AUSTRALIA will undergo a fundamental shift in its export profile over the next few decades as the expanding middle class in Asia drives demand for a new range of supplies.
This will lift demand for gas and base metals - copper and nickel - from Australia, which will eclipse the demand growth expected for iron ore and coal, both of which are used in the first stage of industrialisation when the need for steel surges.
Australia's mining industry expertise will also drive orders for its industrial machinery from mining provinces in Asia, Latin America and Africa. This sector will emerge as the third prong in future export growth, after energy and base metals, a forecast from HSBC and Oxford Economics says.
Malaysia will emerge as one of Australia's biggest markets, surpassing the US to emerge as the No.5 destination for exports, trailing only China, Japan, Korea and India.
Commodity analysts have been tipping weakness in iron ore prices over the rest of the year amid slowing demand growth from China, which will flow on to coal prices and place renewed pressure on the earnings of mining companies.
"There will be a structural shift" in Australia's export profile, the head of commercial banking at HSBC Australia, James Hogan, said.
"Rather than focusing on steel manufacturing, there will be a shift towards the supply of materials for producing high-end consumer goods, so this will boost demand for copper and nickel, and also energy," he said.
"There will be a degree of volatility ... but the trend is clear."
The export focus on Asia will increase as sales to the US and the rest of the world decline.
Asia already accounts for more than 70 per cent of Australia's exports, up from about 50 per cent in 2000. HSBC and Oxford Economics expect this to top 80 per cent by the end of the decade.
"The trend will continue to 2030, with further concentration on Asia," Mr Hogan said.
This will be underscored by countries such as Vietnam, which will emerge as a significant new destination for Australian exports - forecast to grow by 8 per cent to 9 per cent a year over the next 15 years or so. This will put it ahead of the forecast growth in exports to China, where annual growth will slow to about 7 per cent a year between 2020 and 2030, from about 9 per cent at present.
Australia is already the sixth largest producer globally of copper, exporting about 2 million tonnes annually, with large mines at Mt Isa and Olympic Dam.
The nation has a dominant position in nickel and holds about one-third of the global reserves of the metal.
BHP Billiton is one of Australia's largest nickel producers with mines at Mt Keith and Leinster, along with refineries and smelters.