Federal budget 2020: Iron ore price a boon for revenue, workers
Iron ore prices have surged to their highest levels in six years in a much-needed multi-billion-dollar boost for state and commonwealth coffers.
Iron ore prices have surged to their highest levels in six years in a much-needed multi-billion-dollar boost for state and commonwealth coffers.
While coronavirus has ravaged most corners of the economy and put a massive strain on the federal budget, Western Australia acted early to ensure the state’s mining industry could continue amid the lockdown.
The federal government is forecasting the iron ore price to decline to $US55 per tonne by the end of the June quarter next year, two quarters later than was assumed in its July update.
“Some market and industry participants have highlighted a risk that iron ore prices could remain high for an even longer period of time,” the budget papers say.
The commodity has been trading at almost twice that forecast, which if sustained would boost the government’s tax receipts by more than $5bn.
It has also proved to be a boon for the likes of Hamish Taylor, who works as an operator driving trucks and graders at Rio Tinto’s Pilbara iron ore operations.
The 34-year-old was previously flying from his home on the Gold Coast to the Pilbara and back again.
Now he is among a cohort of workers who opted to remain in WA after the border closed in order to keep working.
Those tight border restrictions introduced by the WA government later prompted Rio Tinto to offer generous incentives for interstate workers to relocate permanently to WA, and after his girlfriend lost her job the relocation package was “too good to refuse”.
“When COVID hit, it really was a great incentive for me to come over here,” he said.
“My partner got laid off for a little bit so we decided it was time to set up a life here in Perth.
“We’re currently looking for a house.”
Mr Taylor is originally from Victoria and still has family there, so is well aware of how lucky he is to be working in an industry that has been largely unscathed by the virus.
Now safely settled in Perth, Mr Taylor is also looking at progressing his career. He has applied for a four-year adult apprenticeship within Rio Tinto to become a heavy diesel mechanic.
In Canberra, Josh Frydenberg will be keeping a close eye on the iron ore price and hoping that current market conditions persist for as long as possible. Production from Australia’s biggest iron ore rival Brazil is expected to recover from its coronavirus-induced decrease, although ongoing investment in infrastructure by China should keep demand strong.