Australia’s iron ore export earnings are forecast to decline to A$109 billion in 2025-26 from A$117 billion in 2024-25, and to A$81 billion in 2029-30, due to lower prices over the outlook period, according to the quarterly outlook report by the Australian government’s Department of Industry, Science and Resources.
The export earnings forecast for the fiscal year 2025-26 has been revised up from A$96 billion in the previous report, reflecting a drop in the exchange rate and higher prices in the December quarter.
In 2024, Australia’s iron ore export volumes increased by 1.2 percent year on year to 902 million mt. Following two decades of rapid growth, Australia’s iron ore output is expected to peak within three years as new capacities such as Fortescue’s Iron Bridge, Mineral Resources’ Onslow, and BHP’s South Flank are being developed. Spot iron ore prices have been stable in early 2025, after falling for most of 2024. Over the past few years, iron ore prices have risen and fallen in line with market speculation of further policy announcements in China. Additionally, the decarbonization of global steel production and supply chains will affect growth and trade patterns to 2030 and beyond. Iron and steel production is carbon-intensive, accounting for eight percent of global emissions, with iron accounting for up to 90 percent of these emissions. The transition affords both challenges and opportunities to Australia. As the production of green iron and steel rises, the iron ore product mix will gradually shift towards higher grade ores and concentrates suitable for producing DRI. Around 40 percent of Australia’s iron ore resources are magnetite ore. Magnetite is a more readily usable feedstock for green iron technologies. However, around 95 percent of Australian iron ore production in 2024 was from hematite mines. Given this, research is being undertaken into processes that would allow the use of hematite to produce green iron such as electric smelting furnace technology. Also, Australia’s substantial iron ore resources, infrastructure and renewable energy resources make it well placed to support rising global demand for green iron and steel. Global demand for green iron could reach over 850 million mt by 2050 in a net-zero scenario.
The report pointed out that the benchmark iron ore price is projected to fall to an average of US$85/mt in 2025 and then decline further to US$79/mt in 2026 and to US$74/mt in 2027.