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Urgent warning $113billion industry in Australia at risk of wipeout Australian industry at risk of tumbling New development in West Africa READ MORE: FIFO families living the high life in laid back beach lifestyle By SARAH BROOKES - SENIOR REPORTER, AUSTRALIA Published: 01:15 GMT, 5 November 2025 | Updated: 01:16 GMT, 5 November 2025 A new mine in Guinea is set to change the world's iron ore trade, potentially delivering a huge blow to Australia's $113billion industry. When Simandou’s first ship sails this month, it won’t just signal Africa’s rise in mining, it could punch a multibillion-dollar hole in Australia’s coffers, as fresh supply sends iron ore prices tumbling. The Rio Tinto joint venture with the Guinean government and Chinese-owned Chalco holds the largest undeveloped iron ore deposits in the world, with an expected mine life of 26 years. Estimated at around 1.5billion tonnes of high-grade ore, it's enough to bury the entire Sydney CBD under 200 metres of red earth. The mining giant has started loading the first lot of ore from the mine for movement down the railway and to the port this month with the first shipment expected to be loaded this month. If successful, the project could position Guinea as the world’s third largest exporter of iron ore. Rio chief financial officer Peter Cunningham said Simandou will bring on around 120million tonnes over the next few years. He said the mine would bridge the gap left by legacy mines closing or winding down due to ore depletion. The Simandou mine (pictured) is located in a mountainous and heavily forested area of Guinea, on the west coast of Africa, making infrastructure challenging 'The size of the contestable iron ore market is around 1.9billion tonnes,' he said. 'Over the next 10 years, we estimate that 40 per cent of production from the majors needs to be replaced. 'And while China’s steel consumption has plateaued, there is demand growth elsewhere in global steel markets, often supplied by Chinese exports.' Chief executive Simon Trott said at a recent Goldman Sachs event the ore exported this year would be a 'very small quantity'; however, production would ramp up over a 30 month period. 'It is probably the most complex project in the industry,' he said. Part of the complexity lies in constructing more than 600 kilometres of railway that stretches across the breadth of Guinea, cutting through the rugged Simandou mountain range, along with associated port infrastructure for overseas exports. When the project is at full steam, it directly threatens Australia's iron ore powerhouse in Western Australia’s Pilbara region, which currently supplies nearly half of all global production. Last month, the Department of Industry, Science and Resources revised its iron ore export earnings forecast downward off the back of global supply increases which will push prices lower. Iron ore is used to make steel, which is used in the construction and transportation industries 'Global iron ore markets are facing supply surpluses as China's demand for iron ore diminishes and the Simandou mine comes online,' a spokesman said. 'With prices drifting down iron ore exports are forecast to fall by $3.9billion to $113billion in 2025–26 and then fall to $103billion in 2026–27.' In the June 2025 quarter, iron ore prices fell to USD$96 a tonne, their lowest level since June 2020, following the import tariffs announcement by the US government. The Department said despite occasional rebounds, prices are expected to remain under pressure unless significant stimulus measures are introduced in China. It predicts the benchmark iron ore price to fall to an average of US$81 a tonne in 2027. That will have significant implications for state and federal revenue with Treasury calculating every $USD10 fall in the price of iron ore can shift budget outcomes by billions of dollars. The fiscal impact of falling iron ore prices will be felt most acutely in Western Australia, which collected around $9 billion in iron ore royalties in the 2024–25 financial year alone. Against this backdrop, industry analysts are closely watching shifts in global steel demand. Last year, Mr Trott said China had likely reached its peak steel consumption, a trend that’s now playing out amid a slowing real estate sector, rising trade tensions, and government-imposed production curbs. However, he also pointed to emerging markets such as India, Southeast Asia, the US, and the Middle East as potential sources of renewed demand, which could help offset China’s decline. SydneyChina Share or comment on this article: Urgent warning $113billion industry in Australia at risk of wipeout Add comment
