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West Australian
4 days ago
- Business
- West Australian
Iron ore price drops again to flirt with multi-year lows amid gloomy forecasts
The value of WA's most important mineral commodity is tumbling towards lows not seen in two-and-a-half years, putting three of the four big banks on track for vindication. A tonne of the benchmark iron ore product is currently being traded for $US92.40 after shedding $US1.10/t overnight. It was above $US100/t during the middle of last month. The steel-making commodity's value is now at its lowest point since September and could be heading towards a sustained sub-$US90/t price for the first time since November 2022. Iron ore briefly dipped below $US90/t in September — hitting $US89.50/t — but quickly rebounded. Shares in local mining giants BHP, Rio Tinto and Fortescue were all in the red on Wednesday. Fortescue is the most exposed to fluctuations in the iron ore price of the trio and its stock was down more than 4 per cent by noon. Temporary factors and long-term structural shifts in the global steel market are behind iron ore's price decline. Construction in China, where virtually all of WA's iron ore is pumped into, is currently at a seasonal ebb. The Asian powerhouse has also ordered its steelmakers to curb their output this year to supposedly meet carbon emission reduction requirements. More broadly, China's multi-decade building boom is winding down. Rio Tinto's iron ore chief executive Simon Trott last year said the peak of steel demand from the country had been reached. India has been touted as a new growth market but its iron ore consumption is still nowhere near China's. While demand is waning, supply has been steadily rising, and tens of millions of additional tonnes are soon set to come online from Brazil and West Africa. Global investment bank Citi this week downgraded its iron ore forecasts, predicting the price to stay around $US90/t over the next 12 months. Australia's banks have been even more bearish. Commonwealth Bank reckons the price will drop to $US80/t this year, Westpac thinks it will start 2026 at $US86/t, and NAB is pencilling in a 2025 average of $US87/t. ANZ has been an outlier and last month raised its short-term iron ore prediction from $US90/t to $US100/t. WA's Treasury in December adopted a $US95/t expectation for the 2025 financial year, marking a $US18/t increase from the price estimate on Budget day in May. Every $US1/t change in iron ore's value can directly add or remove almost $100m from the State's coffers. For the 2024 financial year, WA received just under $10 billion from iron ore royalties. Nearly 90 per cent of WA's entire royalty income stream comes from iron ore.
ABC News
4 days ago
- Business
- ABC News
Iron ore is Australia's most valuable export, but China's economic data suggests that's changing
Australia's most valuable export, iron ore, is getting much less valuable as a continued slowdown in Chinese economic activity and strong production from Pilbara and overseas mines work to keep prices flat. Futures contracts for iron ore traded on the Singapore Exchange dropped below $94 for the first time since September last year, after economic data from China on Monday showed lower steel output from Chinese mills. Chinese steel production dropped by 6.9 per cent to 86.55 million tonnes in May, following directives from officials to cut production. While the market is not oversupplied yet, ANZ senior commodities analyst Daniel Hynes said iron ore prices aren't expected to lift over the short term. "The fundamentals suggest we're not swimming in a wave of iron at the moment," he said. "So the upper sort of levels that prices can reach are clearly not going to be as high as we've seen in the past." Analysts at S&P Global also pointed to negative market sentiment caused by the trade tensions between the US and China as a source of weakness in the iron ore price in June. Last year, Rio Tinto's iron ore chief executive Simon Trott said China had reached its peak of steel demand. Beyond the peak, there are few signs of hope that anything will replace the voracious demand for steel the residential construction sector had. "Patches of growing demand from energy transition and manufacturing have not been enough to cover up the property slack, and the billion-tonne steel industry is edging toward another shake-up as barbed wires emerge across most trade borders," said Isha Chaudhary, Wood Mackenzie's global head of steel, raw materials and metals. In addition to lower demand, CBA mining and energy economist Vivek Dhar said increasing supply will also weigh on prices. Rio Tinto recently opened its Western Range mine in Paraburdoo, in partnership with China's Baowu Steel Company, which has the capacity to produce 25 million tonnes of iron ore a year. "Brazil 's Vale is adding supply by 2026," Mr Dhar said. "BHP and Rio Tinto have flagged that they're going to add more tonnes as they squeeze more production out of their rail and port assets. "But I think the biggest