Resources and energy to the United States

Trends and opportunities

The market

Mineral Resources

Mining in the United States (US) produces a number of commodities critical to the domestic and foreign economy, such as coal, metals and industrial minerals (stone, clay, cement, lime etc.). In 2015, US production of 14 mineral commodities were valued at more than US$1 billion each, including (by order of decreasing value): crushed stone, cement, industrial sand and gravel, copper, gold, construction sand and gravel, iron ore (shipped), molybdenum concentrates, salt, lime, phosphate rock, zinc, soda ash, and clays (all types).

While still a critical component of gross domestic product (GDP), the estimated value of mineral raw materials produced at mines in the US dropped three per cent in 2015 to US$78.3 billion, primarily as a result of decreased metal prices, especially iron ore, copper, and precious metals. The drop in prices was attributed to weak demand from China, decreased investment, and increased global supplies. These factors, along with a strong US dollar and global competition, have led to a decrease in exports of metals from the US. Domestic demand for all minerals is also increasingly being satisfied by less expensive imports, showing further signs of a mining slowdown in the US.

Nonetheless, the following states each produced more than US$2 billion worth of nonfuel mineral commodities in 2015 (in descending order of value): Nevada, Arizona, Texas, Minnesota, Wisconsin, California, Alaska, Utah, Florida, Michigan, Missouri, Colorado, Wyoming, and Illinois (Source: U.S. Geological Survey, Mineral Commodity Summaries 2016, published 28 January 2016).

Oil and Gas

Like many other exporting countries, upstream and downstream oil and gas providers in the US have been adjusting to historically low commodity prices since late 2014. This has had negative implications for the domestic environment such as cuts in exploration and production spending, greenfield project postponements and reduced investment in brownfield operations. Major operators have continued to cut their capital expenditure as global oil production remains steady and prices maintain their current levels.

In the US crude oil production averaged 9.4 million barrels per day (b/d) in 2015, and it is forecast to drop to an average 8.7 million b/d in 2016 and 8.6 million b/d in 2017. Natural gas marketed production fell from 79.7 billion cubic feet per day (Bcf/d) in September 2015 to 76.5 Bcf/d in July 2016. The EIA expects marketed natural gas production to average 77.5 Bcf/d in 2016, a decrease of 1.6 per cent from the 2015 level, and a slight increase by 3.7 Bcf/d in 2017 (Source: U.S. Energy Information Administration (EIA), Short-Term Energy Outlook, released 13 October 2016).

While shale resources and production are found across the country, the seven most prolific areas are: Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica. These seven regions accounted for 92 per cent of domestic oil production growth and all domestic natural gas production growth during 2011-14.

Opportunities

The US is import-dependent for a number of important minerals to the economy, including a number of which Australia is a top provider for the country: manganese, titanium concentrates, garnet (industrial), and zinc. Australia also exports large quantities of magnesium, nickel and lead to the US (Source: U.S. Geological Survey, Mineral Commodity Summaries 2016, published 28 January 2016). These minerals can be purchased and utilised by downstream suppliers and manufacturers to produce industrial goods to be consumed domestically, or exported to other markets.

In a time of low commodity prices and sinking profit margins, the cost-competitiveness of foreign exporters is crucial, and largely dependent on an attractive local currency. The Australian dollar is currently appealing to buyers in the US, which also helps in the sale of premium products such as high-quality coal and metals.

Demand for cost-cutting technology is in high-demand as mining and extraction companies feel the pressure to adjust operational costs to a low-fuel-price environment. Areas of interest include: clean technology, energy efficiency, renewables integration, automation, sensors and Internet of Things (IoT). Many multinational companies are investing in early-stage technology development through company acquisition, venture funding or financing pilot projects in order to find the right solutions for their processes. Upstream service providers can find export opportunities in the Texas, Oklahoma and Pennsylvania hubs for oil and gas exploration.

Competitive environment

While Australia is a major exporter across natural resources commodities globally, the source of United States’ imports are influenced by low costs from countries within close proximity and have competitively lower operating costs.

