Many national and international matters have been receiving the majority of the news in Australia in recent months from the costs of living pressures, Israel War, the Bondi stabbing attack, housing and rental crisis and many other matters but one matter that is receiving very little press outside the sector itself is the price of Iron Ore.
China’s appetite for Iron Ore and our abundance of the commodity helped the nation sail through the Global Financial Crisis as other nations went through the worst economic conditions since the Great Depression. While many politicians such as former Prime Minister Kevin Rudd took the credit for our resilience during the GFC when in reality it was the black rock from the Pilbara and China’s growing steel demand that saved the country and the government.
Iron Ore has now dropped from $144 US a tonne in 2023 down to $110 US a tonne today and has been as low as $100 a tonne only a few weeks back.
The major reason for the price decline is China’s weakening appetite with major issues inside there real estate and manufacturing markets. China’s economy is built on cheap production and manufacturing whilst many nations in the West such as America and Australia have become service based economies as they moved manufacturing away in the transition to globalism. The Chinese economy is slowing like most countries and the demand for manufacturing and production is not what it once was.
The share prices for the big three miners of BHP, Rio Tinto and Fortescue are down between 5%-15% this year and could fall further if Iron Ore prices go south more in 2024.
The numbers are staggering for Iron Ore to the economy with each $10US a tonne price change worth nearly $14 billion to Australia which means Australia is down around $40 billion in exports on those prices this year and could be more if prices fall even more this year.
Australia has bigger problems than just China’s slowing economy with the African country of Guinea in the closing stages of exporting Iron Ore with there site Simandou which is reported to have five Chinese companies having contracts to work and export the mine with the site set to open later this year. Iron Ore prices in Guinea are reported to be far lower than Australia, but will be subject to higher freight costs, longer shipping times and potential political unsuitability in the region.
Over 80% of Australia’s Iron Ore goes to China, and they know how much power and leverage they hold over Canberra and they will not be afraid to shake the sector up and demand or negotiate lower prices especially after disputes with billionaire Clive Palmer who has made the Chinese pay a fortune to mine his land with leases.
The signs do not look good and Australia’s long reign of dominance in the market could be about to hit some major turbulence from Africa.
Maybe the greatest warning that Iron Ore’s best days are just about over in Australia is the behaviour and actions of Fortescue Metals, CEO Andrew Twiggy Forrest.
Forrest is a globalist and only has his own vested interests in mind, he regularly meets with world leaders and attended the World Economic Forum in Switzerland this year and is part of the global establishment.
Forrest who has become a multi billionaire and one of the richest man in the world has now suddenly become a green energy advocate via Green Hydrogen and has done a national speaking and media tour even appearing at the national press club in Canberra urging Australia to not go down the nuclear energy path which is far cheaper, but push for more green renewables for which he would benefit off with his Green Hydrogen investments for which he has already invested over one billion in Australia and America and now wants to be the government’s major partner in the move from fossil fuel’s to new green energy.
Forrest is only looking out for his best interests and not what is best for Australia as he tells his media allies some who receive direct funding from the billionaire as he tries to win the PR war, he knows Chinese demand is drying up fast and other global competitors are rising fast such as Guinea who will be much cheaper for Iron Ore than the Pilbara and parliament on both sides of the aisle are led by climate czars who support the move to new energy and away from fossil fuels and he knows its time for Fortescue to transition if they are to remain a major player in Australia moving forward.
Many mining insiders in Western Australia have told me projects are slowing and fear and worry is gripping the sector, one HR executive told me a huge numbers of casuals and contractors will be getting cut over the next few months as projects slow, prices decline and investment stops or stalls as China buy less and less iron ore and could look elsewhere once the Guinea site is open.
It is reported at least one in five jobs in Western Australia alone come from the mining sector and that does include the flow on effect from the sector which supports housing, trades, services, food and beverage, accommodation and tourism. Mining jobs are high paying and the money flows downstream to most sectors benefit across the economy and cannot be replaced easy despite government promises.
Green energy is not price efficient and has to be subsidised by government to break even at this stage and yet the government continues to push on with these crazy policies despite the numbers making absolutely no sense at this time amid worsening economic conditions.
Very few in Canberra are seeing the warning signs that Iron Ore’s best days in Australia are ending slowly or nearly over, the price may remain high, but the tonnes are dropping fast and the financial hit to both the state and national economies will be huge and Green energy can’t replace it despite Mr Forrest’s and Mr Albanese’s assurances.
The economy is moving into perilous times with inflation, deficits and debts all rising and the fall of Iron Ore prices is sure to cause great concern and panic as the budget has huge holes that get even bigger and can’t be replaced easily and the cash flow that has been flowing for many years and funding many national projects is drying up fast and really nothing can replace it so quick.
The lies and promises we have been told that Green energy can easily replace Iron Ore and fossil fuels over many years from many political members and leaders across all parties is about to be clarified and tested for all to see as the holes in the balance sheet sink the ship.
Australia is totally unprepared for price drops in Iron Ore not to mention other major risks across Coal, Housing and International Students that continue to rise.
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