supply increase is going to come from African supply and in particular Guinea with the Simandou project." The impact of the Simandou project in Guinea is being closely watched by Australia's iron ore industry. The Rio Tinto project, in partnership with the Aluminum Corporation of China (Chalco) is the largest untapped high-grade iron ore reserve in the world. Its supply of 64 per cent Fe ore is expected to hit the market at the end of the year. At the same time, Platt and Fastmarkets will re-jig their price indices for Australian iron ore from 62 per cent Fe to 61 per cent Fe, to reflect the lower grade of ore coming from the Pilbara. Recently, Fortescue founder Andrew Forrest told the AFR's Mining Conference that the Pilbara was at risk of becoming a wasteland as Chinese steel mills adopted electric arc furnaces that work better with higher-grade iron ore. But Rio Tinto CEO Jakob Stalsholm remains fully confident in the Pilbara as a global supplier of iron ore. "The Pilbara, in aggregate, is the main fuel engine of iron ore for the world, and particularly towards China, and it will be in the future," he said at the opening of the Western Range mine. "It is for us as companies to make sure that the Pilbara ore remains relevant, and how do we do that? We do that in partnership with companies like Baowu, working on how can we decarbonise the supply chain." Mr Dhar said the attractiveness of Simandou's iron ore for green steel making was overplayed. "Even from Simandou, in terms of the current processes to produce green steel, it is still a challenge at 64 per cent Fe. "And so it's not a slam dunk that it's going to be that enormous threat that people talk about to Australian ore."
Perth Now
02-06-2025
- Business
- Perth Now
Historic deal following sacred site destruction
The traditional owners of land destroyed by Rio Tinto's explosives in 2020 have signed a management agreement with the mining giant. 'This is a groundbreaking and innovative agreement,' PKKP Aboriginal Corporation chairman Terry Drage said. 'I believe it will change the way mining is carried out, certainly in the Pilbara, and hopefully across Australia. 'The PKKP community have made it clear to me that they are not against mining, it just has to be undertaken in a culturally sensitive way, with traditional owners at the forefront.' Rio Tinto executive Simon Trott and Pinikura traditional owner Terry Drage. Supplied Credit: Supplied In May 2020, Rio Tinto destroyed the prized, 46,000-year-old Juukan Gorge in WA's Pilbara region. On Monday, the Puutu Kunti Kurrama and Pinikura Aboriginal Corporation announced it had signed a management agreement with Rio Tinto. The agreement guarantees traditional owners 'will receive certainty that our important places on country will be protected from mining, while at the same time Rio Tinto will receive certainty around where they can develop much earlier in the mine cycle,' Mr Drage said in a statement. The Juukan Gorge is one of the oldest known sites of Indigenous occupation. PKKP Corporation Credit: Supplied Rio Tinto's legal destruction of the heritage site in 2020 garnered international news coverage and sparked a federal parliamentary inquiry. The inquiry concluded Rio Tinto 'knew the value of what they were destroying but blew it up anyway'. 'Rio Tinto's conduct reflects a corporate culture which prioritised commercial gain over the kind of meaningful engagement with traditional owners that should form a critical part of their social licence to operate,' the final report said. The Western Australian government was already drafting new Indigenous heritage laws when the two caves were destroyed. The state government, under considerable pressure from the farming and resources sectors, then backflipped and revoked the laws just five weeks after they took effect in 2023. Simon Thompson resigned as Rio Tinto chairman after the incident. NewsWire / Sharon Smith Credit: Supplied Rio Tinto has been paying a PKKP Aboriginal Corporation-linked charity undisclosed amounts since the caves were destroyed. The dollar figure has been kept secret to avoid putting a price on heritage. On Monday, Rio Tinto chief executive Simon Trott again admitted the blasting of the caves was a mistake. 'Our actions were wrong. We failed to uphold our company values, and our systems and processes were inadequate,' he said. 'Simply put, it should never have happened, and for that we will forever be sorry.' The First Nations corporation had graciously educated Rio Tinto, he said. 'Through the open and gracious sharing of knowledge and experiences, the PKKP have helped to shape a renewed approach to managing cultural heritage protection and mining activities,' Mr Trott said. The two Juukan caves had been cared for by the Puutu Kunti Kurrama and Pinikura/Binigura people for more than 40,000 years. The shelters had been archaeologically excavated multiple times and contained a high number of artefacts and stone tools, preserved human hair, and pollen sediments that mapped thousands of years of ecological history.