• Coal - Colombia maintains the leading position with a 75.0 per cent share of imports (US$ value) to the US, followed by Canada and Indonesia (with Australia ranking at number eight).
• Petroleum gas - Canada is the largest exporter with 88 per cent of the total value in 2015 (Australia is below the top 25 exporters in this category).
• Nickel - Canada and Germany are the largest exporters (30.6 per cent and 9.2 per cent respectively) followed by Australia (7.8 per cent)
• Zinc - Canada, Mexico and China are the largest exporters (61. per cent, 12.9 per cent and 6.7 per cent respectively), followed by Australia (5.8 per cent)

(Source: UN Comtrade Database; accessed 7 November 2016).

While there are high expectations for global exports of liquefied natural gas (LNG) from Australia in the next few years, LNG exporters may have difficulty in attaining US-demand as domestic production is expected to increase as the United States increases its own export capacity with the construction of new terminals. Four new LNG export terminals are currently under construction and are expected to presume service between 2017 and 2019 (Source: EIA, Growth in domestic natural gas production leads to development of LNG export terminals, 4 March 2016).

Tariffs, regulations and customs

As a result of the Australia-United States FTA established in 2005, most tariffs for exported products from Australia have been eliminated, including many natural resources and fuel products.

See Annex 2-B (Australia tariff schedule) of AUSFTA for more detailed tariff information for specific products.

For further information on tariffs for exported products from Australia to the US you may refer to the United States Customs and Border Protection and see their tariff tool and additional resources.

Austrade can also assist if you would like to speak to a US Customs broker for classification, compliance and other services in exporting to the United States.

Industry standards

Depending on your downstream market there are different standards for minerals, fuel products and services held by manufacturers, wholesalers and retailers. A number of independent bodies set widely used standards across energy, automotive, defence, and aerospace industries that educate purchasing decisions, and hold exporters accountable for quality.

Marketing your products and services

Market entry

Whether you are an upstream or downstream provider, breaking into the United States for exporting natural resources can be difficult. Research into the market environment and applicable regulation is important before exchanging goods and services. Additionally, knowing if your company is export-ready beforehand can determine how successful or unsuccessful your offerings will be in a new market.

See Austrade's International Readiness Indicator for new exporters.

As a new exporter, contacting/joining national and regional trade associations can also be a useful first step to find information on industries, obtaining member lists for contacts, and attending trade events for finding customers. Reaching out to cities’ and states’ Chambers of Commerce and economic development organisations can also be useful to understand local markets and regulation.

Distribution channels

Other than direct transactions, utilising wholesalers and other retailers are common ways to market natural resources in the United States. Customs brokers are also recommended for foreign importers of products, in order to avoid financial and regulatory pitfalls.

As additional information, the Chicago Mercantile Exchange (CME) and New York Mercantile Exchange (NYMEX), both operated by CME Group, are the leading exchanges for futures, options and other trading products in the metals and energy markets in the United States. See the CME Group’s Broker Directory for a listing of domestic and international brokers in different markets.

Links and industry contacts

Industry standards (US-based but often internationally applicable)

American National Standards Institute (ANSI) – (all industries)
American Society for Testing and Materials (ASTM) – (all industries)
SAE International - (Automotive, Aerospace)

Transport

Approved North American LNG Import/Export Terminals
Georgia Ports Authority
Port of Houston Authority
Port of Long Beach
Port of Los Angeles

Government and industry

American Coal Council
Industrial Energy Consumers of America
Industrial Minerals Association North America
International District Energy Association
National Association of Energy Service Companies
National Mining Association
Nuclear Energy Institute
Nuclear Infrastructure Council
Petroleum Equipment Suppliers Association
Society for Mining, Metallurgy & Exploration
United States Clean Heat and Power Association
U.S. Energy Association

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

The Australian Trade and Investment Commission – Austrade – contributes to Australia's economic prosperity by helping Australian businesses, education institutions, tourism operators, governments and citizens as they:

• develop international markets
• win productive foreign direct investment
• promote international education
• strengthen Australia's tourism industry
• seek consular and passport services.

Working in partnership with Australian state and territory governments, Austrade provides information and advice that can help Australian companies reduce the time, cost and risk of exporting. We also administer the Export Market Development Grant Scheme and offer a range of services to Australian exporters in growth and emerging markets.