
liquidity crisis in some of its euro partners, especially Italy, which has a debt approaching €2
billion and a yield on its 10-year bonds of about 7 per cent. By contrast, the 10-year bond
yield for Germany is currently around 2 per cent.
While Italy is not insolvent at current bond yields, its large debt requires a regular rollover.
Concerns over the size of its debt, its ability to rein in public spending, and its future in the
euro zone should it fail to impose fiscal austerity measures, has resulted in a substantial

The views expressed in this review are those of the author alone and not necessarily of the Bureau
of Resources and Energy Economics nor the Department of Resources, Energy and Tourism.
58
interest premium for its bonds relative to countries with stronger economies and lower debt
loads, such as Germany and the Netherlands.
Overlaying these difficulties in the current euro crisis are concerns that some countries
currently in the euro zone1, such as Greece, may be forced to leave the euro zone to reestablish their own national currencies. There is no precedent for any country leaving the
euro, and there is a question of whether this can be done legally. Nevertheless, some
economists argue that without a devaluation of Greek exports—which is only possible if
Greece left the euro zone—sustainable economic growth will not be possible unless there is
a real depreciation that would involve very large declines in both prices and wages. Such a
sharp real depreciation, however, would be very difficult to sustain in a democracy, and will
have the paradoxical effect of increasing its real debt—the nominal value of debt relative to
depreciated tax receipts. If Greece were to re-establish its own currency, it would be worth
much less than the euro. Consequently, if repayments of its bonds were in the new and
devalued currency (relative to the euro) it would cause a large capital loss for Greek bond
holders.
The impact of crises on the real economy
The ability of a sovereign debt crisis to be transmitted to the real economy is illustrated in
Figure 1. A shock occurs, either external to the economy or internally generated, which is
then transmitted into both domestic and foreign liabilities. Whether there is a quick
recovery or protracted downturn—or possibly even collapse—is determined by the
magnitude of the affect of the shock and the underlying banking structure, political stability
and credibility of the nation’s economic policies. The ability of a country to ultimately
recover from a shock and the speed of the recovery depends on both its economic polices
and the resilience of its financial structure. The aftermath of sovereign debt crises typically
include a reduction in asset prices—especially in the housing sector and in equities, a rise in
unemployment and a sharp decline, but of short duration, in gross domestic product (GDP)
(Reinhart and Rogoff 2009).
Although the current euro crisis at first only appeared to be a financial crisis, there are
genuine concerns that it is already affecting the real economy, as happened with the global
financial crisis. Should there be a default on sovereign debt within the euro zone, European
banks are especially vulnerable as they own the bulk of the government bonds issued by
highly indebted euro zone countries. As with the Global Financial Crisis in 2008–09, there is
likely to be contagion to banks in other countries and, in particular, to banks and other
borrowers outside of Europe that rely on international wholesale markets as a source of
funds for their own lending or for financing of their capital investments.
As a direct result of the crisis, and its political fall out, the Italian and Greek Prime Ministers
have both resigned. The new Prime Ministers in Italy (Mario Monti) and Greece (Lucas
Papademos) are ‘technocrats’ with mandates to implement fiscal austerity packages to
reduce their countries’ budget deficits. The passage of an austerity amendment to Italy’s
2012 budget that includes a freeze on public sector salaries until 2014, new measures to
1
The euro zone is the economic and monetary union of the 17 member countries of the European
Union (EU) that use the euro as their national currency. The euro zone is comprised of Austria,
Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the
Netherlands, Portugal, Slovakia, Slovenia, and Spain.
59
fight tax evasion and an eventual increase in the retirement age to 67 years, marked the end
of Prime Minister Berlusconi’s premiership. Together with the appointment of Lucas
Papademos as head of a multi-party Greek government, these developments initially eased
some concerns in financial markets such that bond yields fell marginally for Italy
immediately following Berlusconi’s resignation. Nevertheless, bond yields for Greece and
Italy, and other highly indebted euro zone countries, such as Spain, remain at high levels.
Largely due to the euro crisis, the forecast for economic growth in the euro zone for 2012
has been revised downwards by the European Commission, dropping from 1.8 per cent in
May 2011 to its current estimate of 0.5 per cent. Growth projections for Greece are highly
dependent on whether it receives external financing, when and how its fiscal austerity
package occurs and whether it remains in the euro zone. The expectation, however, is for a
sharp contraction in its GDP in 2012.
Figure 1:
Transmission of financial shocks to real economy
Please refer to page 78 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
The market’s overall judgement of the affect of a shock can be represented by the value of
the currency and/or the cost of borrowing by the country in the form of prevailing bond
yields. So far, the value of the euro has remained remarkably robust. By contrast, bond
yields in the vulnerable and highly indebted countries within the euro zone have risen
dramatically over the past few months. For instance, the spread for two year bonds relative
to yields on German bonds for Greece, Italy and Spain from January 2010 to August 2011 is
provided in Figure 2. The increase in these spreads reflects the market’s increasing concern
about the risks associated with the purchase of government bonds from high-debt euro zone
countries.
The spread in ten-year yields on sovereign debt, relative to German yields, at the end of
November 2011 was around 5 per cent for Italy, about 4.5 per cent for Spain, about 9 per
cent for Portugal and over 25 per cent for Greece. By contrast, in 2007 the spread in
sovereign bond yields among euro zone countries was close to zero.
Figure 2:
and Spain
Two-year government bond spreads over German bonds in Greece, Italy
Please refer to page 79 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
The experience of past sovereign debt crises suggest that there are some key steps that
should be followed to reduce the severity and longevity of a financial shock on the real
economy. These include:

a rapid acceptance that a crisis exists;

a policy response that provides a once-and-for-all remedy to the sovereign debt crisis,
rather than a series of half-hearted measures. If the problem is a solvency crisis then
borrowers must accept a ‘haircut’ such that the debt is reduced to an affordable level,
and there must be a credible plan to ensure long-term fiscal stability; and
60

aligning the capital structure and economic policies within the country, and also with
those of the country of its lenders. For instance, lenders could be offered equity-like
investments in exchange for debt forgiveness which may provide lenders with higher
returns when the economy recovers.
The current euro zone crisis
The agreement to expand the European Financial Stability Facility (EFSF) on 27 October 2011
by European leaders is the third ‘comprehensive’ package implemented in 2011 to attempt
to resolve the crisis. It aims to address both the solvency crisis in Greece and the liquidity
crisis in other heavily indebted euro zone countries. The plan includes a ‘voluntary’ write
down of Greek debt held by the private sector. This avoids the need for a default that would
have triggered credit-default swaps and weakened already fragile financial markets.
The 27 October rescue package provides additional financing to Greece to enable it to
service its debt. This is, however, conditional on the implementation of fiscal austerity
measures by the Greek government. Another feature of the 27 October package are two
schemes designed to expand the size of the EFSF to €1 trillion, possibly more, by leveraging
existing funds already provided by wealthier euro zone members. These leveraged funds are
intended to provide an additional ‘buffer’ should the crisis worsen into a solvency crisis in
other euro zone countries. The progress to date indicates that the leveraging of external
funds into the EFSF will be insufficient to achieve the €1 trillion target. In response, EU
leaders agreed on 9 December to provide up to €200 billion that can be used by the
International Monetary Fund (IMF) to help indebted euro zone countries. These additional
funs will be provided on the basis that euro zone members agree to stricter fiscal rules and
oversight.
In its present form, the EFSF has been unable to provide financial markets with confidence
that it could overcome the liquidity crises in Italy and Spain that, together, owe €2.5 trillion.
Without an effective intervention, however, it is possible that highly indebted euro zone
countries may no longer be able to affordably borrow to service their current deficits or to
rollover their existing debt. Should the EFSF prove inadequate, the only party that has the
resources to resolve the current liquidity crisis is the European Central Bank (ECB).
The ECB could, in principle, buy bonds on the secondary market from highly indebted euro
zone countries to prevent yields rising to levels that their debts become unsustainable. The
ECB has already undertaken such purchases, but so far these purchases have been
‘sterilised’ to avoid monetary financing of sovereign debts. By contrast, monetary financing
such that the ECB acts as ‘lender of last resort’ would transgress EU treaties—a point
reiterated in November 2011 by Jens Weidmann, Head of Germany’s Central Bank.
Another option to manage the liquidity crisis is for the ECB to issue joint ‘Eurobonds’ for all
or a share of the sovereign debt of affected countries that would be guaranteed by all
members of the euro zone. However, a ‘Eurobonds solution’ would require the full support
of Germany as it would effectively be the sole guarantor for such bonds. A Eurobonds
solution to the liquidity crisis has, so far, been publicly ruled out by Germany’s Chancellor
Angela Merkel who is concerned it would raise Germany’s own borrowing costs and that
providing such a ‘safety net’ would also reduce the incentives of highly-indebted countries in
the euro zone to undertake fiscal reforms.
An ECB financed rescue package, or even a joint funding formulation with the ECB and IMF,
could resolve the present euro zone crisis. A key question is whether such a package can be
61
implemented before the current crisis results in a default and/or a change in the
membership of the euro zone. Even if an ECB and IMF package remedies the current crisis, it
would raise several long-term questions for the euro zone, namely: Who ultimately pays for
this intervention? What incentives might this create in terms of fiscal policy for highlyindebted countries within the euro zone? And, should transfers from surplus to deficit
countries be undertaken by a monetary authority, or by made more explicit by governmentto-government transfers?
References
Kaminsky, G.L., Reinhart, C.M. and Végh, C.A., 2003, The Unholy Trinity of Financial
Contagion, Journal of Economic Perspectives 17(4): 51–74.
