An abundance of high-quality iron ore and the recent discovery of a 55 billion metric ton reserve have pushed Western Australia into the top spot as the world’s leading iron ore supplier. Now, many are wondering what effects this might have on the country’s export markets as well as global iron ore prices.
Iron Ore Prices: A $6 Trillion Discovery
The newly identified reserve in the Hamersley region is valued at around US $6 trillion and has significantly shaken up the global sector. Experts now expect a surge in investment from major steel-producing nations eager for access to this critical resource. That’s good news for Western Australia, as it means major infrastructure expansion, including new mining operations, transport systems and upgraded port facilities. The state’s ore boasts over 60% iron content, which makes it ideal for industrial use.
China, the world’s largest steel producer, currently imports more than 65% of its iron ore from Australia. The discovery of this new reserve could stabilize long-term iron ore prices and reduce China’s reliance on smaller suppliers.
New Mining Facility Opens in Paraburdoo
And there’s more. Over the weekend, a new mine also launched in the Hamersley region, backed by heavy investments from both Australia and China. The project is a joint venture between China Baowu Steel Group (46%) and Rio Tinto (54%), and will boast an initial capacity of 25 million metric tons following the initial US $2 billion investment. Experts believe it could operate for the next two decades.
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Located in the Paraburdoo mining hub in Pilbara, the new mine sits in one of Australia’s richest iron ore deposits. The Global Times quoted Western Australian Premier Roger Cook as saying that the mine’s opening represented a “significant achievement” and a major boost to the state’s economy. He also emphasized that the project highlights strong trade relationships with key foreign partners. Rio Tinto plans to invest over US $13 billion in Pilbara from 2025 to 2027.
New Discoveries Likely to Lower Iron Ore Prices
As a result of these new discoveries and ongoing investments, analysts now predict a shift in global supply chains. Countries seeking to diversify may lean more on Australia, moving away from Brazil or African sources. Increased exports from Western Australia could also drive down global iron ore prices. This will benefit sectors like construction and automotive, while cementing Australia’s role as a global leader.
As MetalMiner previously reported, iron ore has long driven Australia’s economic growth. Since 2005, national revenue from iron ore has skyrocketed from US $5.2 billion (A$8 billion) to US $80.7 billion (A$124 billion). Still, with many industries shifting toward greener tech, Australia must upgrade its mining and refining practices to meet rising demand for sustainable, high-grade ore.
China Will Likely Remain Heavily Reliant on Australia
Throughout all of this, China has remained a key partner, importing the bulk of its ore from Australia. Brazil ranks second, supplying around 18%. Tensions flared a few years ago when China froze economic talks with Australia, citing its growing ties with Western powers, especially the U.S. But China couldn’t afford to lose access to Australian ore, and relations have since stabilized. In the long term, China aims to become more self-reliant by tapping its own large iron ore reserves, though its ore is of much lower quality than Australia’s.
By Sohrab Darabshaw