Melbourne (Platts)--1Mar2011/130 am EST/630 GMT

Iron ore will retain its title as Australia's biggest export earner in the fiscal year to June 30, 2012, increasing 12% year on year in value to A$63.1 billion ($64 billion), the Australian Bureau of Agricultural and Resource Economics and Sciences forecast Tuesday.

Metallurgical coal will remain the country's second-biggest earner at A$41.9 billion, up 22% year on year, ABARES forecast in its Australian commodities report for the March quarter of 2011.

Rounding out the top five biggest export earners for the country in 2011-12 are thermal coal at A$19.3 billion, up 28% year on year; gold at A$16.8 billion, up 12% year on year; and crude oil at A$13.8 billion, up 18% year on year, ABARES said.

The bureau noted that three months of flooding in the state of Queensland is having a "significant effect" on that state's coal industry in the current July 2010-June 2011 fiscal year, which accounted for 62% of Australia's total coal exports in 2009-10. Exports over December 2010-March 2011 were 15 million mt lower than forecast for the period, costing A$2 billion-2.5 billion in lost exports, ABARES said. It estimated metallurgical coal accounted for three-quarters of the lost revenue.

Despite this, ABARES forecast Australia's metallurgical coal export volumes to increase 3% year on year in 2010-11 to 163 million mt and at an annualized rate of 5% year on year to reach 219 million mt in 2016.

It forecast the country's export earnings from iron ore to jump 64% year on year to $57 billion in 2010-11, reflecting both a 7% increase in volume to 418 million mt and a 73% hike in average contract prices over the same period.

It further forecast Australia's exports of iron ore to increase at an annualized rate of 7% a year across its five-year forecast period to 2015-16.

The country's total export earnings from metals and other minerals are forecast to increase 12.1% year on year to A$125.8 billion in 2011-12, largely reflecting higher shipments and prices for Australian iron ore, the bureau said.

The overall value of Australia's exports of mineral resources is expected to reach A$215 billion in 2011-12, up 16% from a forecast A$186 billion in 2010-11, ABARES said.

Strong commodity demand, especially from China and other emerging Asian markets, is expected to boost earnings from all mineral resource exports to A$219 billion in 2010-11 dollars by 2015-16.

"Assumed strong economic growth in developing Asian economies and continued economic recovery in most developed economies are expected to underpin demand for steel over the short to medium term," ABARES said in the report. "Over the next few years, a significant supply expansion from major iron ore and metallurgical coal producers is expected to place some downward pressure on prices. However, prices for both iron ore and metallurgical coal are forecast to remain well above historical averages."

--Wendy Wells, newsdesk@platts.com

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