The iron ore industry is tipped to contribute more than $600 billion to the Australian economy over the next decade, despite falling prices for the steel-making commodity.
The prediction by the Minerals Council of Australia came in a report which also found iron ore output rose from 17 million tonnes in 2000 to more than 650 million tonnes in 2014.
Australia’s iron ore market share had lifted from 34 to 50 per cent over the same period.
The report forecast “robust” strength for the sector, saying the industry would contribute more than $600 million to Australia’s economy over the coming 10 years even if prices remain at long-term average prices or below.
And it noted that more than 80 per cent of local capacity was among the cheapest to produce in the world.
“Australia now has a 50 per cent share of the seaborne market, a share built on vastly expanded production volumes which now exceed 650 million tonnes per year,” the report said.
“This will enable the industry to add more value to the Australian economy over the next decade than over the previous 10 years.”
However, on prices it conceded that some forecasts of spot prices for the next several years suggest further falls.
The report urged government to help boost productivity growth and cost competitiveness in the sector through workplace reform, promoting free and open markets and “stable and competitive tax and royalty arrangements”.
The report, released Tuesday, comes as exports of iron ore volumes rise, but prices slide.
Last week, figures released by the Pilbara Ports Authority showed June iron ore exports from Port Hedland rose 14 per cent to 38.3 million tonnes compared to the same month a year earlier.
The surge in exports to China comes as the world’s largest iron ore miners continue to be accused of flooding the market and driving prices lower, with many analysts tipping the price of Australia’s biggest export earner to fall below $US50 a tonne because of a global oversupply.
The report comes after steep falls in iron ore prices in recent weeks.
The Steel Index reported that iron ore closed at $US52.00 on Monday, down 3.9 per cent, while the Metals Bulletin had iron ore closing at $US52.28, down 5.4 per cent.