China’s slowing economic growth and rising trade protectionism are the key short-term challenges that Australia’s mining industry faces.

However, while current market conditions were challenging and expected to remain so in the short term, Office of the Chief Scientist manager of resource economics David Thurtell said there was no need to be overly pessimistic.

“While commodity demand from China will slow, it will do so from a very large base, and remain a major source of import demand for years to come,” he told the International Mining and Resources Conference (IMARC) in Melbourne on Tuesday.

“Growth from China is expected to plateau or decline moderately over the medium term, rather than fall sharply.”

Between 2015 and 2020, China’s urban population is expected to have grown by almost 20 million a year, and in the five years following, is projected to grow by 16 million per year.

The slowing rate of urbanisation in China underpins the projected slowdown in commodities demand growth.

This is supported by the International Monetary Fund which said in August that China’s economic growth is moderating and is projected to be 6.2 per cent in 2019.

However, Thurtell said that growth in Indian and South East Asian urban populations would drive demand for resource and energy commodities.

“Urbanisation and industrialisation in emerging economies will be the next source of growth in commodity consumption,” he said.

“While they are unlikely to replicate the scale of growth in consumption from China, there is a large potential for them to contribute to a large increase in commodity demand.”

Looking further ahead, he said that Africa had the potential to play a major role in resource and energy commodity consumption in the long term.

“Changing government policies in a carbon and pollution constrained world will also affect demand for energy commodities,” Thurtell said.

“Overall, there are both opportunities and challenges for the mining sector in Australia. The country has vast mineral wealth and sits on the doorstep of a rapidly growing Asia.

“Australian producers have generally adapted well to challenging market conditions in the past. The investment boom has translated into a substantial increase in Australia’s productive capacity, particularly for iron ore and LNG.”

Thurtell added that long-term growth of Australian commodity earnings depended largely on developing Asia and on shifts towards the new commodity uses: LNG, battery commodities, and other emerging opportunities.

Over 7,000 decision makers, mining leaders, policy makers, investors, commodity buyers, technical experts, innovators and educators from over 100 countries are expected to attend this year’s IMARC event, which has been marked by clashes between climate protestors and Victorian police.