Australia Slashes Mining Revenue Forecast as China Slows

Australia has downgraded its projected mining export revenue by more than A$100 billion (US$63 billion) over the next four years, citing China's slowing economy, Treasurer Jim Chalmers announced on Monday, reports Nikkei Asia. This write-down, which will be reflected in the midyear budget released on Wednesday, will result in A$8.5 billion less in company tax receipts over the same period.

Chalmers acknowledged the "substantial impact" on the country's finances, marking the first time the government has had to downgrade its projected company tax revenue since the COVID pandemic. However, he emphasized his optimism about the long-term prospects of Australia's resource sector, which accounts for over 13% of the nation's gross domestic product.

"This just reflects the reality of less demand out of China largely, and a couple of other less substantial factors," Chalmers said. He further elaborated, "The write-down in mining exports that you could expect to see on Wednesday is a reflection not just on prices, but also on volumes, and volumes are down largely because the Chinese economy is weaker."

Australia's resource and energy exports generated A$415 billion in fiscal 2024, according to the government's September sector report. The price of Australia's primary export, iron ore, has fluctuated throughout 2024 in response to Chinese authorities' numerous measures aimed at stimulating the economy, particularly the struggling property sector. However, recent measures discussed at a meeting chaired by President Xi Jinping failed to fully reassure markets due to a lack of concrete details.

Despite Beijing's efforts, Chalmers stated that his department anticipates "quite weak" Chinese growth. "We welcome the steps that have been flagged or announced by the authorities in Beijing, but we don't pretend that that will automatically solve all of the challenges in the Chinese economy," Chalmers said. "Some of them are structural, some of them are demographic, some of them will take a little bit longer to play out."