Western Australia is the new Qatar! Or, if you prefer, the new Croatia!
Comparing the GDP of the resource-driven state to another country is mostly useless. But it does give you an appreciation for how large a role Australia plays in the global economy and how important the country’s resources have become to Asia’s new century of growth.
Resource exports topped AU$53 billion in the last year – a 25% increase over the year before. The AU$10 billion increase in export earnings was driven by a one two punch of higher commodity prices and increased production. “Petroleum, iron ore and nickel led the charge, each adding billions to their earnings on the back of relentless demand from China. The value of nickel sales jumped 110 per cent, worth AU$8 billion compared to AU$3.79 billion just a year before,” reports Amanda O’Brien in today’s Australian.
You can argue over whether the state – and the whole Aussie economy is one trick pony. You can also argue that if China slows down production because America slows down consumption, Australia is doomed. But you can’t argue that the resource boom hasn’t created vast new investment opportunities in mining services and junior minerals and metals producers. “Iron ore was the biggest single earner, reaping AU$15.8 billion from record sales of 258 million tonnes, a 24 per cent increase in value.”
WA Resources Minister Francis Logan says, “People are actually digging up more. The iron ore industry is hitting record levels in terms of its tonnage produced and it’s investing now in absolutely phenomenal growth from BHP and Rio Tinto, so you’ll see these figures climb even higher….At the moment, iron ore is number two at just over AU$15 billion while petroleum, because of the price of a barrel of oil, is still number one. But depending on how commodity prices move around, over the next two or three years you’ll see iron ore move into the number one spot by a long way.”
Yes. The Big Dig is likely to be very good to iron ore juniors.
The Daily Reckoning Australia