Beware of China backlash

Mining chief warns of risk to ore sales

which called on China to step up its commitment to emissions reduction and fair trade.

The Morrison speech was seen in China as support for the US position in the ongoing trade war.

Ms Gaines said the strong trading relationship built with China by the Australian resources sector had been “a key success factor” in Australian economic prosperity.

She warned that the nation could not afford to ignore the importance trade plays in foreign affairs policy.

“China produces a little over half of the world’s steel, with 928 million tonnes produced in 2018,” she said.

“While other markets are also well established, their volume is substantially less than China’s.

“For example, Japan is currently the world’s second largest producer yet represents only about 6 per cent of global steel production.”

Ms Gaines said that, even though the Pilbara region was China’s biggest source of iron ore for its still-growing steel industry, “other sources of supply exist around the world — including Brazil, South Africa, Canada and Ukraine”.

“We all operate globally, whether as sellers or buyers, and we all have options,” she said.

“Those who think that growth is going to slow, or that China won’t continue to look to develop broader markets for supply, would be at risk of underestimating some important factors.”

Ms Gaines said Fortescuecommissioned modelling by consulting giant EY showed the Australian iron ore industry contributed $58.7 billion in gross value add — a measure of return on invested capital plus taxes, wages and royalties — to the economy last financial year, and 3 per cent of national gross domestic product.

Its contribution was greater, she said, than Australia’s accommodation and food services, and information, media and telecommunications sectors combined.