How has COVID-19 impacted country's Iron ore industry?
Team Veye | 07-Sep-2020
China is known as the world’s manufacturing powerhouse. The expansion of steel production, particularly over the past decade, has been a significant driver of China's demand for raw materials, especially iron ore and coking coal. This has resulted in a considerable increase in China's imports of these commodities.
The Iron ore mining industry, which is one of the largest segment of the Australian mining industry has remained largely unaffected throughout the COVID-19 pandemic. Despite a weakening global demand because of lower steel production, Iron ore industry has delivered a strong performance.
Australia accounted for 53% of global iron ore production in 2019, while Brazil accounted for 21%. China accounted for over two-thirds of global iron ore demand. With the outbreak of pandemic, the Chinese Government had implemented significant stimulus measures intended to support steel production. This helped in preserving demand for Australian iron ore.
Massive outbreak of COVID-19 in Brazil disrupted mining operations in there. This reduced supply from that country and enabled Australian miners to increase prices. High prices and growth in output have enabled the industry to generate an estimated $103 billion in export revenue in 2019-20 according to the Office of the Chief Economist. This result represented the highest level of export revenue on record.
The mining industry was less disrupted by the pandemic as compared to other sectors of Australian industry since most of the major mines are at quite remote locations. Moreover, occupational safety has always been under great focus in the Australian mining industry.
The significant changes in commodity prices had also impacted the industry, though sometimes to their benefit. The decline in oil and gas prices contributed to reducing operating costs for most mining establishments.
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