Australia blew the last mining boom and can no longer rely on high commodities prices, federal Resources Minister Martin Ferguson says, as China's economy continues to slow.
"From here on in, the premium prices are gone," Mr Ferguson told AAP at the opening of the new Australian Minerals Research Centre in Perth on Friday.
"We're not going to see iron ore at $US180-$US190 a tonne, we're not going to see thermal coal at about $US170 (a tonne), coking coal at about $US320 a tonne any more.
"The only way we will maintain our revenue stream as a country, at a state and federal level, is if we expand capacity."
While Australia was in the midst of the greatest mining boom in its history - with $270 billion committed to future projects and $230 billion more potentially on the way - it had failed to fully cash in on the previous boom of the mid-2000s, the resources minister said.
"Australia did not, as a nation, and nor did the companies, get the last resources boom right," he said.
"China grew quicker than expected - they failed to invest in capacity and we lost market share."
Mr Ferguson said Australia was already disadvantaged by its high labour costs and the resources sector needed to be more efficient.
"We are, in essence, a high-wage economy," he said.
"As grades fall and input costs rise, the Australian resources sector will only continue to prosper if more efficient mining and processing techniques are implemented.
"For Australia to remain competitive in a global market in which low-wage competitors are emerging every year, we must ensure that we develop and employ technology."
As mining profits were squeezed, the nation needed to transform itself into a major exporter of minerals and petroleum services and technology, Mr Ferguson said.
This sector was already vibrant, worth $8.9 billion in global sales in 2008/09, he said.
The minister's reality check came as Australia's main trading partner, China, reported that its economic growth had slowed to a three-year low of 7.6 per cent for the June quarter, down from 8.1 per cent in the previous quarter.