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In 2007–08 the value of Western Australia’s mineral and petroleum industry reached $58.6 billion, representing a nine per cent increase compared to the previous year.  Strong overseas demand for the State’s mineral and petroleum commodities, increased output and high commodity prices combined to deliver this record result. 

During 2007 08 the Australian dollar strengthened against the US dollar by 13 per cent which is estimated to have had the effect of reducing mineral and petroleum export revenue by around $9 billion.  Therefore, the net result of a $4.9 billion overall increase in the value of mineral and petroleum sales in 2007 08 is quite remarkable. 

This outcome was achieved with the resources industry continuing to experience ongoing difficulties with equipment supplies, rising costs and skills shortages.  These factors are hampering expansion programs designed to meet shortfalls in resource commodity supplies.

Most of the increase in value for 2007–08 came from the iron ore and petroleum sectors.  Together, these two sectors accounted for 68 per cent ($39.9 billion) of total sales value of the State’s resources industry.

In 2007 08 there was a huge 30 per cent increase in the value of iron ore sales out of Western Australia, with 290 million tonnes exported at a value of $20.5 billion.  This established the iron ore industry as the largest resource sector, representing 35 per cent of the total value of the State’s resources industry.

High oil prices also maintained the petroleum industry’s prominence in the State.  In 2007 08 the State’s petroleum industry grew in value by almost 19 per cent to $19.4 billion.  The total sales value of this industry which includes crude oil, gas and LNG represents a third of the total value of Western Australia’s resource industry.  Western Australia’s petroleum industry also now accounts for 70 per cent of national oil and gas production.

Overall, during the last ten years the value of Western Australia’s mineral and petroleum industry has grown on average by an impressive 13 per cent per annum.  Also highlighting the importance to both the State and national economies, the mining and petroleum sectors contributed 83 per cent ($56.6 billion) toward total Western Australian merchandise exports in 2007–08.

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High world commodity prices played an important role in pushing up the value of Western Australian mineral and petroleum sales.  High demand and constricted supply saw record prices being reached for oil, iron ore, gold, cobalt and lead.   LNG returns were also boosted by the higher oil price.  However, after previous massive increases, nickel and zinc prices underwent downward price corrections of 32 per cent and 36 per cent respectively (in Australian dollar terms).  

Several commodities recorded decreased levels of physical output, notably lead, gold, crude oil, LPG and salt with LNG and nickel down marginally.  However the strong oil price translated to the value of crude oil, LPG butane and propane and LNG rising, despite these production falls.

Iron ore is now the largest individual mineral sector by value and accounts for 35 per cent of the value of the overall mineral and petroleum sector’s output for 2007–08.  On the back of strong demand from China, continued support from traditional markets, a 13 per cent increase in output and price increases, iron ore reached a record sales value of $20.5 billion.  This was a 30 per cent rise from 2006 07.  The quantity sold also broke records in 2007–08, increasing by nearly 13 per cent to reach 291 million tonnes.    

The Tapis oil price peaked in June at $US148.17 per barrel and averaged $US98.03 per barrel in 2007–08, up 42 per cent from 2006–07.  Crude oil output fell by nine percent to 80.3 million barrels however high oil prices saw value of sales increase by around 18 per cent to reach $8.7 billion.  Condensate increased output by six per cent to reach 37.6 million barrels and sales value increased by 34 per cent to reach just under $4 billion.   

Nickel, in third place, contributed $5.3 billion to the total value of the State’s resources in 2007–08.  Whilst sales quantities dropped marginally by just under two per cent to 171 thousand tonnes, a strong Australian dollar and a drop in the US dollar nickel price of 24 per cent saw the value of nickel sales plummet by 34 per cent.  

LNG output remained almost static, down just half a per cent however the influence of high oil prices saw the sales value increase by 13 per cent for a value of $5.1 billion.  This resulted in LNG holding the position of fourth most valuable individual commodity in the State.  

Alumina’s steady performance continued through 2007–08 to claim fifth place.  A modest output increase of about three per cent resulted in a record 12.3 million tonnes being shipped.  An increase of three per cent in the US dollar price for alumina was not enough to offset the effects of the strengthening Australian dollar and resulted in the value of alumina sales in 2007–08 falling by seven per cent to $4.5 billion. 

Gold output fell by 14 per cent in 2007–07 to 4.5 million ounces (139,511 kg) due in part to producers processing lower grades.  This sector remains in sixth place with a value of $4.1 billion.  Whilst the overall average gold price during 2007 08 was US$817 per ounce, in March 2008 the gold price achieved a new high of US$1,033 per ounce.   

Base metals were down in terms of overall value by seven per cent to $1.7 billion in 2007–08.   

The volume of Zinc sold increased by nearly 39 per cent to 197 thousand tonnes.  However, an average 28 per cent fall in the US dollar price of zinc saw sales values drop by 14 per cent to $578 million.   

The value of Copper rose by just under three per cent to $1.1 billion even though the price of copper fell by nearly four per cent in Australian dollar terms.  This was due to the increased quantity of copper produced in 2007–08, rising seven per cent to 124 thousand tonnes.  

A mine closure resulted in Lead production being reduced considerably from 70 thousand tonnes to only 26 thousand tonnes.  Lead prices soared by 76 per cent in US dollar terms.  However this was not enough to counteract the drop in output, resulting in the value of lead sales for 2007–08 falling by 44 percent to $81 million.
 
Domestic natural gas sales increased by five per cent to 9.2 billion cubic meters in 2007–08 and the sales value of this gas rose by 12 per cent to $1 billion.  LPG butane and propane output fell almost nine per cent, however strong prices helped to return a sales value of $683 million which is a 13 per cent increase on the previous year.  

The total value of mineral sands sales value fell by a little under three per cent to $768 million.  Volume of sales was mixed, with ilmenite, leucoxene and zircon being down and rutile up.  

Cobalt sales volumes were up by eight per cent and on average cobalt prices increased 61 per cent in US dollar terms to return an overall increase in sales value of 63 percent or $449 million.  

Diamond sales volumes increased by 53 per cent to reach 28 million carats whilst sales values increased by 40 per cent to $611 million.
 
Coal output was up by five per cent to 6.3 million tonnes and included several export shipments and sales revenue was up marginally by just over one per cent to $275 million.  

The volume of Salt sales fell by 12 per cent in 2007–08 to just over nine million tonnes.  Increased prices were not enough to offset the strengthening Australian dollar and the value of these salt sales also fell by a similar amount (15 per cent) in 2007–08 to $200 million.  

The State’s resources in order of value for 2007–08 are:

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