Krugman, P., 1988, Financing versus Forgiving a Debt Overhang, Journal of Development
Economics 29(3): 253–268.
Pettis, M., 2001, The Volatility Machine: Emerging Economies and the Threat of Financial
Collapse, Oxford University Press: Oxford.
Reinhart, C.M. and Rogoff K.S., 2009, The Aftermath of Financial Crises, American Economic
Review 99: 466–472.
— 2011, From Financial Crisis to Debt Crisis, American Economic Review 101: 1676–1706.
62
Global oil prices, reserves, production and intensity: An
overview
Jin Liu and Quentin Grafton
This review article provides a historical perspective and prospective of oil prices (both
nominal and real) along with trends in global oil reserves, production and intensity.
Oil price trends
Figure 1 shows historical trends of both nominal price (a) and real price (b) for one barrel1 of
crude oil, based on domestic oil prices in the United States. From World War II through to
the first oil price shock in 1973, nominal crude oil prices averaged around US$2 a barrel.
While the nominal oil price in 1974 was almost five times higher than the oil price in 1972,
the oil price in 1980, after the second oil shock in 1979, was almost fifteen times higher than
it was in 1972, and more than three times higher than in 1974. The high nominal oil prices
after the first and second oil shock were due to disruptions in oil supply. Although oil prices
dropped substantially during most of the 1980s and in the 1990s, by 2004 the nominal oil
price (US$38 a barrel) had surpassed its previous high in 1980 (US$37 a barrel), and reached
US$97 a barrel in 2008.2
Real oil prices in 2010 are provided in Figure 1 (b). Over the period 2004 to 2008, the real oil
price more than doubled from US$44 a barrel in 2004 to around US$100 a barrel in 2008,
the highest real price since 1870. Since 2008, the real oil price has been highly volatile falling
to US$63 a barrel in 2009 as a result of the Global Financial Crisis before recovering to US$80
a barrel in 2010.
Figure 1:
US oil prices, 1870 to 2010
Please refer to page 83 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Figure 2 illustrates a trend of monthly average spot oil export prices (nominal) published by
the International Monetary Fund (IMF). During the 1973–74 and 1979–80 oil price shocks,
prices increased about fourfold and threefold, respectively, from early 1973 and 1979 to
their respective peaks in early 1974 and late 1980. While these oil price shocks were
primarily caused by one-off disruptions to supply, the price run-up to 2007–08 was due to
strong oil demand combined with lagged growth in world oil production (Hamilton 2009).
Due to this positive demand shock, the nominal oil price reached US$133 a barrel in July
2008, around sixfold greater than the average monthly oil price over the period of July 1959
to July 2011.

The views expressed in this review are those of the authors alone and not necessarily of the Bureau
of Resources and Energy Economics nor the Department of Resources, Energy and Tourism.
1
One barrel contains 42 US gallons and is equal to around 159 litres.
2
However, the spot oil price (based only on West Texas Intermediate) reached just over US$100 a
barrel in 2008.
63
Figure 2:
Average monthly nominal spot oil price, July 1959 to July 2011
Please refer to page 83 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Since the early 2000s, almost all of the net increase in oil demand has come from the
transport sector in emerging economies. The upward oil price movement in the 2000s
reflected strong oil demand from industrialisation and urbanisation in emerging economies;
while the contraction of oil demand from industrialised nations is due to efficiency gains in
maturing markets (IEA 2011b). There were also increased costs of oil production due to
rapidly rising prices of steel pipe, drilling rigs, engineering services and cement that occurred
from 2004 onwards (Smith 2009).
An examination of historical patterns shows that, contrary to popular belief, oil prices have
not been more volatile in recent times than in the past (see Figure 3). Interestingly, the
volatility observed during 2008–09 is actually lower than the highest volatility, which
occurred in 1990–91. High annual volatilities in the oil price are due to inelastic demand and
supply. Demand is inelastic due to long lead times for altering the stock of fuel-consuming
equipment; supply is inelastic in the short-run because it takes time to augment the
productive capacity of oil fields (Smith 2009).
Figure 3:
Volatility in crude oil prices, July 1975 to July 2011
Please refer to page 84 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Global oil reserves
The total estimated amount of oil in an oil reservoir, including both producible and nonproducible oil, is called ‘oil in place’. Reservoir characteristics and limitations in petroleum
extraction technologies mean not all of the ‘oil in place’ can be brought to the surface.
Reserves are defined as this producible fraction.
Proven reserves are those reserves claimed to have a reasonable certainty of being
recoverable under existing economic and political conditions, with existing technology, and
are referred to as P90 (that is, reserves that have a 90 per cent chance of being produced).
Proven reserves are linked to commercial viability. Thus, proven reserves can increase in
response to both oil price rises and technological advances that allow the extraction of new
sources and increase the proportion of oil within a deposit that can be extracted profitably.
A corollary of this is that proven reserves can decrease with a decline in the oil price.
While new oil reservoirs are continually being discovered, they tend on average to be
smaller or more expensive to develop than previously identified oil fields. These new
reservoirs are also increasingly offshore compared to oil discovered in previous decades,
which were primarily found on shore within member state of Organization of Petroleum
Exporting Countries (OPEC) (see Table 1).
Table 1:
Country
Algeria
Angola
OPEC member countries
Joined OPEC
1969
2007
64
Location
Africa
Africa
Ecuador **
Islamic Republic of Iran *
Iraq
Kuwait *
Libya
Nigeria
Qatar
Saudi Arabia *
United Arab Emirates
Venezuela *
rejoined in 2007
1960
1960
1960
1962
1971
1961
1960
1967
1960
South America
Middle East
Middle East
Middle East
Africa
Africa
Middle East
Middle East
Middle East
South America
Notes: * founding Member. ** Ecuador joined OPEC in 1973 then suspended its own membership
from December 1992 to October 2007.
At the end of 2010, global proven oil reserves were estimated to be around 1.4 trillion
barrels. This represents an increase of 278 billion barrels, or 25 per cent, over the 2000
figure of 1.1 trillion barrels. About 80 per cent of the net addition occurred in OPEC member
countries (see Figure 4).
Figure 4:
Proven oil reserves by key regions and markets: 1980, 1990, 2000 and 2010
Please refer to page 86 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
The top 30 countries by proven reserves accounted for around 98 per cent of global proven
oil reserves in 2010. Among these countries, the top five were OPEC members—Saudi Arabia
(19 per cent), Venezuela (15 per cent), Iran (10 per cent), Iraq (8 per cent) and Kuwait (7 per
cent). These five countries together accounted for around 60 per cent of global proven oil
reserves in 2010 (see Figure 5).
Figure 5:
Ranking of top 30 countries by proven oil reserves in 2010
Please refer to page 86 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Box1: Unconventional oil
Unconventional oil is petroleum produced or extracted using techniques other than the
conventional oil well method. Oil companies and governments have been investing in
unconventional oil sources due to the increasing scarcity of conventional oil reserves. Most
significantly, unconventional oil production is a less efficient process and has greater
environmental impacts than that of conventional oil production.
Unconventional oil sources include shale oil, oil sands (also called bitumen sands), synthetic
crudes and derivative products, coal-based liquid supplies, biomass based liquid supplies and
liquids arising from chemical processing of natural gas. Oil sands, for example, can be found
in several locations around the globe, including in Venezuela, the US and the Russian
Federation. Moreover, the Athabasca deposit in Alberta, Canada is the largest and most
developed.
As with all forms of mining, there are potentially hazardous tailings and waste generated
from the varied processes of oil extraction and production. Environmental concerns relating
to greenhouse gas emissions (GHG) with unconventional oil are similar to those with
65
conventional oil. For example, extraction and production of oil sands can lead to significant
contamination of water, sediment, soil, air and associated flora and fauna, as well as
landscape degradation (Timoney 2011).
Unconventional oil will be increasingly relied upon when some conventional oil deposits
become ‘economically non-viable’ due to depletion. Conventional oil sources are currently
preferred sources of supply because they provide much higher yields. However, new
technologies, such as steam injection for oil sands deposits, are continually being developed
to increase extraction efficiency and yields from unconventional oil production.
Global oil production
Over the past 50 years, global oil production has been dominated by the US, OPEC members
and the Former Soviet Union. Figure 6 shows that the US was the largest oil producer in the
world prior to 1974 and throughout most of the 1990s. The Former Soviet Union3 was the
largest producer in the intervening years and since 1999. By comparison, OPEC oil
production in 2010 was almost five times greater than oil production in the United States
and twice OPEC’s output in 1965. In 2008, OPEC oil production reached a historical high of
more than 1.7 billion tonnes. Oil production in non-OPEC countries has been increasingly
steadily since 1965 and almost doubled between 1980 and 2010.
Figure 6:
Global oil production in key markets, 1965 to 2010
Please refer to page 88 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
While total global oil production4 was 3.9 billion tonnes in 2010; oil production in the top 30
producing countries accounted for around 94 per cent of global oil production. Among these
countries, the top five were the Russian Federation (13 per cent), Saudi Arabia (12 per cent),
the US (9 per cent), Iran (5 per cent) and China (5 per cent). The total for these five countries
accounted for 44 per cent of global oil production in 2010 (see Figure 7).
