UPDATE: Australia Mined Metals Output To Rise 10% Next Fiscal Year -Abare

Australian output of mined metals will rise 10% in the next fiscal year due to higher demand from export markets and as miners bring new and idled production capacity online, the Australian Bureau of Agricultural and Resource Economics said Tuesday.

Abare, the government's main statistical agency, forecast in a quarterly report that metal export earnings will likely rise 31% to A$106 billion in the year that began July 1.

That performance would be driven by 12% increases in the value of exported alumina and nickel, as well as 55% and 38% increases respectively in export earnings for iron ore and gold, which Abare includes in its total calculation for metals.

Copper production will rise 14% to 944,000 tons in 2010-11, having fallen by 7% to 825,000 tons in 2009-10 due to problems at BHP Billiton PLC's (BBL) Olympic Dam mine and lower production at Xstrata PLC's (XTA.LN) Ernest Henry mine, it said.

Refined copper exports fell 21% to 392,000 tons in 2009-10 and will likely climb 20% to 471,000 tons in 2010-11, Abare said.

The value of all copper exports rose 11% to A$6.5 billion in 2009-10 due to higher prices, which were partially offset by lower volumes and a stronger Australian dollar, it said. Exports will likely fall 2% to A$6.4 billion in the next fiscal year.

Aluminum production fell 3% to 1.9 million tons in 2009-10 on the back of lower production at Alcoa Inc.'s (AA) Portland smelter, and will likely be unchanged in 2010-11.

Earnings fell 19% to A$3.8 billion due to lower volumes and prices during 2009-10. A small price increase over the coming year would add 2% to A$3.9 billion in 2010-11, Abare said.

Production of alumina, an intermediate-stage commodity in the production of aluminum from bauxite ore, rose 2% to 20.1 million tons in 2009-10 thanks to increased production at the Worsley and Gove refineries in Western Australia and the Northern Territory, and Abare forecast it will rise 1% to 20.3 million tons in 2010-11 as the same refineries continue to ramp up production.

The value of alumina exports fell 17% to A$5 billion in 2009-10 but could climb 12% to A$5.6 billion in 2010-11.

Zinc production fell 3% to 1.36 million tons in 2009-10 but will rise 4% to 1.4 million tons in 2010-11, due largely to Minerals and Metals Group's Century Mine returning to full production, Abare said.

Exports of zinc concentrates rose 8% to 2.3 million tons in 2009-10 and could rise a further 5% to 2.4 million tons in 2010-11, while exports of refined zinc fell 6% to 426,000 tons and are forecast to rise 3% to 437,000 tons in 2010-11.

Export earnings for zinc rose 20% to A$2.2 billion and could remain steady in 2010-11, with higher volumes offset by lower prices, Abare said.

Meanwhile, nickel production fell 11% to 164,000 tons, the ramp-up of Western Areas NL's (WSA.AU) Flying Fox and Spotted Quoll mines could see it rise 15% to 188,000 tons in 2010-11.

Refined nickel production rose 3% to 114,000 tons and Abare forecasts it will rise a further 11% to 127,000 tons in 2010-11, while earnings rose 32% to A$3.6 billion and could climb 12% to A$4 billion in 2010-11, with higher ore grades offsetting lower market prices for nickel, Abare said.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]