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The value of Western Australia’s mineral and petroleum industry reached a record high of $101.2 billion in 2010–11 representing an increase of 39 per cent over the previous year. This is the first time resource sales have exceeded $100 billion and is particularly significant considering the 12 per cent appreciation of the Australian dollar against the US dollar during 2010–11.

This outcome was supported by exceptionally high commodity prices and robust overseas demand for the State’s resources. The sales record was delivered against a backdrop of extensive flooding from a longer than normal wet season and included a subsequent train derailment.  The industry also continues to face increasing costs and skills shortages which are hampering expansions and developments designed to meet increasing demand.

The most outstanding sales outcome in 2010–11 came from the iron ore sector.  Coupled with petroleum and gold, these three sectors accounted for 88 per cent or $88.7 billion of all mineral and petroleum sales.

Western Australia is very prominent in the global iron ore industry.  In 2010–11 another sales record was set and has averaged a 35 per cent increase in value each year over the past five years.  With its close proximity to Asia, vast iron ore reserves and project expansions to meet demand, Western Australian producers are well placed to remain a significant contributor to growth in the national economy.

The strong Australian dollar which has been trading near post-float highs and in 2010–11 averaged US99 cents. High commodity prices helped to compensate for the strengthening Australian dollar and played an important role in raising the value of Western Australian mineral and petroleum sales in 2010–11.  
The list below shows average commodity price movements between 2009–10 and 2010–11 in both US and Australian dollar terms:

In 2010–11, Western Australia accounted for a record 46 per cent of Australia’s merchandise exports which were worth $244.6 billion.  Queensland followed with 20 per cent, New South Wales 15 per cent and Victoria contributed around eight per cent.

Mining and petroleum dominated Western Australia’s merchandise exports accounting for 95 per cent of the total in 2010–11 with China remaining the State’s largest market, taking 42 per cent. Commodity exports are forecast to increase over the next five years as a number of significant iron ore and LNG projects come on stream across the State.

The magnitude of the State’s mining developments is demonstrated in the Australian Bureau of Statistics (ABS) figures for 2010–11.  This data shows that Western Australia’s share of national mining capital expenditure rose 29 per cent to $28.3 billion and accounted for 60 per cent of the total ($47.2 billion). Over the past five years private new capital expenditure by the industry has grown on average by 21 per cent.

Western Australia attracted the bulk of mineral and petroleum exploration expenditure in Australia drawing in 54 and 72 per cent respectively in 2010–11.

As highlighted by record sales in 2010–11, the State’s mineral and petroleum industry remains globally competitive and is in a very strong position given the uncertain global economic outlook.  This follows a decade of rapid expansion where the value of resource sales has increased on average by 14 per cent each year.  Supported by a substantial pipeline of resource investment activity, the industry is well placed to take advantage of rapid industrialisation in Asia and the resultant strong demand for commodities.

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Iron ore is the State's largest sector accounting for a record $57.3 billion in 2010–11 an increase of 62 per cent on last year.   This also represents 57 per cent of total sales in 2010–11.  Australian dollar prices for all grades of iron ore from Western Australian producers increased by an average of 60 per cent over the year.  Adverse weather conditions early in 2011 affected shipments of iron ore and overall were only three per cent higher than the previous year reaching 396 million tonnes. 

Petroleum, which includes crude oil, condensate, LNG, natural gas, LPG butane and propane, is Western Australia’s second largest resource sector after iron ore accounting for $23.2 billion or 23 per cent of total sales in 2010–11. This represents a 24 per cent increase in overall value compared to the previous year.

LNG was the second most valuable commodity in the State in 2010–11. Output increased by eight per cent to 17 million tonnes and the value of LNG sales rose by 25 per cent to $8.7 billion.  LNG production is forecast to grow in the period ahead due to increased demand from Asia and supply from new projects including Woodside Energy’s Pluto LNG project which is expected to commence production in March 2012.

The value of crude oil sales from Western Australia rose by 32 per cent to $8.4 billion in 2010–11, making crude oil the third most valuable commodity.  International events pushed up the Tapis crude oil price by 29 per cent to average US$101 a barrel in 2010–11.   This reflects disruptions to oil supply in Libya, political unrest in the Middle East and North Africa, and an increase in Japan’s   oil-fired electricity generation following the March 2011 earthquakes and tsunami.

Crude output increased by 18 per cent to 87.6 million barrels reflecting the ramp-up in production during the period from the Pyrenees and Van Gogh fields.

The value of Condensate increased by 14 per cent to reach almost $4 billion, however output fell by seven per cent to 43.3 million barrels.

Gold ranked fourth in terms of overall value and reached $8.2 billion, representing eight per cent of all sales in 2010–11.  This reflects gold’s role as a ‘safe haven’ investment given concerns about the world economy.  The price of gold was up by 26 per cent in US dollar terms with gold producers responding to the higher prices increasing output by 12 per cent to 5.9 million ounces.

Nickel, in fifth place, contributed $4.6 billion or five per cent to the total value of the State’s resources in 2010–11.  A 24 per cent increase in the US dollar nickel price resulted in the value of nickel sales rising by 13 per cent.  Nickel production was up by four percent to 187 thousand tonnes. 

Alumina claimed sixth place in 2010–11 with output down marginally by three per cent to 12.3 million tonnes.  Strengthening of the Australian dollar offset the 21 per cent rise in the US dollar price for alumina, with the value of alumina sales increasing by four per cent to reach almost $4 billion.

Base metals were up in terms of overall value by nine per cent to $1.6 billion in 2010–11.

Copper dominated base metals in terms of value however output remained almost static at 148 thousand tonnes in 2010–11.  US dollar copper prices were up by 30 per cent compared to 2009–10 which resulted in the value of copper sales rising by 13 per cent to $1.3 billion. 

Sales volumes of zinc were down by 20 per cent to 80 thousand tonnes in 2010.  Despite a solid 31 per cent rise in the US dollar price of zinc, sales values fell by 11 per cent to $189 million.

Lead production rose by 55 per cent to 40 thousand tonnes in 2010–11 and sales followed with a rise of 53 per cent to $94 million.

Sales values of zinc were down by 24 per cent to $159 million and volumes of were down by 20 per cent to 70 thousand tonnes in 2010–11.

Domestic natural gas sales fell by five per cent to 8.9 billion cubic metres in 2010–11 whilst the value of sales rose slightly by three per cent to $1.4 billion.  LPG butane and propane’s output fell by five per cent and the sales value increased to $774 million, which is a 20 per cent increase on the previous year.

The total value of mineral sands sales was down by 33 per cent to $468 million in 2010–11.  The reduction in the value of sales was mainly due to cutbacks in output by the leading producer.  This resulted in falls in value for rutile (54 per cent), leucoxene (51 per cent), synthetic rutile (30 per cent), zircon (30 per cent) and ilmenite (23 per cent).  Output tonnage also fell in similar amounts with the exception of zircon which fell only 15 per cent.

In 2010–11, the value of salt sales fell by 12 per cent to $367 million largely due to a strong Australian dollar.  Volumes increased by 12 per cent to 12.2 million tonnes.

Coal production rose by eight per cent to 7.2 million tonnes in 2010–11 with sales revenue falling by two per cent to reach $319 million.
 
Diamond sales volumes fell sharply in 2010–11 decreasing by 38 per cent to 10.1 million carats.  Declining grades in the Argyle mine together with a heavy wet season were responsible for reduced production.

Output for Cobalt, as a by-product of nickel mining, fell by 15 per cent in 2010–11.  A five per cent fall in the average US dollar price of cobalt in 2010–11 contributed to a 24 per cent fall in the value of sales which reached $145 million.

Western Australia’s mineral and petroleum resources in order of value for 2010–11 are:

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