Mining Sector Struggles

The mining sector has seen better days. Despite Deloitte’s forecast that the mining boom will end in the next two years, it’s still business as usual for the mining sector.

Iron ore is the mineral that delivers the greatest revenue to the Australian government. In 2011 alone, the price of iron ore amounted to $US180 per tonne.

China, one of the biggest users of iron ore, has lost its interest this year and the price of ore has reduced to somewhere between $US125 and $US150 per tonne. Coking coal and thermal coal has also lost 30 per cent of its value compared to a few months ago.

Federal Resources Minister Martin Ferguson confirms that from here on forward, the prices of minerals will drop. According to JPMorgan’s forecast, the price of iron ore is 10 percent lower as compared to what was estimated. It is foreseen that the price of iron ore will be around $US135 per tonne.

Mining companies have felt the pinch. The glowing reports of Rio Tinto, Fortescue Metals Group, and BHP Billiton show increased export volumes did not influence their investors at all. Share prices have significantly decreased.

Nevertheless, Canaccord BGF, Warwick Grigor stressed that other minerals such as gold, copper, and gas are still going strong in the market.

In fact last April, Rio Tinto started hiring some 6,000 workers for its various operations. Growth in the mining sector is estimated from now till 2017 at 7.5 percent each year.