GM Stuffit. WA sees rising iron ore prices till 2011
Friday, 09 May 2008
The Western Australian government expects the iron ore price bonanza to end in 2011/12 as prices for the valuable commodity begin to decline. In the state budget handed down on Thursday the WA government said a declining share of GST revenue and softer iron ore prices from early next decade will lead to a fall in its budget surplus. State Treasure Eric Ripper said the government expected the benchmark iron ore price to increase by 67 per cent in 2008/09 to $134 per tonne.
The price is expected to fall in 2011/12 to $101 per tonne, when global iron ore supply is expected to exceed demand.
In 2003/04, the iron ore price was $30 per tonne.
"The eyes of the world are fixed on Western Australia's surging resources industry," Mr Ripper said in his budget speech.
"Export volumes are forecast to grow by 10.75 per cent in 2008/09, underpinned by the resources sector.
"Current iron ore production in the Pilbara is 285 million tonnes.
"Together, iron ore companies aspire to export 1.1 billion tonnes by 2015.
"That is, output in the Pilbara could more than treble in volume in seven years."
Revenue from the state's lucrative mining sector is expected to account for 17 per cent or $3.423 billion of total general government of revenue in 2008/09, compared to 15 per cent in 2007/08.
The WA government has forecast an operating budget surplus of $1.855 billion for 2008/09, down from an expected surplus of $2.093 billion in 2007/08.
Mr Ripper said the surplus was forecast to decline by the end of the 2011/12 financial year to $203 million, when iron ore prices were expected to come off their record price base.
Surpluses of $1.67 billion are expected in 2009/10 and $1.073 billion in 2010/11.
Mr Ripper said the declining surplus drop would be due to the state's falling share of GST revenue.
In 2008/09, improving ports was also a key government priority.
Some $377 million will be spent on deepening the Fremantle inner harbour and on the multi-use Panamax berth at Utah Point in Port Hedland, and upgrading key rail freight facilities.
Mr Ripper said investing in crucial infrastructure would ensure WA's continued economic growth and prosperity, which had been underpinned by its huge iron ore sector in recent years.
He said the state's ports were predicted to handle an average increase of over 60 per cent in tonnage over the next five years, with tonnage in Port Hedland expected to increase by 133 per cent.
Investing in Port Hedland infrastructure would provide better access to export markets for smaller mining operations and new entrants to the iron ore industry, he said.
Source: Sydney Morning Herald
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