As noted many times, when a commodity price crashes, the first thing that happens is that the aggressively anti-government mining sector turns to the government for a handout.
Because it happens everywhere, it only achieves a race to the bottom for whatever commodity price it affects, as all governments cut costs to bet on the falling cost curve.
However, it is unusual and noteworthy when the iron ore sector sticks the begging bowl out before the crash has even started, knowing that it is coming:
Australia is facing a $25 billion-a-year economic hit as iron ore export epicentre Port Hedland enters a new era of softer prices for the steel-making ingredient, according to a report backed by BHP, Fortescue Limited, Gina Rinehart’s Roy Hill and others.
The value of production linked to Port Hedland, where most of the iron ore mined in Western Australia is loaded for export, is expected to peak at $89.2 billion in 2023-24.
The report forecasts a steep fall to $64.2 billion by 2027-28 and that the value of production will settle around the lower level until at least 2032-33.
…Rio Tinto, which operates its own iron ore port infrastructure on the Pilbara coast, exports salt from Port Hedland and also contributed to the study.
“The conservative unit price assumptions for iron ore provided by companies in their forward guidance are comparable to the iron ore price assumptions adopted by Treasury in the WA state budget whereby the iron price is typically set at levels within the range of $US60-70 per tonne over the outyears,” the report said.
…“It is vital that our resources sector continues to be supported to ensure it remains internationally competitive so that the benefits continue to flow across the nation.”
In short, the miners are saying, ‘cut our royalties now so we can squeeze out a few more economic rents before the post-China crash begins.’
‘BTW, we have made it much worse by over-investing in capacity at exactly the wrong moment, so while you are at it, subsidise our capital works, most of which are in Africa.’
Australian governments should roundly ignore this pathetic begging bowl and let the miners burn.
BHP and RIO are low-cost enough to survive anything. The two higher-cost producers, Roy Hill and Fortescue, can go to the Thunderdome to fight it out and entertain the ever-poorer masses:
