Average prices for most mineral commodities increased significantly in 2005-06 compared to the previous year, largely the result of strong global demand driven in part by the continuing strong economic growth of China. Reserve Bank of Australia data shows a 35% increase in its US dollar non-rural commodity price index for 2005-06. In Australian dollar terms this translated to a 36% increase, reflecting a 1% depreciation in the Australian dollar.
As reported in ABARE's Australian Mineral Statistics, export earnings for most minerals increased in 2005-06, due principally to the rise in commodity prices. On average the export unit returns for total mineral resources were 32% higher than in 2004-05. At the same time, the volume of mine production indexes show production of total minerals to have decreased by 0.5%.
Export earnings for black coal rose by 42% to $24.2b in 2005-06. The average Australian dollar export price for coking coal increased by 64%, offset by a drop of 4% in export volumes. The average price for steaming coal increased more moderately, by 9%, with export volumes rising by 4%. Production of black saleable coal was less than 1% higher than the previous year.
Iron ore export earnings were $12.8b, an increase of 58%. The volume of iron ore exported increased by 5%, in line with a 5% increase in production. The average export unit value of iron ore rose by 51%, reflecting the effect of a 72% increase in contract prices negotiated in the latter half of 2004-05. A further increase of 19% was agreed by major steel producers in May/June 2006.
The world trade weighted average price of crude oil in 2005-06 was A$76.80 per barrel, an increase of 40% over 2004-05. The effect of this increase was eroded by a 15% decline in production, mainly attributed to the natural depletion of mature fields. Export earnings for liquefied natural gas (LNG) were at record levels in 2005-06, increasing by 38% to $4.4b. Export volumes of LNG also reached their highest level at 12.5Mt. In previous years LNG production was solely from the North West Shelf (Western Australia), but in February 2006 production from the Bayu-Undan fields commenced when the LNG plant in Darwin (Northern Territory) began operating.
Higher average US dollar prices for copper (up 61%) and zinc (up 81%) contributed to significant increases in export earnings for these commodities.
A number of large mining businesses report in the Economic Activity Survey for financial years ending on dates other than 30 June. For this reason, these changes in market conditions may not be directly reflected in the data of financial and economic performance. See Explanatory Notes paragraphs 22 and 23, where the contribution of such businesses is quantified.