Figure 7:
Ranking of top 30 countries by oil production in 2010
Please refer to page 89 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
While the total volume of global oil production more than doubled from 1966 to 2010, the
growth rate in global oil production has declined. Although the growth rate across these
years remains positive overall, it has been negative in some years (see Figure 8). The
declining trend in the rate of output growth indicates that oil production is approaching its
peak level. Peak oil, however, does not mean the world is about to ‘run out’ of oil and is
determined as much by economics as geology (Smith 2009). For instance, there remains
around 1.4 trillion barrels of proven oil reserves, which have increased over the past decade
3
The Former Soviet Union includes Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, the
Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.
4
Oil production includes crude oil, shale oil, oil sands and NGLs (the liquid content of natural gas
where this is recovered separately), but does not include biofuels.
66
(1.1 trillion in 2000). The issue, rather, is about the impacts of peaking production on the oil
price and the cost and availability of substitutes, such as biofuels.
Figure 8:
Total global oil production and growth in production, 1966 to 2010
Please refer to page 90 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
According to the IEA’s forecasts in its World Energy Outlook 2011 publication, oil production
trends can vary markedly across assumed scenarios5. Oil production was forecast to rise to
104 million barrels a day (mb/d) in 2035 from 83 mb/d in 2010 in the Current Policies
Scenario; increase to 96 mb/d in the New Policies Scenario (peaking before 2020); and fall to
76 mb/d in the 450 ppm Scenario. Thus, peak oil production is not solely determined by
remaining economic oil reserves, but also by energy and environment policies.
Oil intensity
The US is both a large oil producer and the world’s largest oil consumer. In 2010, total US oil
consumption was 850 million tonnes, or about two times greater than China’s total oil
consumption. China, however, had the greatest growth in oil consumption over the past
decade. In 2010, China’s oil consumption was about 40 times greater than its oil
consumption in 1965, while US oil consumption rose by about half over the same period (see
Figure 9 (a)). As a result of this growth, the US share of global oil consumption declined from
36 per cent in 1965 to 21 per cent in 2010, and the share of global oil consumption by China
increased from less 1 per cent in 1965 to around 11 per cent in 2010 (see Figure 9 (b)).
Figure 9:
Global oil consumption in key markets, 1965 to 2010
Please refer to page 91 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Figure 10 shows that for industrialised countries, such as the US and Japan, oil use per capita
initially increased with growth in their GDP per capita, but stayed unchanged when their
income levels reached around US$20000 (measured at purchase power parity or PPP) per
capita in Japan, and US$30000 (PPP) per capita in the US. As per capita incomes have
increased beyond these levels, there has been a decline in oil use per capita. By contrast,
China and India are still showing a positive relationship between per capita income and per
capita oil use, reflecting their convergence with industrialised countries in terms of
industrialisation and urbanisation.
5
These scenarios are the:
Current Policies Scenario, which assumes no new policies are added to those in place as of mid-2011;
New Policies Scenario, where recent government policy commitments are assumed to be
implemented in a cautious manner—even if they are not yet backed by firm measures;
450 ppm scenario, which works back from the international goal of limiting the long-term increase in
the global mean temperature to two degrees Celsius (2°C) above pre-industrial levels, in order to
trace a plausible pathway to that goal.
The wide difference in outcomes between these scenarios underlines the critical role of governments
to define the objectives and implement the policies necessary to shape the energy requirements of
the future (IEA 2011a).
67
Despite their rapid growth over the past two decades, per capita income in China and India
still remain well below that of industrialised nations. For example, based on IMF’s World
Economic Outlook September 2011, per capita income measured at PPP in China was 17 per
cent and 24 per cent of per capita income in the US and Japan, respectively; while per capita
income in India was 8 per cent and 11 per cent.
Figure 10:
Oil use per capita versus GDP per capita, 1965 to 2010
Please refer to page 92 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Figure 11 shows trends of oil intensity from 1980 to 2010. The downward trend is primarily
due to improving oil efficiency as a result of ongoing fuel-saving technological change, fuel
switching, increasing use of alternative energy sources in power generation, and structural
changes in the global economy away from oil-intensive sectors. Oil intensity since 1980 has
fallen fastest in China, compared with in the US and the EU.
Figure 11:
Oil intensity* in key markets, 1980 to 2010
Please refer to page 92 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
In summary, since the first oil price shock in 1973, nominal oil prices have been highly
volatile. Prices rose rapidly due to negative supply shocks in 1973–74 and 1979–80, but
declined throughout much of the 1980s and 1990s. By contrast, the price increases in 2007–
08 were primarily due to strong oil demand from emerging economies. Although both global
proven oil reserves and production have increased over the past decade, the growth rate in
global oil production has declined. This declining trend suggests that conventional oil
production is approaching its peak level, despite the fact that proven oil reserves have
increased over the past decade. When, and at what level, conventional oil production peaks
depends greatly upon global energy and environmental policies. Under a ‘strict’ policy
scenario, oil consumption may even peak within the current decade as a result of policies to
limit GHG emissions.
References
Hamilton, J., 2011, Historical oil shocks, Department of Economics, University of California,
San Diego.
International Energy Agency (IEA) 2011a, World Energy Outlook 2011.
IEA 2011b, Medium-term oil & gas market.
Smith, J., 2009, World oil: market or mayhem, Journal of Economic Perspectives, Vol. 23, No.
3: 145–164.
Timoney, K., 2011, ‘Water issues in Canada’s tar sands’, in Water Resources Planning and
Management, edited by Q. Grafton and K. Hussey, Cambridge University Press.
68
Gold and Australia’s economic development
Adam Bialowas
The discovery of gold in Australia in 1851 was a defining event in both the economic and
social development of Australia. Within 50 years of the discovery of gold the Australian
colonies had obtained the right to self governance (within imperial limits) and Australian per
capita income was one of the highest in the world. Today, gold remains an important
component of Australia’s export portfolio, contributing over $13 billion in export earnings
for the 2010–11 financial year.
Eureka! Gold discovered in Australia
Gold was ‘officially’ first discovered in Australia in Bathurst, NSW in April 1851, but it is
widely accepted that it had been found a number of times prior to this date. However, these
discoveries were either very small or suppressed by the Colonial Governments of the time to
avoid penal labour leaving their current areas of employment in order to seek their fortune
on the gold fields (Goodwin 1970).
The significance of the discovery in 1851 was that the Californian gold rush was already
underway, and the colonies were already facing competition for migrants from California. By
declaring the discovery of gold, and allowing for prospecting, the governments of the
colonies saw a way to maintain or grow their population and economic growth.
Impacts of the gold rush on Australia
The decade subsequent to the discovery of gold was a tumultuous time in Australia’s
economic and social development. Initially, the discovery of gold caused a large degree of
dislocation in other sectors and industries of the economy. For instance, it is estimated that
between 1851 and 1852 the average annual wage of a miner in Victoria increased from £70
to £357 (Maddock and McLean 1984). Even before this five-fold increase, the wage level of
miners already enjoyed a significant premium to other professions.
Given the large disparities in mining and other sectors there was a ‘rush’ to seek
employment in mining. This created a problem to employers in non-mining sectors that
wished to retain their labour force. It was an issue which was not unnoticed by the
governments of the time, particularly as police and other officials were documented to have
abandoned their posts to seek their fortunes gold mining (La Croix 1991). The primary way
for employers to compete for labour was to increase wages in other sectors (see Figure 1).
These wage costs contributed to inflation within the fledgling colonies.
Figure 1:
Index of Victorian wages
Please refer to page 95 of the Resources and Energy Quarterly – December quarter 2011
PDF version.

The views expressed in this review are those of the author alone and not necessarily of the Bureau
of Resources and Energy Economics nor the Department of Resources, Energy and Tourism.
69
To combat the dramatic increase in wages, Colonial governments pursued a policy of mass
migration to increase the labour supply to help reduce wages back to their original levels.
While some migrants were unassisted, and able to pay their own way to Australia, the
Colonial governments were able to use the revenues associated with the gold rush to
encourage assisted migration and target people with particular skills that were in short
supply.
Over the ten-year period following the announcement of the discovery of gold the
Australian population expanded rapidly, growing from 430000 people in 1851 to over 1.1
million in 1860 (ABS 2008). The growth was even more pronounced in the colonies in which
gold had been discovered. For instance, in Victoria, the population grew five-fold from an
initial population of approximately 97000 people to over 530000 in 1860 (ABS 2008). While
these policies did eventually lead to a reduction in the level of wages in the colonies, they
never returned to their pre-gold rush levels (see Figure 1).
One of the characteristics of the population boom initiated by the gold rush was that that
many of those who came were induced to stay. In part, this was because colonial
governments actively pursued a policy of increasing the demand for labour in the
agricultural sector. This was achieved through a combination of policies, such as granting
access to Crown land, which led to a rapid development of the Australian agricultural sector,
and the wool industry in particular. Hence, at a time when many other countries
experienced a reduction in their agricultural sector as their economies were transitioning to
industrial and manufacturing-based economies, Australia expanded its agricultural labour.
As a result of this transition Australia found itself well placed to take advantage of the
increase in demand for food and fibres from other countries that were pursuing a
manufacturing based approach to their economic development (Schedvin 1987).
End of the gold rush
Subsequent to the initial discovery of gold in the NSW and Victorian colonies, a succession of
discoveries were also made in the colonies of Queensland, Western Australia and Tasmania.
As a result, gold production in Australia was not a transitory phenomenon at a national level
and the gold industry continued to make a significant contribution to Australia’s economy
throughout the nineteenth century. While production peaked in 1853 and 1856, when 3
million ounces were produced, production remained above 1 million ounces until the 1890’s
(Maddock and McLean 1984).
An expansion of the gold mining industry occurred with the discoveries of gold in
Queensland and Western Australia. However, practical considerations associated with
mining in arid regions, and the costs associated with overcoming them, acted as a barrier to
independent and small-scale miners in a way distinct from earlier discovers of gold in NSW
and Victoria.
Deregulation of the world gold market
For the majority of the twentieth century gold played a more indirect role in the Australian
economy than the previous century. In January 1925, Australia returned to the gold standard
as a means of restricting the money supply and reigning in inflation (Tsokhas 1994). Given
that many other countries were also operating on a gold standard, the market for gold was,
at that time, tightly controlled by the worlds’ central banks with a number of restrictions
70
placed on the ability of individuals to buy and sell gold. This in turn reduced the incentives
for the exploration and mining of new gold deposits.
It was not until 1971, with the collapse of the Bretton-Woods gold-US dollar exchange
system that gold entered a new growth phase. The move to a floating exchange rate meant
there was no longer a need for the world’s governments to control private gold holdings.
Consequently, in the US restrictions that had been placed on an individuals’ ability to buy
gold were relaxed. Similar restrictions were removed in other countries and the modern gold
market came into existence (Allen et al 1999).
Figure 2:
Nominal gold price, January 1971 to December 1980
Please refer to page 97 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
The deregulation of the world’s gold market corresponded with a period of great instability
in the world’s economy. High levels of inflation sparked by the oil price shocks of the 1970s
resulted in a huge increase in private investment demand for gold as individuals sought to
protect their wealth. This, in turn, led to a massive increase in the value of gold between the
late 1970s and early 1980s. In the decade after the collapse of the Bretton-Woods system,
the price of gold increased from $US35 an ounce to over $US600 an ounce in nominal terms.
The Australian gold industry shines again
The spectacular increase in the price of gold over the 1970s and early 1980s served as the
impetus for a resurgence in the Australian gold industry. The dramatic rise in the price of
gold resulted in substantial returns being obtained from investing in the Australian gold
industry. Adding to these returns were technological advancements in both the exploration
for, and mining of gold, that made the mining of lower grade ores economically viable. The
combination of these factors led to a second boom in the Australian gold industry (Hogan et
al 2002; Hogan 2004).
Over the decade between 1981 and 1990 Australian gold mine production grew from 18
tonnes in 1981 to over 244 tonnes in 1990. The majority of this gold was exported as bullion,
and gold, once again became an important component of Australia’s export portfolio. In
nominal terms, the value of Australia’s gold exports grew from $56 million in 1981 to over
$3.4 billion in 1990.
Over the 1980s and 1990s, the price of gold trended downwards, in line with the prices of
many commodities. As a consequence of this price trend, although Australia’s gold
production continued to grow over the early to mid 1990’s, it did so at a progressively
slower pace. The gold industry was only able to remain profitable via the continual reduction
of costs associated with the use of improved exploration technologies and mining
techniques.
The Australian gold industry today
In 2010, Australia was the second largest gold producer in the world with China being the
largest (GFMS 2011). In this year Australian mine production totalled 261 tonnes,
representing almost 10 per cent of total world mine production. While gold is no longer
71
Australia’s major export earner, it remains an important component of Australia’s export
earnings, contributing over $13 billion to Australia’s export earnings in 2010–11.
In addition to the direct contribution to the economy via the national accounts, gold also
provides a number of flow-on benefits. For instance, the majority of Australian gold mines
are located in regional or remote areas, and thus, provide an important source of income
and employment in these regions.
In summary, the discovery of gold in Australia was a turning point in its history and economic
development. The revenue obtained from the gold discoveries of the 1850s enabled the
colonial governments of the time to embark on a path of rapid population growth via
assisted migration. This population growth, in turn, contributed to the rapid development of
the Australian agricultural sector and, in particular, the wool industry.
In a remarkably short period of time after the discovery of gold in Australia, Australia was
transformed from a series of semi-independent colonies of the British Empire founded on
penal labour, into a newly born federation with one of the highest per capita incomes in the
world. Today, gold still comprises a major component of Australia’s export earnings,
contributing billions of dollars each year.
References
Australian Bureau of Statistics (ABS), 2008, Australian Historical Population Statistics 1998,
Cat. No. 3105.0.65.001.
Allen, C., Brearley, T., Clarke, A., Harman, J. and Berry, P., 1999, Australia in the World Gold
Market, ABARE Research Report 99.8.
Gold Fields Mineral Survey (GFMS), 2011, Gold Survey 2011, Hedges House, London.
Goodwin, C. D., 1970, British Economists and Australian Gold, The Journal of Economic
History, vol 30 No2, pp.405–426.
Hogan, L., Harman, J., Maritz, A., Thorpe, S., Simms, A., Berry, P., and Copeland, A., 2002,
Mineral exploration in Australia: trends, economic impacts and policy issues, ABARE
eReport 02.1.
Hogan, L., 2004, Research and development of Exploration and Mining, implications for
Australia’s gold industry, ABARE eReport 04.3.
La Croix, S. J., 1992, Property Rights and Institutional Change During Australia’s Gold Rush,
Explorations in Economic History, Vol 29 No. 2: 204–277.
Maddok, R. and McLean I., 1984, Supply-Side Shocks: The Case of Australian Gold, The
Journal of Economic History, Vol. 44 No. 4: 1047–1067.
Schedvin, C. B., 1987, The Australian Economy on the Hinge of History, The Australian
Economic Review, Vol. 20, No.1: 20–30.
Tsokhas, K., 1994, The Australian role in Britain's return to the gold standard, The Economic
History Review, Vol. 47, No. 1: 129–146.
72
Energy productivity analysis of the Australian grain
industry
Nhu Che, Quentin Grafton, David Feldman1 and Thuy Pham
Energy productivity measures the output of goods and services generated with a given
amount of energy inputs. Rising energy productivity means increasing energy efficiency such
that more goods and services can be produced with the same amount of energy, or the
same quantity of goods and services can be made with fewer energy inputs. Thus, measuring
and understanding trends in energy productivity provides a basis for improving economic
efficiency and reducing the possible negative impacts of energy use.
Energy productivity can be measured at an economy-wide scale for particular industries, or
at an individual firm level. In this review, we analyse energy productivity in the Australian
grain industry. While the results are specific to this industry, the method can be applied to
other industries and can provide insights about how we can increase Australian energy
productivity over time and across sectors.
The Australian wheat industry
The Australian grains industry accounted for almost $7 billion of gross value of production in
2009–10. The industry is dominated by wheat, which contributes about 70 per cent of total
value, and in 2009–10 the gross value of wheat production was $4.8 billion. The largest grain
producing states are Western Australia, New South Wales and South Australia, accounting
for 38, 24 and 18 per cent respectively of the total harvested grains and 36, 29 and 15 per
cent respectively of total grain cropped land (ABS 2011) (see Figure 1Figure ).
Figure 1:
Australian wheat production and area by state, 1995–96 to 2009–10
Please refer to page 101 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Australian wheat production has fluctuated significantly over the past decade due to
weather related events, especially drought. In particular, wheat production in 2003 was 35
per cent lower than in 2004, and 2007 production fell by 40 per cent compared to the more
favourable weather in 2006 (ABS 2005 & 2007).
Total Factor Productivity of the Australian grain industry
An indicator of overall productivity is Total Factor Productivity (TFP). TFP measures the ratio
of total output produced to total inputs used in the production process. Accordingly, a
change in productivity can be measured by a change in TFP.
1
Department of Agriculture and Food of Western Australia (DAFWA).
The views expressed in this review are those of the authors alone and not necessarily of the Bureau
of Resources and Energy Economics nor the Department of Resources, Energy and Tourism.

73
In industries that are highly dependent on external factors, such as weather related events,
TFP must be adjusted to account for variations in rainfall or other weather factors. An index
of TFP growth (1980 = 1) in grain production (not adjusted for weather effects) by state is
provided in Figure 2. Over 1979–80 to 2009–10 all states exhibit a great deal of variation in
the calculated TFP measure. Western Australia is the only state that has shown an increasing
trend in TFP, with an annual average growth rate of 1.15 per cent.
Figure 2:
Total Factor Productivity for grain production in Australia by state
Please refer to page 102 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Measuring energy consumption and energy productivity
Productivity is commonly measured by an index. If productivity is being measured over time,
the index is typically set equal to either 1 or 100 in the base year and subsequent measures
of productivity are calculated relative to this base. If the index is greater than the base year
in a particular year, then productivity is higher for that year compared to the base year.
There are various methods available to construct indexes. A commonly used method is the
Törnqvist index that is explained in detail in the Appendix to this review. Applying this
approach to energy production, energy productivity (EPt) at time t can be defined by:
(1)
EPt = QYt / QEt
where QYt is the Törnqvist index of grain output and QEt is the Törnqvist index of energy
consumption.
The average values for the energy consumption, the grain quantity indices and the EP for an
average grain farm across Australia and in the major grain growing states, were calculated
using data from DAFWA (2011). Using 1980 as a base year (1980 = 1) a time series of the
energy consumption index per average grain farm (the denominator in equation (1)) for the
Australian grain industry is presented in Figure 3.
Figure 3:
Index of energy consumption in grain production in Australia
Please refer to page 103 of the Resources and Energy Quarterly – December quarter 2011
PDF version
The quantity index of energy consumption has trended upwards for all states over the
period 1980–2010, with some fluctuations. In 2009–10, the energy consumption index for
Australia was 1.15, indicating energy consumption per grain farm had increased by 15 per
cent compared with 30 years ago. In 2010, New South Wales had the highest levels of
average energy consumption in grain production in Australia.