Business Wire
01-06-2025
- Business
- Business Wire
PKKP and Rio Tinto sign Co-Management Agreement
MELBOURNE, Australia--(BUSINESS WIRE)--The Puutu Kunti Kurrama and Pinikura (PKKP) Aboriginal Corporation and Rio Tinto have signed a Co-Management Agreement to support a lasting and trusted partnership. The agreement is the overarching framework for Rio Tinto's iron ore operations on PKKP Country and formalises how they engage on proposals affecting heritage and social surroundings throughout the mine lifecycle. It will ensure knowledge-sharing and joint design is at the centre of Rio Tinto's operations on PKKP Country, so significant heritage is preserved and co-managed. Pinikura Traditional Owner and Chairperson of PKKP Aboriginal Corporation, Terry Drage said: 'The effect of this agreement is that PKKP Traditional Owners will receive certainty that our important places on Country will be protected from mining, while at the same time Rio Tinto will receive certainty around where they can develop much earlier in the mine cycle. 'Ultimately, this is good for us as Traditional Owners, and it is good for business.' Rio Tinto Iron Ore Chief Executive Simon Trott said: 'The destruction of the Juukan Gorge rock shelters on the 24th of May 2020 brought immeasurable pain to the PKKP and profoundly changed our company. 'Our actions were wrong. We failed to uphold our company values, and our systems and processes were inadequate. Simply put, it should never have happened, and for that we will forever be sorry. 'Through the open and gracious sharing of knowledge and experiences, the PKKP have helped to shape a renewed approach to managing cultural heritage protection and mining activities.' The agreement is designed to provide certainty to the PKKP for the protection and management of their heritage. It also gives Rio Tinto certainty for its operations and development. The broader terms of the agreement were finalised and signed last month, ahead of the five-year anniversary of the tragic destruction of rock shelters at Juukan Gorge. The Co-Management Agreement reinforces Rio Tinto's commitment to PKKP to continue to work together on the rehabilitation of the Juukan Gorge area, focusing a shared effort to rehabilitate and preserve its cultural heritage. Note to editors: The Puutu Kunti Kurrama and Pinikura (PKKP) Aboriginal Corporation's media release on the Co-Management Agreement is available here. Broadcast-quality vision and interviews with PKKP leaders Burchell Hayes, Terry Drage, Dr Jordan Ralph and Rio Tinto Iron Ore Chief Executive Simon Trott, as well as photographs, are available for download here.
Bloomberg
21-05-2025
- Business
- Bloomberg
Debate Heats Up on Future of Australia's Mining Hub
Good morning folks, it's Adam here in Sydney bringing you all the latest news from our bureaus across the globe. Today's must-reads: • Rio Tinto executive defends future of the Pilbara • Bitcoin hits record high • Ex-BofA banker faces insider trading probe We start with a division of opinion over the future of Western Australia's Pilbara region. Rio Tinto executive Simon Trott has defended the iron ore hub's prospects, after mining billionaire Andrew Forrest delivered a downbeat message.
