COVID-19 hasn’t stopped Australia’s resources cash cow
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Australia’s resource sector remains a key contributor to the country’s economy with export figures highlighting its resilience as the COVID-19 pandemic impacts global markets.
Total resources and energy exports increased by nearly 34 per cent in March to $68.9bn compared to the previous month and 2 per cent more than the same period the previous year.
“These figures show how important the resources sector is to our economy and resilient it’s been in the face of the COVID-19 pandemic,” Minister for Resources, Water and Northern Australia Keith Pitt said.
“Iron ore remains the star performer of the sector following a 36 per cent monthly increase during March worth $8.9bn for the month, a 47 per cent increase on last year.”
Total coal exports in the first quarter were down by 17.9 per cent on the same period last year though they were still valued at $13.7bn.
“A decline in steel manufacturing in countries like India and Japan has seen demand for our metallurgical coal fall but it should begin to recover as the global economy shifts back into gear,” Pitt said.
He recently urged lenders to support Australian thermal coal projects rather than exiting coal because of “misguided ideological reasons”, saying that the country needed to get as many resources projects into development as possible.
This came after Westpac announced that it was toughening its fossil fuel lending standards, which included a commitment to have zero exposure to companies that get more than 25 per cent of their revenue from thermal coal by 2030.
Westpac’s move mirrors a growing number of lenders who are phasing out support for coal.
Meanwhile, LNG exports in March were up 8 per cent from the same month last year to $4.6bn, though the figure for the quarter was down by 0.9 per cent on 2019.
“The next three months will bring some challenges but it is clear that resources and energy exports will be a key driver of our post COVID-19 recovery,” Pitt said.
While it is unclear at this stage how much COVID-19 will impact on export earnings after March, the Resources and Energy Quarterly (REQ) released in March forecast that Australian resource and energy export earnings would hit a record $299bn in the 2019-20 financial year.