Chinese demand for imports from Australia unlikely to slow – CME

By: Esmarie Swanepoel
12th October 2012
PERTH (Mining Weekly) - The Western Australian resources sector has seen continued growth in some key commodities, leading the industry to view the future with cautious optimism.

In the September edition of the Western Australian resources and economics report, the Chamber of Minerals and Energy (CME) noted that gold production increased by 5.5% to 46 t for the June quarter, while iron-ore production was up 8.8% to 133-million tons.

Petroleum exploration increased by 59% to $624-million.

The June quarter also saw recoveries in the export values of several major commodities from the state, with most of the increases driven by increases in the volumes export.

Gold and copper volumes increased by 34% and 38% respectively, while iron-ore exports also recovered in value, rising by 21.5%. However, the report noted that, compared with the corresponding period last year, this was still a 3% decline.

Tonnages exported to China increased by 11% during the quarter, and accounted for 69% of the total volume of iron-ore exported. This was mainly owing to strong steel production in China during the quarter under review.

“The Chinese economy is likely to remain a driving force behind the global economic recovery over the next two years, with the National Reform and Development Commission recently delivering several months of major project approvals,” said CME CEO Reg Howard-Smith.

“As a result, Chinese demand for imports from Australia and other nations is unlikely to slow down drastically in the near future.”

However, the CME report noted that most of the commodities surveyed experienced price declines during the quarter under review, with the average export unit value of iron-ore falling 4.3%, while copper and nickel prices also declined after staging a recovery in the March quarter.

Gold prices held steady, but showed a slight decline of 0.7% during the quarter.

Looking ahead, Howard-Smith noted that Western Australia would face rising competition from lower-cost miners such as those in Africa and parts of South America.

“Efficiency improvements amongst businesses and government policies aimed at cost cutting and productivity improvements are key to maintaining growth going forward,” he said.

“The increasing cost of doing business in Australia is now becoming a major issue for many companies looking to expand or enter the Western Australian market.”

Edited by: Mariaan Webb