The index of energy productivity of the Australian grain industry is presented in Figure 4.
Using 1980 as a base year (1980 = 1), energy productivity has increased in all the key grain
growing states and for Australia. The largest increase in productivity occurred in Western
Australia, where energy productivity has more than tripled. For Australia as a whole, energy
productivity has almost doubled over the period 1980–2010. This means that an average
74
Australian grain farm in 2010 used half as much energy to produce the same amount of
grain as the average Australian grain farm did in 1980.
Figure 4:
Energy productivity in grain production in Australia
Please refer to page 104 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Energy intensity relative to other inputs in the Australian grain industry
Another way to analyse trends in energy use is by calculating energy intensity relative to
other input factors. Energy intensity (EI) in period t is defined by Equation (2):
(2)
EIt = QEt / QINt
where EIt is the energy intensity relative to all other input factors; QEt is the Törnqvist energy
consumption index and QINt is the aggregated Törnqvist quantity index of all other inputs
(such as land, capital and equipment, labour and fertilizer and other materials).
A decline in the energy intensity index indicates that less energy is being used in the
production process compared with the previous year. Figure 5 presents energy intensity
relative to other inputs over the period 1980–2010. Using 1980 as a base year (1980 = 1),
Figure 5 shows that over the past thirty years energy intensity has decreased in the key grain
growing states and across Australia. Thus, energy inputs relative to all other farm inputs into
grain production have become comparatively less important. This can in part help to explain
why energy productivity increased over the same period. For example, energy productivity
increased by the largest amount in Western Australia and this was associated with the
greatest decline in energy intensity by state.
Figure 5:
Energy intensity relative to other inputs in grain production in Australia
Please refer to page 105 of the Resources and Energy Quarterly – December quarter 2011
PDF version
Impact of rainfall during the growing season on energy productivity
Given the importance of climate conditions on grain yields and production (DAFWA 2009),
the energy productivity index should be adjusted for variations in precipitation during the
grain growing period (see Appendix). Following DAFWA (2011) and Che et al (2011), rainfall
during the crop growing season is used as a proxy for the prevailing climatic conditions. The
unadjusted energy productivity index (PEP) and the adjusted energy productivity index
(APEP) for Western Australia are given in Figure 6. This graph shows that adjusting for
climatic conditions, energy productivity was around 0.2 index points higher across the 30
years to 2010.
Figure 6:
Energy productivity and adjusted energy productivity of grain production,
Western Australia
Please refer to page 106 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
75
In summary, analysis of energy productivity and energy intensity measures (by inputs) can
provide insights into why energy use has been changing across a sector. An application of
the index approach, using the Törnqvist formula, shows that in the Australian grain industry
energy productivity has almost doubled, with energy productivity at the average grain farm
in Western Australia more than tripling, over the period 1980 to 2010. This improvement
can in part be explained by reduced energy intensity relative to other inputs.
76
Appendix
Measuring Total Factor Productivity
The Törnqvist index can be used to measure total factor productivity (TFP). This index
represents the log-change index number based on a natural logarithm of a ratio of prices to
quantities. Formally, the value share of the ith commodity (input or output) relative to the
value of all commodities for a given time period t is defined as follows:
(A1)
wit = pitqit / SUMni=1 pitqit
for n commodities, prices p and quantities q of commodity i in period t. The Törnqvist
quantity index (Qt) in log-change form for periods t–1 to t is given by the log of the ratios of
the quantity index calculated in the two time periods, that is,
(A2)
ln (Qt / Qt–1) = SUMni=1 vit ln(qit / qit–1)
where the relative weighting or importance between two periods of the ith commodity is
given by:
(A3)
vit = (wit + wit–1) / 2
Solving (A2) for Qt gives:
(A4)
Qt = Qt–1 anti ln (SUMni=1 vit (qit / qit–1))
Thus, the input quantity index of grain farms (QINt) can be constructed using equations (A1)
to (A4) with five key input factors: land, capital and equipment, labour, materials (including
chemicals, fertiliser, other material inputs and seed) and energy use.
The output quantity index of grain farms includes the following field grains grown by
farmers: wheat, barley, buckwheat, oats, triticale, and maize. For tractability , and as
developed by DAFWA (2011), the output of grain farms is measured in terms of wheat
equivalent, equal to the total revenue of each grain divided by the wheat price.
Given the essential role of weather conditions in grain production, the Törnqvist quantity
index of grain output for any given time period (QYt) can be adjusted for annual rainfall.
Thus, at time period t relative to period t–1, the rainfall-adjusted output quantity index
(Q tildeYt) is given by:
(A5)
Q tildeYt = QYt (raint / raint–1)^vYt
where raint and raint–1 represent the rainfall during the grain growing periods t and t–1,
respectively.
The ratio of the Törnqvist output index to inputs index, adjusted for rainfall, provides a
measure of TFP, and is defined by:
(A6)
TFPt = Q tildeYt / QINt
An increase in TFP over time indicates that more output can be produced using the same
quantity of inputs.
77
Measuring energy productivity
The value share of energy relative (wE) to all input factors, or the relative importance of
energy in the production process, at period t is defined as:
(A7)
wEt = pEtqEt / SUMni=1 pitqit
Where pit represents prices, qit quantities and pEtand qEt are, respectively, the price and
quantity of energy inputs used in the production process. The non-energy inputs in the
production process are land, capital and equipment, labour, and materials (including
chemicals, fertilizer, other material inputs and seed).
The Törnqvist energy input index at time t is given by:
(A8)
QEt = QEt–1 anti vEt (qEt / qEt–1)
where the relative weighting or importance in each period of the energy input in terms of all
other inputs is given by:
(A9)
vEt = (wEt + wEt–1) / 2
Energy productivity (EP) at time t relative to period t–1 is defined as the ratio of the output
quantity index (A4) to the energy input index (A8), that is:
(A10)
EPt = QYt / QEt
References
Australian Bureau of Statistics (ABS), 2011, Statistics of Australian grain industry, Cat. no.
7503.0 and 7121.0.
Che, N., Feldman, D., Xayavong, V. and Cook, D., 2011, Economic Analysis of the Western
Australian Grains Industry, Upcoming Research Report, Department of Agriculture and
Food, Western Australia, Perth.
Department of Agriculture and Food of Western Australia (DAFWA), 2009, Plan to Support
2009–2012 Grains Industry Development, Department of Agriculture and Food,
Western Australia, Perth.
— (2011). Profitability, Productivity and Efficiency Analysis for Western Australian Grain
Farms, Report to the Executive Board, Perth
78
Resources
and Energy
Quarterly
Statistical tables
79
Contribution to GDP
Please refer to page 112 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Principle markets for Australian exports in 2010–11 dollars
Please refer to page 113 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Principle markets for Australian resources and energy exports
Please refer to page 114 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 1:
Annual exports summary, Australia, Balance of payments basis
At current prices
Mineral resources
– Coal, coke and
briquettes
– Other mineral
fuels
– Metalliferous ores
and other minerals
– Gold
– Other metals bs
– Total s
Total commodities
sector s
Other merchandise
s
Total merchandise
s
Services
Total goods and
services
Chain volume
measures c
Mineral resources
– Coal, coke and
briquettes
– Other mineral
fuels
– Metalliferous ores
and other minerals
– Gold
– Other metals bs
– Total s
Total commodities
sector s
Other merchandise
s
Total merchandise
s
Services
Total goods and
services
2006–07 2007–08
$m
$m
2008–09
$m
2009–10
$m
2010–11 s
$m
2011–12 f
$m
21928
24603
54954
36777
44102
52864
15641
18889
20706
18964
23619
28073
36137
41930
52733
54082
79766
86988
10740
21773
106220
12272
18211
115904
17508
14358
160259
14300
14031
138154
14271
15966
177725
20768
15344
204036
136619
145875
194176
168630
211815
240257
33001
37047
37447
33121
35160
na
169620
182922
231623
201751
246975
na
47175
50891
52948
52011
50570
na
216795
233813
284571
253762
297545
na
27855
29585
30951
36777
35277
37505
16680
16568
17523
18964
20047
21814
43588
47508
47129
54082
55683
61121
16001
14107
118231
16500
13907
124068
18348
14358
128309
14300
13668
137791
12767
14356
138130
14483
15480
150402
149918
153296
159939
169561
170944
190364
28256
30947
28037
32189
33898
na
178174
184243
187976
201750
204842
na
51135
53651
54023
52011
49564
na
228443
236965
241051
253761
254405
na
80
a Includes diamonds, which are not included in the balance of payments item by the ABS. b Includes
BREE estimates for steel and nickel, which are retained as confidential by the ABS. c For a description
of chain volume measures, see ABS, Introduction of chain volume measures, in the Australian
National Accounts, cat. no. 5248.0, Canberra. Reference year is 2009–10. s BREE estimate. f BREE
forecast. na Not available.
Sources: BREE; ABARES; Australian Bureau of Statistics, Balance of Payments and International
Investment Position, Australia, cat. no. 5302.0, Canberra.
Table 2:
Unit export returns
Annual indexes a
Energy minerals
Metals and other
minerals
Total mineral
resources
2005–
06
226.0
2006–
07
206.6
2007–
08
235.8
2008–
09
398.3
2009–
10
258.9
2010–
11 s
317.1
2011–
12 f
353.5
161.9
201.5
199.8
225.8
208.9
270.1
274.1
186.7
204.3
214.3
290.6
228.3
288.5
304.6
a In Australian dollars. Base: 1989–90 = 100. s BREE estimate. f BREE forecast.
