Australia on Tuesday kept its forecast for iron ore exports nearly unchanged at 338.4 million tonnes for the 2009/10 financial year, as low cost Australian ore displaces higher cost producers in the face of falling steel output.
At that level, iron ore production would be a record and bring in A$25.47 billion in export revenue, the country's governm+ent commodity forecaster, the Australian Bureau of Agriculture and Resource Economics (ABARE), said in its June quarter review.
"The demand for our product has increased as it becomes more competitive in the current low price environment," said UBS mining analyst Glyn Lawcock.
Overall, export earnings from Australian mineral and energy commodities are forecast to drop 22 percent to A$124.4 billion in 2009/10, according to ABARE.
In steel-related raw materials besides iron ore, ABARE lifted its export forecast for refined nickel 1.85 percent to 110,000 tonnes and reduced metallurgical coal exports to 128.0 million from 130.2 million tonnes.
For iron ore, the revision comes as Australian miners BHP Billiton and Rio Tinto wrestle over pricing with Chinese steel mills, which offer the greatest growth prospects for Australia's mining sector.
China accounts for around 78 percent of Australian exports.
Rio Tinto and BHP Billiton, pursuing a joint venture in iron ore mining to the dismay of steelmakers, will supply the overwhelming bulk of the ore, with smaller miners Fortescue Metals Group, Atlas Mining Ltd, Mt Gibson and others contributing much less.
DJ Carmichael mining analyst James Wilson warned Australia's iron ore upstarts could deliver more than ABARE allowed for, citing a target by Atlas to lift output to 6 million tonnes by 2010 from 1 million this year and Gindalbie Metals Ltd's plans to start mining later this year.
Growth projects planned separately by Rio and BHP over the next few years could be accelerated if the proposed joint venture between the companies proceeds, he added.
BHP is completing the fourth stage of a multi-year growth programme in iron ore, while Rio Tinto has said it will push its mines 10 percent harder this year, taking annual capacity to 220 million tonnes.
Rising production in Australia was running counter to the world trend to mine less, according to ABARE.
"Global production of iron ore is expected to decline in 2009 in response to weakening demand," Abare analyst Robert New said in the outlook document.
"Most of the cutbacks in production volumes are expected to be in countries which have higher cost operations, while lower cost producers are not expected to be as adversely affected by the weaker demand," New said.
In its final forecast for the current financial year, the forecaster left its total iron ore production steady at 339.4 million tonnes.
Refined copper output for 200/10 was cut 6.8 percent to 467,000 tonnes while mined copper output was unchanged at 1.017 million tonnes.
The forecast for output of aluminium -- Australia is the fifth-largest supplier -- dropped 2.8 percent to 1.899 million tonnes.
Source: Reuters
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