In Bozo Joe’s recent Budget he forecast an iron ore price of $48. However, that price was FOB which does not include the cost of delivery which is around $6 per tonne. Thus the Budget forecast was actually a CFR (or spot) equivalent price of $54 in the forward estimates.
The cheapest iron ore production in the country is that of RIO in the mid $30s, being generous. Hence, three days of iron ore price crashes from $54.10 to $44.10 essentially just halved the Federal government tax take for iron ore in the forward estimates.
The iron ore income shock is nearly over because once we pass through the mid $30s there is no income left.
That structural adjustment to mining-led growth is really delivering now.
Advertisement