Minerals exports and exploration take a dive in first quarter

Its report of Australian Mineral Statistics – March quarter 2009 – said that mineral resource export earnings declined by 18 per cent to $38.7 billion.
Export volumes and production of the majority of commodities were lower in the March quarter with only around 30 per cent of commodities covered recording increased production.
The Australian dollar averaged US66.6 cents in the March quarter 2009, slightly lower than the US67.4 cents average of the previous quarter. Reflecting this, movements in the exchange rate had a negligible influence on export values in the quarter.
Commodities that recorded significant declines in export earnings include: iron and steel, down $200 million (48 per cent) to $218 million; bauxite, down $25 million (43 per cent) to $33 million; diamonds, down $68 million (42 per cent) to $95 million; metallurgical coal, down $4.9 billion (39 per cent) to $7.6 billion; copper, down $565 million (36 per cent) to $1 billion; and LNG, down $1.3 billion (35 per cent) to $2.5 billion.
Higher iron and steel export volumes were more than offset by lower export prices resulting in declining export earnings.
Commodities that recorded significant increases in export earnings in the March quarter 2009 include: rutile concentrate, up $34 million (53 per cent) to $98 million; refined gold, up $1.5 billion (39 per cent) to $5.4 billion; uranium oxide (U3O8), up $47 million (19 per cent) to $293 million; synthetic rutile, up $9 million (15 per cent) to $68 million; ilmenite concentrate, up $5 million (14 per cent) to $42 million; and petroleum refinery products, up $16 million (8 per cent) to $210 million.
Increased export values for refined gold and rutile concentrate are driven by both higher export volumes and higher prices. The export value of uranium oxide and synthetic rutile increased as a sharp rise in the export unit value more than offset lower export volumes.
Significant production declines occurred for: intermediate nickel (45 per cent); refined nickel class 2 (40 per cent); refinery liquefied petroleum gas (LPG) (38 per cent); mined silver (36 per cent); iron and steel (35 per cent); and zinc ores and concentrates (24 per cent).
Increased production was observed for mined tin (62 per cent); refined gold (45 per cent); refined nickel class 1 (22 per cent); rutile concentrate (10 per cent); and zircon concentrate (7 per cent).
Mined tin production was higher in the quarter, reflecting the continued ramp up of capacity at Metals X’s Renison operation, having started production in the September quarter 2008.
Production of refined gold increased in the March quarter, primarily because of an increased availability of overseas scrap for refining in Australia. Higher production of refined nickel class 1 reflected higher output from BHP Billiton’s Kwinana refinery. Increased production of rutile and zircon concentrates reflected higher production at Iluka’s mineral sands operations.

Coal
Production of salable and raw black coal is estimated to have decreased in the quarter. Black coal export volumes also decreased by 14 per cent to 58 million tonnes.
In the March quarter, export unit values for thermal coal declined by 11 per cent, reflecting lower spot prices. The combination of lower export prices and the decrease in export volumes resulted in export earnings decreasing by 13 per cent to $5 billion.
Export unit values for metallurgical coal declined by 18 per cent in the March quarter, reflecting increasing volumes sold at a discount to contract prices. Weaker global demand for steel-making raw materials was reflected by a 26 per cent decline in export volumes for metallurgical coal, which contributed to a 39 per cent decline in export earnings to $7.6 billion.

Uranium
Australia’s uranium production declined by 14 per cent to 2297 tonnes U3O8 in the March quarter, as production at both Energy Resources Australia’s Ranger operation and BHP Billiton’s Olympic Dam declined as lower grade ore was processed.
Uranium export earnings increased by 19 per cent to $293 million in the quarter as a significant increase in average export prices offset a 14 per cent fall in export volumes.

Metals and other minerals
Iron ore
Despite interruptions caused by heavy rain at Rio Tinto’s and Fortescue’s Pilbara operations, iron ore production remained flat in the March quarter 2009 compared with the December quarter 2008. However, export volumes increased by 13 per cent in the March quarter 2009.
This increase more than offset a decline in the export unit value, resulting in a 3 per cent increase in iron ore export earnings to $9 billion.

