Australia's Iron Ore Exports to Rise 5.5% in 2011, Government Bureau Says

Australia, the world’s largest iron ore exporter, will export 5.5 percent more of the steelmaking raw material this year as BHP Billiton Ltd. and Rio Tinto Group increase output, taking advantage of higher prices.

Australia may ship 425 million metric tons in 2011 and 462 million tons next year, the Canberra-based Australian Bureau of Agricultural and Resource Economics and Sciences said today in a report. The nation’s copper and nickel exports will also climb as global consumption increases.

Rio and BHP, the world’s second- and third-largest iron ore producers, are expanding mines in Australia to meet demand led by China. Global steel consumption may climb 6 percent this year to 1.4 billion tons and may reach 1.9 billion tons in 2016, the government-run bureau said.

“Growth in steel consumption in developing Asian economies will form the backbone of world steel demand growth, reflecting the development of infrastructure and rising incomes in these economies,” the bureau said in the report. “Prices for both iron ore and metallurgical coal are forecast to remain well above historical averages.”

Australia’s export earnings from iron ore may be 64 percent higher this fiscal year at A$57 billion ($57.9 billion), it said. That may gain to A$68 billion in the year ending June 30, 2016. Total sales from metals and minerals may gain 12 percent to A$125.8 billion this financial year.

Iron Ore Prices

Exports of iron ore are projected to increase at an average annual rate of 7 percent to 2016 to 599 million tons, the bureau said. By 2016, Australian exports are projected to account for 43 percent of world trade, it said. Exports may rise to 599 million tons by 2016.

Brazil, the world’s second-largest producer, may ship 332 million tons this year, an increase of 7.8 percent, rising to 436 million tons in 2016.

Iron ore prices may average $149 a ton this year, compared with $112 a ton in 2010, it said. Prices will decline as companies including BHP, Rio and Vale SA, the world’s largest producer, expand operations. Iron ore will average $93 a ton by 2016.

China, the world’s biggest producer of steel, is forecast to produce 671 million tons this calendar year, up 7 percent. The nation’s steel consumption is projected to increase by 8 percent a year to 995 million tons by 2016.