Introduction:

In the course of recent years, the State’s iron ore industry has encountered a time of major development fuelled in the primary by interest from China. The yearly development in the estimation of offers amid this period has been 30% every annum and yield has expanded 12 % every annum. In 2013–14, iron ore sales yield increased by 119 Mt, or 23%, from 2012–13 to attain to a record of 631 Mt. The value of sales increased 31% to achieve a record of $73.7 billion. Accordingly, iron ore kept on being the most important asset segment in Western Australia, representing 61% of the aggregate estimation of the State’s mineral and petroleum sales. China kept on accepting the majority of share of Western Australia’s iron ore sales, representing 77% or $54 billion of the aggregate sum dispatched in 2013–14. Other real markets included Japan (12 %), South Korea (8%) and Taiwan (2%) (Western Australian mineral and petroleum statistics digest 2013 –14).

To the large extent, iron ore is completely consumed as inputs in the worldwide generation of steel. Therefore iron ore and metallurgical coal exports have been displayed in view based on estimated demand and supply curves for moderate inputs to worldwide steel production. The intersection of these curves creates a conjecture of the amount of worldwide steel production and the marginal input costs associated with that level of production. This in turn implies the global level of iron ore and metallurgical coal production and their associated global prices (The Treasury 2014).

Decreased demand of iron ore:

On the demand side, China is a major participant in the market which consumes nearly 70% of the annual commodity for its steel industry. Seaborne trade in 2013 for iron ore totalled about 1.2 billion tonnes.