The Chamber of Minerals of Energy of Western Australia (CME) has emphasised Western Australian iron ore producers are meeting current demand in the world market.
“Over the past decade iron ore producers in Western Australia have expanded their capacity to meet a growing market,” said CME Chief Executive Reg Howard-Smith.
This period of growth has seen significant benefits flow through the Western Australian economy and to the state government. In particular royalties have grown from $5.2 billion in 2012-13 to $6.9 billion in 2013-14 – a substantial 33 per cent increase. (Royalties from iron ore account for more than 90 per cent of total state royalties.)
According to the Department of Mines and Petroleum’s September 2014 Economic Profile –iron ore production from Western Australia was less than 30% of global resource commodity production in 2013.
“Western Australia is not the only supplier of iron ore. Other companies and jurisdictions around the world are pushing to get their product to market. If Western Australian producers don’t meet the demand in the world market, then other significant players such as Brazil, Russia, China, India and emerging producers in Africa will take advantage,” said Mr Howard-Smith.
“This clearly makes iron ore producers in Western Australia price-takers not price-makers,” said Mr Howard-Smith.
It should come as no surprise to the government given the Western Australian Budget delivered in May 2014 outlined iron ore production growth would average 6.8% over the next four years. The Budget also noted significant volatility in iron ore prices.
“Notwithstanding volatile commodity prices, the major challenge facing the Western Australian resources sector is the high cost of doing business. Improving our international competitiveness will stimulate further growth and deliver ongoing benefits to the community,” said Mr Howard-Smith.