Gold
Gold mine production remained unchanged at 54 tonnes in the March quarter, while refined production grew strongly by 45 per cent to 129 tonnes. A three-fold increase in the volume of overseas sourced scrap refined in Australia for re-exporting was the main contributor to higher export volumes in the quarter. A strong rise in the US dollar denominated gold price and a modest depreciation of the Australian dollar led to an 14 per cent increase in unit export values. As a result of both increased export volumes and a higher Australian dollar denominated gold price, export earnings increased by 39 per cent to $5.4 billion in the March quarter 2009.

Copper
Copper mine production declined by 13 per cent in the quarter, partly attributable to lower production at Xstrata’s Ernest Henry and Mount Isa mines and a number of other smaller operations. Reflecting lower mine production and the closure of some SX-EW capacity in the quarter, refined production declined by 19 per cent to 109 tonnes. Export volumes fell by 27 per cent in the March quarter. This combined with lower export prices resulted in the value of copper exports declining by 36 per cent to $1 billion.

Nickel
Nickel mine production declined by 10 per cent in the March quarter to 44 000 tonnes, as a result of a number of mine closures during the December 2008 and March 2009 quarters.
These closures also affected production of intermediate products and class 2 refined nickel, with production of both down by more than 40 per cent. However, class 1 refined nickel production increased by 22 per cent, to 28 500 tonnes, as production at BHP Billiton’s Kwinana refinery resumed full production following disruptions in the September quarter 2008.
Nickel export volumes declined by 14 per cent as a result of lower production of ores and concentrates, and intermediate products. Export values declined by 16 per cent as lower nickel prices reinforced the effects of falling export volumes.

Zinc
Zinc mine production fell by 24 per cent to 298 000 tonnes in the March quarter 2009 compared with the December quarter 2008. Lower production at a number of mines contributed to this decline, with the largest falls occurring at Oz Minerals’ Golden Grove and Century mines, and Xstrata’s Mount Isa operation. The value of zinc exports declined by 23 per cent to $358 million in the March quarter 2009, mainly attributable to a 18 per cent fall in the volume of zinc exports.

Exploration spending
Mineral and petroleum exploration expenditure fell significantly in the first quarter with large declines in Western Australia and South Australia, the latest Australian Bureau of Statistics (ABS) figures showed.
Excluding petroleum, the seasonally-adjusted estimate of mineral exploration expenditure fell from $604.2m in the December quarter to $495.9m in the three months ended March 2009 with WA posting the biggest decline of $63.4m, the ABS said.
South Australia recorded the second biggest decline of $20.4m.
Total metres drilled fell a seasonally-adjusted 29.9 per cent from the previous quarter to 1.54m metres in the March quarter.
In original terms, total metres drilled fell 45.2 per cent to 1.2m metres.
Drilling in areas of new deposits dropped 57.3 per cent to 338,000 metres, and drilling in areas of existing deposits slid 38.5 per cent to 888,000 metres.
Expenditure on petroleum exploration in the first quarter fell $14.8m, or 1.5 per cent, to $998.6m, expenditure on production leases fell $25.5m to $209.2m, while exploration on all other areas rose $10.7m to $789.4m.
Offshore petroleum exploration rose 4 per cent to $912.4m in the quarter, while onshore exploration expenditure fell 36.5 per cent to $86.2m.
Queensland recorded the largest decline in petroleum exploration expenditure, spending $27.8m less than the December quarter to $60.1m in the three months ending March.
Northern Territory posted the biggest increase in petroleum exploration expenditure, up $44.6m from the previous three months to $73.9m.
Some material sourced from: Lloyd’s List Daily Commercial News – www.lloydslistdcn.com.au

For a copy of ABARE’s report visit: http://www.abare.gov.au/publications_html/ams/ams_09/ams_jun09.pdf

To see ABARE’s table of percentage changes to Australia’s mineral exports from Dec 08 to Mar 09 quarters, click here.