Iron ore is Australia’s largest source of export revenue, worth $63 billion (approximately US$45 billion) in 2017.
Each year the iron ore industry generates around $5 billion in royalties for the State Government of Western Australia (depending on market prices) and major iron ore producing companies (BHP, Rio Tinto and Fortescue) pay around $3 billion in company tax each to the Federal Government (again, depending on commodity prices).
While the price of iron ore has been moderating some of the growth in export revenue in recent years, the volume of Australia’s iron ore exports is continuing to grow, albeit at lower rates.
In 2017 shipments of iron ore from Australia increased by 20 million tonnes and totalled 828 million tonnes.
Over the last ten years, Australia’s iron ore export volumes have increased by more than 200 per cent.
China is the world’s largest steel producer and a key export market for the Australian iron ore industry. It accounts for around 80 per cent of Australia’s iron ore exports (by volume)
Iron ore has always been an important commodity. Steel is a key resource for building infrastructure, high density housing and manufacturing equipment, which is why it is widely used by industrialising economies.
Australia has been exporting iron ore for over 50 years – first to Japan in the 1960s to support its post-war redevelopment, and then to support growth in its manufacturing output.
The rapid growth in China’s economy in the 21st century has also created significant growth in demand for iron ore.
Australian miners, who are the most productive and innovative in the world, have played a key role in supplying this market with high-grade iron ore.
As the economies of highly populated countries in Asia continue to grow, steel and iron ore will be in high demand. Just as we have seen with China over the past 20 years, the economic growth in India and South-East Asia will require increasing amounts of steel.
China will also remain a key producer and consumer of steel with its One Belt, One Road initiative requiring significant investment in steel-intensive infrastructure projects both in China and around the region.
Australia is well positioned to be a key supplier of iron ore to these markets, as our miners are low-cost, reliable producers of high grade iron ore.