Rising electric vehicle production is also expected to affect prices of critical minerals, including lithium.
“In addition to using about 9 kilograms of lithium, the average light electric vehicle requires about 200 kilograms of other key minerals and metals… about six times the volume used in an internal combustion engine car,” the report said.
The forecast for record profits in 2021-22 is 33% higher than the record $320 billion achieved last year thanks to Australian exports, including gas, nickel, iron ore, coal and steel.
But rising global inflation is expected to put downward pressure on commodity prices, with prices expected to decline to $370 billion in real terms in 2022-23 and then stabilize at between $263-293 billion in subsequent years until 2026-27.
“Prices are expected to remain at relatively high levels in the near term, but decline from 2023 onwards as demand recedes and supply increases,” the report said.
In Tuesday’s budget, the Treasury assumed that commodity prices would return to more consistent levels by the end of the September quarter of this year.
“Nevertheless, the recent strength in export prices will see Australia’s terms of trade reach a record high in 2021-22. This will support strong profitability in the mining and agricultural sectors, with positive flow into the ‘total economy and income’, indicates the economic outlook of the budget.
Mr Frydenberg said the government was saving some of the windfall to help the bottom line.
“We have drawn clear lines [and] reap the dividends of a stronger economy,” he said.
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