LAUNCESTON, Australia, July 8 (Reuters) – Australia’s major iron ore miners have had a torrid year so far, battling low prices, engaging in an ugly slanging match with each other and dealing with persistent questions about the wisdom of their expansion strategies.
It was therefore not surprising when the mining industry’s peak body launched a report on Tuesday that puts quite a different spin on the iron ore industry.
The Minerals Council of Australia’s report, entitled “Iron Ore: The Bigger Picture”, points out the enormous benefits the industry has brought Australia and will continue to provide.
The major Australian iron ore miners, Rio Tinto and BHP Billiton, are members of the council and sit on the board of directors, but the country’s third-biggest producer, Fortescue Metals Group, is absent from the list.
The report doesn’t really make an effort to explain how the major miners got their forecasts on Chinese demand so wrong, and it glosses over whether they really expected the price to fall as low as it has.
Spot Asian iron ore .IO62-CNI=SI has been pummelled in the commodity sell-off in recent days, dropping to $49.70 on Tuesday, approaching the record low of $46.70 hit in April.
What the report does do is present a positive outlook by highlighting the iron ore sector’s contribution to the Australian economy.
Revenue from the industry totalled more than A$430 billion ($321 billion) in the decade from 2005 to 2014, and this will rise to over A$600 billion in the next 10 years, even assuming no further output growth and prices staying at low levels.
The report also points out that the bulk of this revenue accrues to suppliers and governments, with suppliers getting 53 percent in the 2010-2014 period, governments taking 24 percent, and the rest for investors.
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