Steely iron ore prices sustain WA’s resources sector

National iron ore exports surpassed $100 billion in the year to June, double the level four years ago, while Western Australian merchandise shipments were $184 billion.

Iron ore exports in the 2020 financial year were $102 billion, according to the Australian Bureau of Statistics, including just shy of $10 billion in June, the highest ever in a month.

Australian iron ore exports have rebounded from around $47 billion in the 2016 financial year, on the back of recovering prices.

As of this morning, iron ore was trading close to $US119 per tonne, reflecting both sustained demand from China, and subdued supply from Australia’s largest iron ore competitor in Brazil amid the COVID-19 pandemic.

WA’s two major iron ore producers, Rio Tinto and BHP, reported growth in iron ore production and exports despite disruption caused by the COVID-19 pandemic.

Rio Tinto’s second quarter Pilbara iron ore shipments were 1 per cent higher than a year earlier at 86.7 million tonnes, while BHP achieved record production, with a 7 per cent year-on-year increase in iron ore output in June.

WA merchandise exports overall have increased from $99.6 billion in 2016 to be $183.9 billion in the year to June.

That’s an 80 per cent increase.

The data also shows China’s increasing importance for the Western Australian economy, with merchandise exports to the country increasing 50-fold, from $1.9 billion in the year to June 2000 to $98 billion in the year to June 2020.

Federal Resource Minister Keith Pitt said that strong iron ore and gold exports have underpinned the resilience of the Australia’s resources sector during the pandemic.

“Australia’s success in becoming a top supplier of iron ore and gold has provided a crucial buffer to our economy, with record earnings helping Australia to face the global headwinds from the COVID-19 outbreak,” Mr Pitt said.

“Australia’s commodity industry continues to provide the materials needed to lift millions in our region out of poverty, while providing crucial jobs and income to Australia’s regions.”

Mr Pitt said gold exports were forecast to reach $32 billion in 2020–21, with gold set to become the third largest commodity export behind iron ore and LNG.

Australia is forecast to become the world’s largest gold producer in 2021-22, according to the minister’s office.