China-Australia relations: is this the start of ‘mining boom 2.0’ as Canberra rakes in cash from iron ore rally?
- Analyst calls this ‘one of the most incredible transfers of wealth between the pockets of the Chinese and Australian governments’, despite political conflict
- Australia is the biggest iron ore exporter to China, which gets about 60 per cent of its supply from down under
China is making Australia rich as record-breaking iron ore prices lift revenues for both miners and the Australian government, despite a long-standing bilateral political conflict, but Australia is unlikely to enjoy another decade-long mining “boom”, according to analysts and economists.
For every US$10 rise in the price of iron ore, the Australian government’s revenues – in the form of company taxes and royalties – rise by about A$2.5 billion, while Australia’s annual export earnings rise by A$11 billion, experts say.
“Political posturing and tensions aside, this is therefore one of the most incredible transfers of wealth between the pockets of the Chinese and Australian governments,” said Navigate Commodities’ iron ore analyst, Atilla Widnell. “The Australian Treasury could benefit from an extra US$34 billion to US$37 billion added to its coffers if iron ore prices are sustained above US$200 a tonne.”