For decades, coal was the bedrock of Australia’s commodity exports before it lost its top status to iron ore as shipments of the steel raw material to China soared.
Now coal is at risk of being surpassed by gold.
The latest quarterly report from the Australian government’s commodity forecaster shows that earnings from exports of the precious metal are expected to rise to A$56 billion ($36.6 billion) in the fiscal year starting July 1.
This is higher than the A$39 billion forecast for metallurgical coal and the A$28 billion for thermal coal, according to data released on Monday by the Department of Industry, Science and Resources.
Of course, putting the two types of coal together brings a combined total of A$67 billion for expected export earnings in 2025-26, which is still higher than the forecast for gold.
But here is where it gets interesting.
By the 2026-27 fiscal year, it’s quite possible that gold could overtake the combined total for metallurgical coal, used to make steel, and thermal coal, used mainly for power generation.
The government expects gold exports to rise to 313 metric tons in 2026-27 from 289 tons in 2025-26 and 250 tons in 2024-25.
This would cement Australia’s status as the world’s biggest net exporter of gold and the third-largest producer.
However, the department has been cautious in its price forecast for gold, expecting it to retreat to $2,825 an ounce for 2026-27, down from $3,200 for 2025-26, which is in turn below the current spot price of around $3,273.
The government forecaster is traditionally conservative in its price forecasts for commodities and an average of $2,825 for 2026-27 would be at the bottom end of the range expected by most analysts.
It’s possible that gold will continue its 29% rally since the November election of Donald Trump to a second term as US president, which has seen a range of policies implemented and planned that are viewed as bullish for the precious metal.
These include tax and spending policies that would dramatically increase the government fiscal deficit, putting pressure on US Treasuries as a store of value.
The sweeping tax cut and spending bill proposed is edging closer to being passed by the Republican-controlled Senate and House of Representatives, and if successfully signed into law it is estimated by the non-partisan Congressional Budget Office that it would add $3.3 trillion to US debt over a decade.
There is also considerable uncertainty over Trump’s trade and tariff policies, with his early July deadline looming for the United States to reach deals with dozens of major trading partners.
Even if deals are reached and they impose lower tariffs than Trump announced in April, it is still likely that imports into the United States will face far higher taxes than they did under former President Joe Biden and during Trump’s first term.
This adds a positive backdrop to gold as investors are likely to seek alternatives to US Treasuries and other assets, with both investor and central bank buying expected to remain strong.
Price assumptions
If a more optimistic price is assumed for gold in 2026-27 of $4,000 an ounce, it would yield export revenue of A$61.6 billion, using the current Australian dollar exchange rate to the US currency.
That would still be below the government’s forecast of a combined A$67 billion for both coal types, but unlike gold the price forecasts for coal may be too optimistic given the likely dynamics in the seaborne market.
The government forecast expects metallurgical coal to average $201 a ton in 2026-27 and Newcastle Port benchmark thermal coal $110.
Metallurgical coal contracts on the Singapore Exchange ended at $178.50 a ton on June 27, while globalCOAL assessed Newcastle thermal coal at $108.87 in the week to June 27, with both prices being close to recent four-year lows.
This means that the government is expecting the prices of both types of coal to increase slightly in coming years, which would require seaborne demand in major Asian markets such as China, India, Japan and South Korea to at least hold steady, if not improve.
China and India, the two largest coal producers and importers, are seeking to boost domestic output and lower imports, which may limit their seaborne imports.
Japan and South Korea are seeking to use cleaner fuels such as liquefied natural gas, which may also end up being cost competitive with coal given the flood of new capacity expected to hit the market by 2027.
If gold maintains its current uptrend and seaborne coal continues to come under pressure, then it is quite possible that gold overtakes coal as Australia’s second-biggest commodity export by 2026-27.
(The views expressed here are those of the author, Clyde Russell, a columnist for Reuters.)
(Editing by Jamie Freed)