Can it get any worse for Australia's ASX-listed iron ore players?
Of course it can.
Australia's Department of Industry, Science, and Resources has gazed into the future, and the outlook is grim for much of the resources sector.
And with mining contributing more than 12% of Australia's economic output, that does not sound great for a country so heavily reliant on it.
The latest Resources and Energy Quarterly report forecasts Australia's resource and energy exports to drop to $387 billion in FY25 from $415 billion the previous financial year.
That represents a slide of about 6.7%, a trend expected to continue.
The report predicts earnings will likely continue to sink over the next five years before steadying at $343 billion towards the end of that period.
As such, Australia's resource and energy exports could see a 17% decline in value over the next five years.
And iron ore, Australia's largest export, contributes about a quarter of the country's resource and energy exports.
Australia's iron ore miners, led by Rio Tinto Ltd (ASX: RIO), BHP Group Ltd (ASX: BHP), and Fortescue Ltd (ASX: FMG), have enjoyed solid growth over the past 20 years.
Australia's iron ore production, mainly centred around Western Australia's Pilbara region, has more than tripled since 2004 when the country's miners produced about 200 million tonnes.
Australia is still the biggest iron ore producer in the world, exporting 902 million tonnes of iron ore in 2024.
China remains by far the world's biggest importer, consuming about 72% of the world's supply in 2023, followed by Japan's 6%, with South Korea importing 4%.
One way to go?
But things are changing.
The report stated that Australia's iron ore miners are "running fast to stand still".
It warned that sustaining production volumes at the current high levels would require "ongoing investment in exploration to address declining volumes and ore quality, as well as investment to develop new deposits and build tie-in infrastructure".
A rock and a hard place
The report also noted that lower forecast prices could reduce Australia's iron ore export earnings in real terms from around $117 billion in FY25 to about $109 billion in FY26.
Further declines could see export earnings drop to $81 billion in FY30, representing a decline of more than 30% from the FY25 figure.
But it's not all doom and gloom.
Spot iron ore prices have been relatively stable so far this year after plunging for most of 2024.
The price of iron ore is currently hovering around $104 per tonne, having fallen to $91 per tonne in 2024.
World steel production is also projected to rise to about 2 billion tonnes by the end of 2030.
And while declining output in China will have an impact on Australia's iron miners' operations, that decline is expected to be offset by new capacity in India, Southeast Asia, and the Middle East.
