According to a government report on Monday, Australia is set to earn a record A$136 billion this financial year from iron ore exports, buoyed by the recovery of global steel-making after the COVID-19 led downturn.
Australian dominance to continue
Australia is expected to retain its dominant marketshare in iron ore despite the Brazilian supply recovery as per the report. The Australian iron ore shipments are expected to rise to 1.1 billion tonnes by 2025–26 from 900 million tonnes in 2020–21.
Annual earnings of A$100 until 2026
The report noted that more iron ore resources are expected to be dug out from Western Australia’s Pilbara region by miners like BHP Group, Rio Tinto, and Fortescue. Consequently, Australia is expected to log more than A$100 billion per year for the next half-decade from the iron ore export.
Gains from other metals, decline in coal exports
The report forecasts LNG export values falling from A$48 billion last financial year to A$33 billion for the year ending June 30, and thermal coal exports declining to A$15 billion from A$21 billion.
China’s informal restrictions on Australian imports of metallurgical coal are expected to decrease the export values to A$23 billion from last year’s A$35 billion.
However, the Department of Industry noted that the export of new energy materials like copper, lithium, and nickel is expected to bring in gains, offsetting the lower contributions from thermal coal.
Gold exports are expected to surge to $A29 billion this year from A$25 billion, while copper exports are expected to increase to A$12 billion from A$10 billion.
China’s push into Guinea
The report noted that China’s push into Guinea is underway. The infrastructure costs including port connections and ~600 kilometres of railway are currently being reviewed by Rio Tinto, although full production is expected to start only by 2027-28.
The southern blocks of the Simandou deposit are controlled by a JV between Rio Tinto, Chinalco, and the Guinean government, while the northern area is under the control of China-backed SMB-Winning Consortium which is closer to development having signed a $14 billion infrastructure contract.
Once at full production capacity, Guinea is expected to supply ~ 200 million tonnes of iron ore per year, translating to nearly 15-20% of current Western Australian production.