Sources: BREE; ABARES.
Table 3:
Contribution to exports by sector, balance of payments basis
Please refer to page 117 of the Resources and Energy Quarterly – December quarter 2011
PDF version.
Table 4:
Industry gross value added a b
Agriculture, forestry and fishing
Mining
– mining (excludes services to
mining)
– exploration and mining
support services
– total
Manufacturing
– food, beverage and tobacco
product
– textile, clothing and other
manufacturing
– wood and paper products
– printing and recorded media
– petroleum, coal, chemical,
etc, product
– non-metallic mineral products
– metal products
– machinery and equipment
– total
Construction
Electricity, gas, water and
waste services
Taxes less subsidies on
products
Statistical discrepancy
Gross domestic product
unit
$m
2006–07 2007–08 2008–09 2009–10 2010–11
23139
24743
29109
28764
31443
$m
78935
79923
82209
87796
86379
$m
7783
8632
8656
8309
9171
$m
86446
88193
90507
96104
95548
$m
23160
23127
22404
23953
23576
$m
9262
9695
8688
7150
6647
$m
$m
8400
5048
8071
5174
7457
4268
7736
4088
7567
4101
$m
18652
19114
17200
17807
17907
$m
$m
$m
$m
$m
5673
20408
19257
108703
86469
5926
22719
19884
113062
92517
5890
21993
18760
106363
95291
5783
21310
19881
107707
95804
5608
22673
19552
107633
101480
$m
26798
26866
27894
28623
28893
$m
89888
91668
90826
90334
90986
$m
$m
–1
0
0
0
–3658
1201562 1246899 1263935 1293379 1318554
81
a Chain volume measures, reference year is 2009–10. b ANZSIC 2006.
Source: Australian Bureau of Statistics, Australian National Accounts: National Income, Expenditure
and Product, cat. no. 5206.0, Canberra.
Table 5:
Volume of production indexes
Mine a
Energy minerals
Metals and other
minerals
Total minerals
2006–
07
2007–
08
2008–
09
2009–
10
2010–
11 s
2011–
12 f
118.9
116.6
122.8
126.2
111.9
129.1
124.3
124.8
119.6
123.5
138.8
147.7
121.3
120.7
121.4
125.0
125.1
138.3
a Uranium is included with energy. s BREE estimate. f BREE forecast.
Note: The indexes for the different groups of commodities are calculated on a chained
weight basis using Fisher’s ideal index with a reference year of 1997–98 = 100.
Sources: BREE; ABARES; Australian Bureau of Statistics.
Table 6:
Employment a b
Agriculture, forestry and
fishing
Mining
– coal
– oil and gas extraction
– metal ore
– other mining (including
services)
– total
Manufacturing
– food, beverages and
tobacco
– textiles, clothing, footwear
and leather
– wood and paper product
– printing, publishing and
recorded media
– petroleum, coal and
chemical product
– non-metallic mineral
product
– metal product
– other manufacturing
– total
Other industries
Total
2005–
06
’000
2006–
07
’000
2007–
08
’000
2008–
09
’000
2009–
10
’000
2010–
11
’000
348
352
355
362
369
351
29
9
42
27
10
46
26
11
47
35
15
49
41
15
52
48
13
69
49
53
62
72
66
75
129
136
146
170
173
205
205
215
230
226
228
229
56
51
50
48
46
45
77
77
70
67
64
57
52
51
54
51
52
56
88
92
98
90
88
85
38
36
42
40
37
37
161
347
1025
8587
10089
161
342
1025
8876
10388
159
360
1063
9144
10708
157
348
1028
9332
10892
147
343
1006
9479
11027
147
336
992
9806
11355
a Average employment over four quarters. b ANZSIC 2006. Caution should be used when using
employment statistics at the ANZSIC subdivision and group levels due to estimates that may be
subject to sampling variability and standard errors too high for most practical purposes.
Source: Australian Bureau of Statistics, Labour Force, Australia, cat. no. 6291.0, Canberra.
82
Table 7:
Business income
Company profits in selected
industries a
Mining
Manufacturing
– food, beverages and
tobacco
– textiles, clothing, footwear
and leather
– wood and paper product
– printing, publishing and
recorded media
– petroleum, coal and
chemical product
– non-metallic mineral product
– metal product
– machinery and equipment
– other manufacturing
– total
Other industries (including
services)
Total (including services)
2006–
07
2007–
08
2008–
09
2009–
10
2010–
11
$m
$m
$m
$m
$m
40311
40184
67402
49889
76563
4532
5757
6166
8168
na
548
501
245
409
na
1085
1184
667
615
na
578
620
170
439
na
3859
6192
2159
3676
na
1108
10004
1640
762
24116
1359
7924
1937
851
26325
978
3781
2695
637
17498
1155
2662
3383
712
21219
na
na
na
na
20344
88856
99836
73102
98834
103016
153283 166345 158002 169942 199923
a Company profits before income tax, based on ANZSIC 2006.
Sources: BREE; Australian Bureau of Statistics, Australian National Accounts: National Income,
Expenditure and Product, cat. no. 5206.0, Canberra; Australian Bureau of Statistics, Company Profits,
Australia, cat. no. 5651.0, Canberra; Australian Bureau of Statistics, Business Indicators, Australia, cat.
no. 5676.0, Canberra; Australian Bureau of Statistics, Australian Industry, cat. no. 8155.0, Canberra.
Table 8:
All banks lending t5o business a
Agriculture, fishing and forestry
Mining
Manufacturing
Construction
Wholesale, retail trade,
transport and storage
Finance and insurance
Other
Total
2009–10
Sep
Dec
$b
$b
57.9
58.4
10.7
13.9
41.5
40.6
29.9
29.7
Mar
$b
57.8
14.1
40.8
29.4
Jun
$b
59.1
12.1
39.2
28.2
2010–11
Sep
Dec
$b
$b
58.7 58.8
11.3 11.2
38.6 38.2
28.3 28.2
Mar
$b
58.6
11.0
40.1
28.7
Jun
$b
60.4
12.1
39.9
28.4
92.0
91.9
91.9
90.5
89.3
92.6
92.5
131.4
316.3
679.6
134.5 128.7 133.0 132.0 125.0 121.2 114.8
311.3 310.4 307.3 306.6 303.9 309.0 307.1
680.4 673.0 669.3 664.7 657.2 661.2 655.2
92.0
a Includes variable and fixed interest rate loans outstanding plus bank bills outstanding.
Source: Reserve Bank of Australia, Bank Lending to Business – Selected Statistics, Bulletin Statistical
Table D8.
Table 9:
Capital expenditure of private enterprises
2006–
07
$m
2007–
08
$m
2008–
09
$m
2009–
10
$m
2010–
11
$m
At current prices
Gross fixed capital formation a
All sectors
299101 336357 351112 356034 369879
New capital expenditure
Mining b
23621 29201 37977 35185 47247
83
Manufacturing
food, beverages and tobacco
textiles, clothing, footwear
and leather
wood and paper product
printing, publishing and
recorded media
petroleum, coal and chemical
product
non-metallic mineral product
metal product
machinery and equipment
other manufacturing
total
Total surveyed industries
Chain volume measures c
Gross fixed capital formation a
All sectors
New capital expenditure
Mining
Manufacturing
Other selected industries
Total surveyed industries
2256
2596
2492
2566
2882
139
112
118
140
70
759
928
897
719
610
353
396
450
452
187
1767
2126
2239
2207
2320
467
4761
1436
58
12106
87475
474
4137
1110
164
12340
96833
609
4608
1160
108
12682
113201
731
3689
1112
126
11743
107104
806
4017
1340
111
12343
119741
313195 343308 348082 356036 369298
25472
12657
49767
88014
30559
13031
54907
98501
37648
12625
60454
110682
35184
11744
60177
107105
47265
12704
61983
121955
a Estimates taken from ABS national accounts, which include taxation-based statistics. b ANZSIC 2006
Division B. c Reference year is 2009–10.
Sources: BREE; ABARES; Australian Bureau of Statistics, Australian National Accounts: National
Income, Expenditure and Product, cat. no. 5206.0, Canberra; Australian Bureau of Statistics, Private
New Capital Expenditure and Expected Expenditure, Australia, cat. no. 5625.0, Canberra.
Table 10:
Private mineral exploration expenditure
At current prices
Energy
Petroleum
– onshore
– offshore
total
Coal
Uranium
Total
Metals and other
minerals a
Gold
Iron ore
Base metals, silver and
cobalt b
Mineral sands
Diamonds
Other
Total metals and other
minerals a
Total expenditure
2005–
06
$m
2006–
07
$m
2007–
08
$m
2008–
09
$m
2009–
10
$m
2010–
11
$m
355.8
906.1
1261.9
166.4
56.1
1484.4
498.2
1727.3
2225.5
193.2
114.1
2532.8
493.8
2541.1
3034.9
234.8
231.5
3501.2
492.3
3318.4
3810.7
297.3
185.2
4293.2
748.6
2745.5
3494.1
321.2
169.1
3984.4
756.5
2558.9
3315.4
498.6
213.9
4027.9
399.6
161.3
455.9
285.4
592.6
449.8
438.0
588.7
575.4
524.1
652.2
665.0
356.7
555.0
783.2
519.1
457.2
669.5
29.2
22.6
48.8
37.3
26.9
46.8
37.0
21.7
110.8
30.6
10.0
154.3
na
na
147.2
na
na
196.2
1018.2 1407.3 1995.1 1740.7 1742.3 2217.7
2502.6 3940.1 5496.3 6033.9 5726.7 6245.6
a Uranium is included with energy. b Base metals include copper, lead, nickel and zinc. s BREE
estimate.
