Australia's resource export outlook strengthened: despite trade headwinds, revenue forecast for 2025-26 raised to A$405 billion

Why Australia's Export Outlook Defies Global Trade Headwinds

Australia's resources and energy sector has once again demonstrated its resilience. According to the latest *Resources and Energy Quarterly* report from the Department of Industry, Science and Resources, Australia's resources and energy export earnings are expected to rise to A$405 billion in 2025-26 and further to A$416 billion in 2026-27, representing increases of A$22 billion and A$42 billion respectively from the December forecasts. Although the report forecasts export earnings will fall back to A$371 billion by 2030-31, the strong short-term growth highlights Australia's central role in global resource supply chains.

Background: The Report and Market Environment

This upward revision comes against an increasingly complex global trade backdrop. Geopolitical tensions, rising trade protectionism, and slowing growth in some major economies have brought uncertainty to commodity markets. However, Australia's resource sector, with its product diversity and stable demand from trading partners, has successfully weathered some of these headwinds. The report specifically points to the surge in AI investment, the acceleration of the global energy transition, and countries' heightened focus on critical supply chain security as the main structural factors supporting export growth.

Federal Minister for Resources and Northern Australia, Madeleine King, said: "Australia's resources and energy sector continues to deliver strong export earnings, supporting jobs, investment and economic growth despite geopolitical uncertainty." She added that export volumes remain robust, underscoring Australia's role as a reliable and stable supplier.

In-Depth Analysis

#### Business Level: Who Benefits? Who Feels the Pressure?

The growth in export earnings directly benefits Australia's major resource companies. Iron ore giants such as BHP, Rio Tinto, and Fortescue will continue to benefit from stable iron ore export volumes, despite slightly weaker price expectations. Iron ore is expected to account for over 25% of total resources and energy export earnings, maintaining its position as the largest export commodity. Gold stands out as a highlight, benefiting from rising prices and increased export volumes. Gold export earnings are projected to reach around A$73 billion in 2026-27, making it the second-largest resource export for the first time. This is a positive signal for gold mining companies such as Newmont (NEM) and Northern Star Resources.

On the other hand, while LNG export volumes remain strong, falling global prices will squeeze profit margins. LNG producers such as Woodside and Santos need to focus on cost control. Demand for energy transition metals such as lithium and nickel looks promising, but current price volatility puts pressure on producers. The report forecasts that demand for copper, nickel, aluminium, lithium, and steel will grow over five years, offering long-term opportunities for related companies, but short-term earnings forecasts should be cautious.

#### Industry Level: Rising Capital Expenditure and Supply Chain ChangesThe report highlights rising capital expenditure in the resources and energy sector, reflecting increased willingness among companies to invest. This indicates that Australia is recovering from the investment trough of the past few years, with new project development and existing mine expansions expected to accelerate. The critical minerals sector stands out in particular, as the Australian government has made its critical minerals strategy a national priority to reduce dependence on single supply sources. The demand growth expectations in this report further validate the global reliance on Australia’s critical minerals.

On the supply chain front, the report assumes that shipping through the Strait of Hormuz will resume in July, but acknowledges that trade flows will take time to return to pre-conflict levels. This assumption is based on a de-escalation in the Middle East, but uncertainty remains. If disruptions persist, they will affect Australia’s LNG transportation costs, and may even force a shift to alternative shipping routes.

#### Trade level: Asia-Pacific market is key

Australia’s main destination for resource exports remains the Asia-Pacific region. China, as the largest buyer, continues to see strong demand for iron ore and LNG; Japan and South Korea are traditional LNG markets; and India is emerging as a new growth point. The surge in gold exports in this report is partly attributable to strong demand from India and China.

In the critical minerals sector, ASEAN countries are beginning to become important partners in downstream processing, and Australia is expected to deepen economic ties with Southeast Asia through supply chain cooperation. At the same time, the United States is encouraging allies to build secure supply chains, and Australia may benefit from increased exports to the U.S., though the report does not specify details.

#### Investment level: Where is capital flowing?

• The upward revision in export revenues will attract more capital into Australia’s resources industry. Beyond traditional commodities, investors are focusing on the following areas:
• Energy transition metals: Copper, nickel, lithium, and rare earths, benefiting from the global deployment of electric vehicles and renewable energy.
• Gold: As a safe-haven asset, it has performed strongly amid global uncertainty.
• Infrastructure investment: To support exports, transport infrastructure such as ports and railways needs upgrading, and is expected to attract public-private partnership investments.
• Integration of AI with the resources industry: AI’s pull on energy demand indirectly strengthens the logic for attracting investment into the resources sector.

#### Long-term trends: Outlook to 2030The report predicts that export revenue will fall back to A$371 billion in 2030-31, but the decline is not due to an industry downturn; rather, it reflects the normalization of commodity prices and structural transformation. From Australia’s perspective, the following changes will occur over the next 3–10 years: 1. The declining role of iron ore: As China’s steel demand peaks and the green steel transition unfolds, long-term growth in iron ore demand will slow, though it will remain a cash cow in the near term. 2. The rise of energy transition metals: Lithium, nickel, copper, and rare earths will become new growth engines for exports, but current price volatility requires a consolidation period. 3. Natural gas as a transitional role: LNG demand in Asia remains resilient, but faces long‑term competition from renewable energy. 4. Geopolitics reshaping trade flows: Trade agreements with allies such as the US and the EU may expand, while dependence on trade with China gradually decreases. 5. Upward capital expenditure cycle: As new projects come online, the resource sector’s contribution to GDP is expected to remain elevated between 2025 and 2030.

Conclusion

The core message of the latest *Resources and Energy Quarterly* is that Australia’s resource exports remain strong despite trade headwinds, and the upward revision to short-term revenue expectations is driven by multiple demand factors. This validates Australia’s role as a stabilizer of global resource supply chains, but also highlights the need for structural transformation. Companies must balance their portfolios between traditional commodities and emerging metals, while the government should continue to optimize the investment environment and ensure that infrastructure and skills supply keep pace with industry developments. For investors, the long-term fundamentals of Australia’s resource sector are solid, but short-term attention should be paid to price volatility and geopolitical risks.

--- *This article is based on the June 2025 *Resources and Energy Quarterly* released by the Australian Department of Industry, Science and Resources and a statement by Federal Resources Minister Madeleine King. Data source: Reports from Australian Mining.com (Export outlook strengthened despite trade headwinds).*

--- *Disclaimer: This article is for reference only and does not constitute investment advice.*