Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Iron ore and gold may seem unlikely bed fellows, but in the current coronavirus pandemic they are combining to try and hold up Australia’s reputation as the “lucky country.”

While the country’s unbroken 29-year stretch of economic growth will be ended by the pandemic, the resource sector is proving to be key in cushioning the blow and likely ensuring Australia outperforms other developed economies.

The Australian government’s flagship resources report forecast that earnings from exports of resources and energy will reach a record 293 billion Australian dollars (about $275-billion) in the current fiscal year that ends on June 30.

Story continues below advertisement

This will drop to 263 billion Australian dollars in the 2020-21 fiscal year, according to the report released on Monday by the chief economist at the Department of Industry, Science, Energy and Resources.

A 10-per-cent decline in export earnings from minerals and energy may seem like quite a blow, but the report notes that earnings from exports will be 50-per-cent higher in real terms than during the 2008 global financial crisis.

The coronavirus pandemic has hit most commodities, with the exception of the traditionally contrarian gold, but the declines haven’t been evenly spread, with energy such as crude oil, coal and liquefied natural gas (LNG) tending to fare worse than metals.

While Australia is the world’s largest exporter of LNG and coking coal, and ranks second in thermal coal, it is also the biggest shipper of iron ore, and the world’s second-largest gold producer.

It is iron ore that is doing the bulk of the heavy lifting in keeping Australia’s resource exports buoyant, with the report forecasting export volumes of 852 million tonnes in 2019-20, rising to 893 million in 2020-21 and 912 million the following year.

A slight drop in the forecast price from US$78 a tonne in 2019-20 to US$77 in the following fiscal year means the export value drops slightly from 103 billion Australian dollars this fiscal year to 97 billion Australian dollars in 2020-21.

It’s worth noting that the government is being cautious in its price forecasts, with its expected iron ore price well below the current spot price of US$103.50 a tonne, as assessed by commodity price reporting agency Argus.

Story continues below advertisement

This is a reflection of some of the risks around how the global, and Chinese, economies will recover from the public health lockdowns that have crushed growth.

There are also the risks of renewed trade tensions between the United States and China, especially as the political temperature is likely to rise ahead of U.S. President Donald Trump’s attempt to win a second term in the November election.

But what the government forecast also shows is the advantage of being the world’s largest exporter of a commodity sought after by China, which buys about two-thirds of global seaborne iron ore.

While tensions have risen between Australia and China in recent months over Canberra’s support for an international probe of the origins of the novel coronavirus and Beijing’s early response, it’s likely that the iron ore trade would be the last affected by any ill will.

It’s the prevailing view that Australia is overly exposed to China for its exports, but it’s less common to take the view that China’s economy is heavily dependant on steel, and its steel industry is largely beholden to Australia’s iron ore miners.


The other stand out commodity for Australia is gold, with the government forecasting exports will rise to 418 tonnes in 2020-21 from 362 tonnes in 2019-20, with revenue jumping to 32 billion Australian dollars from 27 billion Australian dollars.

Story continues below advertisement

Again, the gold price forecast is cautious at US$1,587 an ounce for 2020-21, well below the US$1,770.95 an ounce in early Asian trade on Monday.

Many gold analysts expect the precious metal to continue to rally over the medium term given the massive amounts of fiscal stimulus around the world and the low interest rates, with some countries having negative real interest rates.

While gold and iron ore look constructive for Australia, both grades of coal are likely to struggle, even though export volumes are expected to remain steady.

Export revenue from coking coal is forecast to drop to 25 billion Australian dollars in 2020-21 from 35 billion Australian dollars, while thermal coal declines to 16 billion Australian dollars from 20 billion Australian dollars.

LNG volumes are also expected to be constant around 80 million tonnes per annum, but revenue for 2020-21 is seen slipping to 35 billion Australian dollars from 47 billion Australian dollars, given weakness in the oversupplied spot market, as well as softness in crude oil-linked longer-term contracts.

Over all, what the government’s latest quarterly resource and energy report shows is the advantage of having a diverse portfolio of commodity exports.

Story continues below advertisement

While iron ore and gold are holding up Australia for now, it’s quite possible that LNG, coking coal or alumina may be the big movers in the next upswing.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies