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In 2008–09 the value of Western Australia’s mineral and petroleum industry reached $71.3 billion, representing a 19 per cent increase compared to the previous year.  It is an outstanding achievement given the challenging market conditions experienced during a period which has seen commodity prices fall sharply as a result of the global economic downturn.

Over the course of 2008–09 the Australian dollar depreciated against the US dollar by almost 17 per cent which to some degree helped cushion the effect of the drop in demand and weakening commodity prices.

Most of the increase in value for 2008–09 came from iron ore, petroleum and gold.  Together, these three sectors accounted for 84 per cent or $60 billion of all mineral and petroleum sales.

In 2008–09 there was a significant 53 per cent increase in the value of iron ore sales from Western Australia, with 316 million tonnes exported at a value of $33.6 billion.  This established the iron ore sector as the State’s largest in terms of value, accounting for 47 per cent of the total value of all mineral and petroleum sales.

High oil prices in the first quarter also helped to maintain the prominence of the State’s petroleum sector.  In 2008–09 this sector grew in value by nine per cent to $21.3 billion.  The total sales value of this sector which includes crude oil, condensate, natural gas and LNG represents around 30 per cent of the total value of Western Australia’s resource industry. 

Increases in the gold price has seen the gold sector have a noticeable overall impact in terms of value reaching $5.2 billion in 2008–09, a 25 per cent increase over the previous year.

The State’s mineral and petroleum industry has proven to be resilient during an uncertain economic climate and continues to grow. Over the past decade the value of Western Australia’s mineral and petroleum industry has grown on average by a healthy 15 per cent per annum.

The mineral and petroleum sectors contributed a massive 89 per cent ($77.5 billion) towards the State’s total merchandise exports in 2008–09 which highlights the importance these sectors have to both the Western Australian and national economies.

Western Australia outperformed all the other states to contribute 38 per cent ($86.8 billion) towards Australian merchandise exports in 2008–09, an increase of 27 per cent from the previous year.  Queensland followed with 24 per cent, then New South Wales with 17 per cent and Victoria contributing about 9 per cent.
 

Additional statistical indicators which illustrate the significance of
Western Australia’s resources industry to the Australian economy include:

• Western Australia accounts for approximately 46 per cent of Australia’s total value of mineral and petroleum sales (based on DMP and ABARE published data);
• DMP and ABARE data show that in the 2008 calendar year Western Australia’s petroleum industry accounted for 66 per cent of national crude oil and condensate production and 71 per cent of natural gas production; and
• In 2008–09, 38 per cent of Australia’s total merchandise exports originated from Western Australia.

Growth in the State’s resources industry is underpinned by strong levels of investment. In 2008–09, the value of new capital expenditure by Western Australia's mining industry amounted to $22.8 billion, which was a 34 per cent increase compared to the previous financial year.  Capital expenditure by the mining industry represented 75 per cent of Western Australia’s total new capital expenditure of $30.4 billion in 2008–09.  Western Australia also accounted for 64 per cent of national investment expenditure by the mining industry in 2008–09.

Data compiled by DMP show that there were 67,865 persons employed in the Western Australian mining sector in June 2009.  This represents a four per cent decrease compared to June 2008 when employment was 70,789 and a loss of 9,663 jobs compared to October 2008, when Western Australian mining sector employment peaked at 77,528.  It is clear that the economic downturn has led to job losses in the State’s resources industry, however the industry continues to be a major employer in Western Australia where it is estimated that one in five employees are either directly or indirectly involved in resource sector activities.
 
After experiencing several years of extraordinary growth the Western Australian resources industry performed relatively well in 2008–09 despite challenging conditions. Whilst key challenges remain, the State’s resources industry is globally competitive and is in a strong position to meet the demands of future economic growth. The long-term outlook for the resources industry is positive and will continue to be driven by industrialisation in emerging economies, particularly China, which is underpinning steady demand for Western Australia’s mineral and petroleum resources.

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At an aggregate level, the value of Western Australian mineral and petroleum sales held up quite well in difficult conditions to record a 19 per cent increase to reach $71.3 billion in 2008–09.  Once again iron ore was the largest individual mineral sector by value and accounted for almost half of the total value of the State’s mineral and petroleum sales. Other commodities to record significant growth in sales value in 2008–09 include LNG, natural gas, gold, salt and coal.    The following table lists the overall average commodity price movements in
2008–09. As shown, commodity prices were adversely affected by the global financial crisis.

Iron ore recorded an impressive $33.6 billion in the value of total sales which saw the sector surpassing its previous sales record achieved last financial year. This strong sales result represents a 53 per cent increase from 2007-08 and reflects previously negotiated iron ore price increases.  High levels of demand from China and continued support from traditional markets including Japan saw a nine per cent increase in the quantity of iron ore sold to reach 316 million tonnes which was another milestone for the sector.

The Tapis oil price averaged US$72.33 per barrel in 2008–09 and was down
29 per cent from 2007–08 which coincided with the slowing world economy.  Crude oil output remained fairly static at 81.4 million barrels in 2008–09, however low oil prices saw the value of sales decrease by 12 per cent to reach $7.7 billion.  Condensate output increased by eight per cent to 41.9 million barrels while sales value decreased by 22 per cent to $3.1 billion. 

LNG output increased by 15 per cent in 2008–09 which was supported by continued strong demand from customers in Asia.  More notably, LNG sales values increased substantially by 67 per cent for a total value of $8.5 billion.

Gold has moved up the rankings into fourth place in 2008–09 with a record value of $5.2 billion which was up 25 per cent from 2007–08. Volatility observed in financial markets and economic uncertainty has seen the gold price averaging US$874 per ounce in 2008–09. In Australian dollar terms the gold price has averaged AUD$1,171 per ounce which is 28 per cent higher than the previous year.  Gold output fell by four per cent in 2008–09 to 4.4 million ounces.

Alumina delivered a steady performance through 2008–09 to claim fifth place.  Output remained constant compared with the previous financial year and resulted in 12.3 million tonnes of alumina being shipped.  A decrease of 16 per cent in the US dollar price for alumina offset the strengthening Australian dollar and resulted in the value of alumina sales in 2008–09 increasing only slightly to record a total of $4.6 billion.

Nickel, in sixth place, contributed $3 billion to the total value of the State’s resources in 2008–09. Whilst sales quantities have risen marginally by four
per cent to 178 thousand tonnes, a large drop in the US dollar nickel price of
53 per cent resulted in the value of nickel sales falling dramatically by 42 per cent.

Base metals were impacted heavily by the fall in commodity prices as shown by the 33 per cent decrease in sales values to record $1.2 billion in 2008–09. 

Zinc’s sales volumes decreased by nearly 31 per cent to 136 thousand tonnes and suffered a 46 per cent fall in the US dollar price.  Similarly, zinc sales values fell by 57 per cent to $249 million. 

Copper bucked the downward trend with regard to volumes and recorded
an 11 per cent increase with the quantity of copper produced in 2008–09 totalling 138 thousand tonnes.  The value of copper sales decreased by 18 per cent to $889 million as the price of copper fell by nearly 37 per cent in US dollar terms.

Lead production decreased by 36 per cent to 16 thousand tonnes in 2008–09.  Over the same period lead prices dropped by almost 50 per cent in US dollar terms. Coinciding with the drop in output the value of lead sales decreased by 61 per cent to $32 million.
 
Domestic natural gas sales volumes decreased by six per cent to 8.6 billion cubic meters in 2008–09 and the sales value of this gas rose by 20 per cent to
$1.2 billion.  LPG butane and propane output rose almost six per cent and buoyant prices helped to return a sales value of $751 million which is a ten per cent increase on the previous year.

The total value of mineral sands sales increased slightly by $5 million to $698 million in 2008–09.  Sales volumes were mixed, with increases in synthetic rutile and zircon offsetting falls in ilmenite, rutile and leucoxene.

Cobalt sales volumes decreased by eight per cent which coincided with a
45 per cent drop in cobalt prices in US dollar terms.  Sales values for cobalt were also impacted and recorded a decrease of 49 per cent to reach $230 million in 2008–09.

Diamond sales volumes fell sharply during 2008–09, decreasing by 67 per cent to reach 9.2 million carats.  Not surprisingly, sales values for diamonds also decreased and fell by 57 per cent to $262 million.
 
Coal output increased by 12 per cent to 7.0 million tonnes and included several export shipments. Coal sales revenue rose by 23 per cent to $333 million.

The volume of salt sales remained steady in 2008–09 to record 11 million tonnes. In contrast, the value of salt sales increased strongly by 63 per cent to $380 million.

Western Australia’s mineral and petroleum resources in order of value for 2008–09 are:

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