Cloudbreak mine, Western Australia – Australia’s iron ore industry has hit a slump after decades of boom fuelled by rampant demand from China. This is threatening the livelihoods of thousands of miners and entire communities dependent on these vast opencast mines.
At Perth Airport, just after 05:00 local time, the boarding gate is a sea of fluorescent yellow and blue. This is a regular shuttle service to Fortescue Metals’ Cloudbreak mine – the passengers are fly-in-fly-out workers and they come dressed for the job.
In just under two hours they’ll land at one of the giant iron ore mines in the Pilbara, where the red dirt hides untold riches. But times have changed. The price of ore has plummeted, down around 70% from its 2013 peak.
Every mine worker boarding Flight 1970 knows what that means: cost cuts. They’ve seen hundreds of millions of dollars worth of cuts across the industry already and more are likely to come.
China’s economic slowdown means the country doesn’t need as much iron ore. It’s the key ingredient for steel, and if you’re not building as many apartments and bridges and roads as before, you don’t need as much of it.
‘Head above water’
But the big miners are still increasing production to build market share. It’s an easy equation: demand down and supply up, price plummets.
In the past few weeks the impact has been writ large on share market screens. Rio Tinto, BHP Billiton and Fortescue Metals, Australia’s top three iron ore producers, have all seen their share price hammered and their profits crushed.
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