Sources: BREE; Australian Bureau of Statistics, Mineral and Petroleum Exploration, Australia, cat. no.
8412.0, Canberra.
84
Table 11:
Annual world indicator prices of selected commodities a
Energy
Crude oil
Dubai
West Texas
Intermediate
brent
world trade weighted
average a
Uranium (U3O8) b
Minerals and metals
c
Aluminium
Copper
Gold d
Iron ore (negotiated) e
Lead
Manganese
(negotiated) g
Nickel
Silver
Tin
Zinc
unit
2006–
07
2007–
08
2008–
09
2009–
10
2010–
11
2011–
12 f
US$/bbl
61.2
90.4
68.5
74.2
92.2
106.3
US$/bbl
63.4
96.8
70.3
75.2
89.3
95.4
US$/bbl
64.0
95.2
68.8
74.5
96.0
108.9
US$/bbl
60.0
92.2
67.4
73.4
93.0
108.2
US$/lb
81.15
80.75
51.25
43.81
57.13
55.98
US$/t
US$/t
US$/oz
USc/dmtu
US$/t
2692
7087
639
73
1693
2665
7791
823
80
2904
1781
4936
874
145
1459
2017
6634
1092
97
2093
2379
8665
1372
178
2392
2274
8293
1761
229
2133
US$/mtu
258.2
540.9
1340.1 544.9
768.0
na
US$/t
USc/oz
US$/t
US$/t
37909
1274
11455
3723
28564
1544
18529
2606
13322
1289
13576
1403
23963
2880
23960
2243
19940
3522
20011
2031
19390
1688
16202
2066
a World trade weighted average price compiled by the US Department of Energy. Official sales prices
or estimated contract terms for major internationally traded crude oils. b Average of weekly
restricted spot prices over the period, published by Ux Consulting. c Average LME spot price unless
otherwise stated. d London gold fix, London Bullion Market Association. e Australian hematite fines to
Japan (fob) for Japanese Fiscal Year commencing 1 April. BREE Australia–Japan average contract price
assessment. g Japanese Fiscal Year commencing 1 April. s BREE estimate. f BREE forecast. na Not
available.
Sources: BREE; Australian Bureau of Statistics; International Energy Agency; ISTA Mielke and Co.;
London Bullion Market Association; The London Metal Exchange Ltd; Reuters Ltd; Ux Consulting
Company; Platts Oilgram; US Department of Energy; World Bureau of Metal Statistics.
Table 12:
World production, consumption and trade for selected commodities a
Energy
Crude oil
Production
– world b
– OPEC c
Consumption b
Coal
Production
hard coal d
brown coal
Exports
– metallurgical
coal
– thermal coal
Uranium (U3O8)
Production e s
Consumption
Metals
unit
2007
2008
2009
2010
2011 s
2012 f
mbd
mbd
mbd
85.7
34.9
86.5
86.5
35.8
86.2
85.6
34.1
85.6
87.5
34.8
88.3
88.8
36.0
89.2
90.5
36.6
90.5
Mt
Mt
5306
954
5653
965
5842
913
6020
930
6225
935
6443
954
Mt
227
234
220
273
272
295
Mt
696
704
721
794
817
852
kt
kt
48.6
77.7
53.5
76.2
53.3
77.2
55.7
82.0
58.3
84.6
65.1
79.4
85
Bauxite production
Alumina
production
Aluminium
– production
– consumption
– closing stocks g
Iron and steel
Production
– iron ore h
– pig iron
– crude steel
Iron ore trade
Gold
Mine production
Supply
Fabrication
consumption i
Base metals
Copper
production j
consumption
closing stocks
Lead
production j
consumption
closing stocks
Nickel
production j
consumption
closing stocks
Tin
production j
consumption
closing stocks
Zinc
production j
consumption
closing stocks
Mineral sands
Production
– ilmenite k
– titaniferous slag
– rutile
concentrate
– zircon
concentrate
kt
209014 217469 193038 203460 257978 275825
kt
74120
77564
73667
81023
87450
93500
kt
kt
kt
38186
37409
2961
39669
36904
4709
37198
34764
6485
41093
39661
6501
43049
41217
8334
46391
42827
11897
Mt
Mt
Mt
Mt
1699
946
1344
830
1693
927
1330
897
1588
900
1220
948
1815
1020
1415
1055
2131
1132
1502
1093
2231
1206
1594
1172
t
t
2476
3942
2408
3959
2589
4318
2689
4261
2763
4052
2850
4101
t
3102
3023
2511
2779
2845
2971
unit
2007
2008
2009
2010
2011
2012
kt
kt
kt
18040
18141
682
18497
18138
845
18605
18153
1125
19222
19204
1017
19475
19270
1222
20136
20041
1317
kt
kt
kt
8331
8383
268
9055
9045
307
9024
8966
390
9627
9586
447
10335
10147
635
10653
10556
732
kt
kt
kt
1419
1326
125
1382
1278
155
1322
1241
234
1446
1464
213
1580
1557
236
1709
1642
304
kt
kt
kt
349
357
35
332
337
32
333
322
46
352
368
16
369
375
5
369
375
45
kt
kt
kt
11345
11272
638
11768
11570
820
11286
10874
1217
12825
12543
1562
13163
12846
1879
13480
13345
2014
kt
kt
12117
2670
11422
2695
9881
2247
11470
2749
11310
2545
11614
2610
kt
610
615
572
708
679
639
kt
1367
1282
1067
1338
1442
1376
a Some figures are not based on precise or complete analyses. b 1 million litres (1 megalitre) a year
equals about 17.2 barrels a day. c Includes OPEC natural gas liquids. d Includes anthracite and
bituminous coal, and for the United States, Australia and New Zealand, sub-bituminous coal. e World
production data have been revised to exclude reprocessed uranium. g LME and producer stocks. h
China’s iron ore production adjusted to world average. i Includes jewellery consumption. j Primary
refined metal. k Excludes some small producers and large tonnages produced from ilmenite–
magnetite ore in the Commonwealth of Independent States. s BREE estimate. f BREE forecast. na Not
available.
Sources: BREE; ABARES; Australian Bureau of Statistics; Consolidated Gold Fields; Economic
Commission for Europe; Gold Fields Mineral Services; International Atomic Energy Agency;
International Energy Agency; International Iron and Steel Institute; International Lead–Zinc Study
86
Group; International Nickel Study Group; ISTA Mielke and Co.; Metallgesellschaft A.G.; UNCTAD Trust
Fund on Iron Ore; United Nations; World Bureau of Metal Statistics.
Table 13:
Commodity production
Energy
Coal
– black, saleable
– black, raw
– brown
Petroleum
– crude oil and
condensate
– petroleum products a
Gas b
LPG (naturally
occurring)
Uranium (U3O8)
Metalliferous minerals
and metals
Aluminium
– bauxite
– alumina
– aluminium (ingot
metal)
Copper
– mine production d
– refined, primary
Gold
– mine production d
– Iron and steel
– ore and concentrate e
– iron and steel
Lead
– mine production d
– refined g
– bullion
Manganese
– ore, metallurgical
grade
– metal content of ore
Nickel h
– mine production d
– refined, class I s
– refined, class II i
– total ore processed j
Silver
– mine production d
– refined
Tin
– mine production d
– refined
Titanium
– ilmenite concentrate s
– leucoxene concentrate
s
– rutile concentrate s
– synthetic rutile s
Mt
Mt
Mt
ML
ML
Gm3
unit
2006–
07
2007–
08
2008–
09
2009–
10
2010–
11
325.4
417.0
65.6
326.2
422.8
66.0
339.6
446.2
68.3
365.9
471.1
68.8
327.5 s
406.0 s
na
376.9
483.9
na
25610 k 26407 k 25583 k 24793 k
25340
27651
k
43652
40.8
44086
41.7
44111
44.5
41892
49.0
43141
53.4
43129
56.5
ML
4550
3971
3930
4097
3907
4145
t
9589
10123
10311
7109
7069
7930
Mt
kt
62.7
18506
63.5
19359
64.1
19597
67.8
20057
68.5
19544
69.4
20361
kt
1954
1964
1974
1920
1937
1979
kt
kt
859
435
847
444
890
499
819
395
952
485
1053
498
t
250.8
229.7
217.9
239.7
265.1
273.5
Mt
Mt
287.7
8.0
324.7
8.2
353.2
5.6
423.4
6.9
450.0
7.3
489.2
5.7
kt
kt
kt
642
191
114
641
203
152
596
213
155
617
189
148
697
190
133
714
201
161
kt
5046
5428
3730
5795
6784
7075
kt
2037
2188
1504
2365
2756
2882
kt
kt
kt
kt
191
104
15
225
190
105
15
222
185
95
15
213
160
114
6
200
194
90
10
234
221
115
15
261
t
t
1674
618
1867
605
1764
751
1809
701
1792
712
1913
883
t
t
2061
321
1767
na
4045
na
19829 18410 s
na
na
9202
na
kt
2383
2205
1932
1394
1202
1233
kt
169
153
117
123
200
228
kt
kt
279
729
332
672
285
732
361
553
458
542
315
568
87
– titanium dioxide
pigment s
Zinc
– mine production d
– refined
Zircon concentrate s
Other minerals
Diamonds
Salt
kt
207
201
214
222
204
204
kt
kt
kt
1375
496
564
1571
507
563
1411
506
485
1362
515
408
1479
499
674
1584
523
589
24632
11229
16528
9826
15169
11314
11138
8027
11772 12025 s
10855
11862
’000 ct
kt
a Includes production from petrochemical plants. b Includes ethane, methane and coal seam gas. c
Uranium is included with energy. d Primary production, metal content. e Excludes iron oxide not
intended for metal extraction. g Includes lead content of lead alloys from primary sources. h Products
with a nickel content of 99 per cent or more. Includes electrolytic nickel, pellets, briquettes and
powder. i Products with a nickel content of less than 99 per cent. Includes ferronickel, nickel oxides
and oxide sinter. j Includes imported ore for further processing. k Energy Quest. s BREE estimate. f
BREE forecast.
Sources: BREE; ABARES; Australian Bureau of Statistics; Consolidated Gold Fields; Coal Services Pty
Limited; Department of Resources, Energy and Tourism; Energy Quest; International Nickel Study
Group; Queensland Government, Department of Natural Resources and Mines.
Table 14:
Volume of commodity exports
Mineral resources
Energy
Crude oil a
LPG
LNG b s
Bunker fuel c
Petroleum products
Metallurgical coal
Thermal coal
Uranium (U3O8)
Metalliferous minerals
and metals d
Aluminium
– alumina
– aluminium (ingot metal)
Copper
– ore and concentrate e
– refined
Gold g
Iron and steel
– iron ore and pellets
– iron and steel h
Lead
– ores and concentrates
– refined
– bullion
Manganese e
Nickel g s
Titanium
– ilmenite concentrate i
– leucoxene concentrate
– rutile concentrate
– synthetic rutile s
– titanium dioxide pigment
Refined silver
Tin g
unit
2006–
07
2007–
08
2008–
09
2009–
10
2010–
11
2011–
12 f
ML
ML
Mt
ML
ML
Mt
Mt
t
15965
2824
14
2156
1752
132
112
9519
15975
2589
14
2169
1807
137
115
10139
16588
2500
15
2217
1164
125
136
10114
18064
2776
18
2285
850
157
135
7555 s
19636
2471
20
2282
760
140
143
6950 s
20806
2553
20
2313
914
150
163
7930
kt
kt
15056
1638
15739
1650
16395
1748
16653
1624
16227
1686
16799
1741
kt
kt
t
1493
290
400
1694
296
382
1797
361
437
1928
271
335
1751
375
301
2052
381
336
Mt
kt
257
2648
294
2131
324
1741
390
1549
407
1785
460
1179
kt
kt
kt
kt
kt
422
215
112
4667
207
308
193
169
5105
211
381
261
147
3226
194
491
186
151
5648
221
493
213
93
6190
210
440
226
159
7095
233
kt
kt
kt
kt
kt
t
t
999
123
307
508
171
431
1867
894
56
399
513
175
335
3079
1538
20
550
512
141
423
4159
1763
18
575
513
181
420
6031
1804
27
491
517
195
198
5431
1833
31
323
545
204
600
5696
88
Zinc
– ores and concentrates e kt
– refined
kt
Zircon concentrate j
kt
Other minerals
’000
Diamonds
ct
Salt
kt
1948
374
555
2323
411
637
2101
451
685
2271
425
748
2327
410
963
2325
451
887
24632
16528
16279
10355
9900
10855
10749
10686
10978
11185
11162
11243
a Includes condensate and other refinery feedstock. b 1 million tonnes of LNG equals
aprroximately1.31 billion cubic metres of gas. c International ships and aircraft stores. d Uranium is
included with energy. e Quantities refer to gross weight of all ores and concentrates. g Quantities
refer to total metallic content of all ores, concentrates, intermediate products and refined metal. h
Includes all steel items in ABS, Australian Harmonized Export Commodity Classification, ch. 72, ’Iron
and steel’, excluding ferrous waste and scrap and ferroalloys. i Excludes leucoxene and synthetic
rutile. j Data from 1991–92 refer to standard grade zircon only. s BREE estimate. f BREE forecast.
Sources: BREE; ABARES; Australian Bureau of Statistics, International Trade, Australia, cat. no. 5465.0,
Canberra; Australian Mining Industry Council; Department of Foreign Affairs and Trade; Department
of Resources, Energy and Tourism; International Nickel Study Group.
Table 15:
Value of commodity exports (fob)
$m
2008–
09
$m
2009–
10
$m
2010–
11
$m
2011–
12 f
$m
10484
1182
5854
1457
8757
1044
10079
1537
9534
1105
7789
1315
11772
1068
10437
1508
14214
1246
11978
1794
1323
788
566
526
679
16038
8365
887
36813
17885
990
24526
11886
757 s
29796
13956
610 s
33595
18760
791
45591
77892
57478
69673
83056
43492
75660
55741
67721
80936
206
5809
192
6015
178
4969
229
5218
244
6156
4967
4724
3838
4178
4029
4151
2579
10903
3618
2245
16146
4526
1980
12996
5124
3292
13014
5487
3166
18874
20511
1562
34239
1363
34515
1120
54197
1303
60412
879
757
674
595
645
560
432
998
425
409
1300
511
248
981
489
384
1532
1406
1395
1407
1466
2006–07
2007–08
Mineral resources
$m
Energy
Crude oil a
8317
LPG
1038
LNG
5222
Bunker fuel b
1295
Other petroleum
1098
products
Metallurgical coal
15039
Thermal coal
6758
Uranium (U3O8)
660
Total
– derived as sum of
39427
above
– on balance of
payments basis (excl.
37569
bunker fuel)
Metalliferous minerals and metals
Aluminium
bauxite s
108
– alumina
6243
– aluminium (ingot
5650
metal)
Copper c
– ore and concentrate
3914
– refined
2612
Gold c
10320
Iron and steel
– iron ore and pellets
15512
– iron and steel
1743
Lead c
– ores and concentrates
855
– refined
457
– bullion
268
Manganese
– ore s
482
89
Titanium
– ilmenite concentrate d
– leucoxene concentrate
– rutile concentrate
– synthetic rutile s
– titanium dioxide pigment
Nickel s
Refined silver
Tin c
Zinc c
– ores and concentrates
– refined
Zircon concentrate e
Total
Other minerals
Diamonds s
Salt
Other
Total mineral resources
exports
Total commodity exports
Derived as sum of above
On balance of payments g
113
35
259
361
408
7912
221
25
104
15
277
305
375
5412
187
42
171
12
335
258
396
2717
245
70
197
11
382
269
448
3875
254
101
198
17
390
315
527
4097
164
126
202
22
217
299
607
3748
534
117
2590
1707
478
62273
2031
1319
421
64737
935
923
540
78188
1237
977
370
75472
726
239
4850
625
232
6177
676
237
4803
471
247
5800
107515
117362
161796
139468 179233 205830
139263
136619
148702
145875
197701
194176
171551 215312 243842
168630 211815 240257
1482
1239
893
905
532
408
98760 110862
366
251
10183
410
253
11249
a Includes condensate and other refinery feedstock. b International ships and aircraft stores. c Value
of metals contained in host mine and smelter products are not available separately and are included
in the value of the mineral product or metal in which they are exported. d Excludes leucoxene and
synthetic rutile; data from 1991–92 refer to bulk ilmenite only. e Data refer to standard grade zircon
only. g As derived in table 1. s BREE estimate. f BREE forecast.
Sources: BREE; ABARES; Australian Bureau of Statistics, International Trade, Australia, cat. no. 5465.0,
Canberra; Department of Resources, Energy and Tourism.
Table 16:
Value of imports of selected commodities, Australia
Mineral and energy
resources
– aluminium (ingot metal)
– diamonds
– ferroalloys
– gold (refined and
unrefined)
– ingot steel
– iron ore
– petroleum
— crude oil a
— natural gas
— petroleum products b
– phosphate rock
– phosphates
– silver
– other
Total mineral and energy
resources
2006–
07
$m
2007–
08
$m
2008–
09
$m
2009–
10
$m
2010–
11
$m
11
397
116
10
444
154
10
417
181
27
442
118
18
397
127
5309
7311
11250
7739
5426
2479
338
2225
311
3191
269
1889
259
2121
417
13360
800
7784
32
267
98
707
17149
724
12730
80
778
80
483
14727
2166
13129
193
549
223
794
15031
1219
11296
10
347
107
1183
19572
1929
12058
57
628
490
859
31698
42479
47098
39666
44099
a Includes condensate and other refinery feedstock. b Includes LPG.
Sources: BREE; Australian Bureau of Statistics, International Trade, Australia, cat. no. 5465.0,
Canberra.
90
BREE contacts
Executive Director / Chief
Economist – BREE
General Manager
Micro & Industry
Performance Analysis –
Theme Leader
Macro & Markets Analysis –
Theme Leader
Resources Program – Program
Leader
Quantitative Economic
Analysis – Theme Leader
Energy Program – Program
Leader
Data & Statistics Program –
Program Leader
Quentin Grafton
Jane Melanie
Arif Syed
Jin Liu
Alan Copeland
Nhu Che
Allison Ball
Geoff Armitage
91
quentin.grafton@bree.gov.au
(02) 6243 7483
jane.melanie@bree.gov.au
(02) 6243 7502
arif.syed@bree.gov.au
(02) 6243 7504
jin.liu@bree.gov.au
(02) 6243 7513
alan.copeland@bree.gov.au
(02) 6243 7501
nhu.che@bree.gov.au
(02) 6243 7539
allison.ball@bree.gov.au
(02) 6243 7500
geoff.armitage@bree.gov.au
(02) 6243 7510