Australian Mining Might Lose Its Biggest Customer
Australia has grown into a top exporter of minerals worldwide and energy in Asia. But the high demand from China that fuels this growth is unlikely to weather a U.S.-China rivalry.
In 2020, Australia mined over 900 million metric tons of usable iron ore.1 This made Australia by far the world’s biggest source of iron ore at 37% of all global production, more than double the amounts mined by runners-up Brazil and China, which each mined about 15%. For comparison, Russia mined about 4% and the United States just about 2%.2 Iron ore is a key raw material needed to smelt steel, one of the most basic alloys needed for industrial civilization. Steel is used in nearly every piece of modern infrastructure or technology, including skyscrapers, bridges, ships, trains, cars, rockets, and all kinds of tools, appliances, and weapons. Australia exports about 95% of the iron ore that it mines, over 80% of which is exported to China, with the rest going primarily to Japan and South Korea.3 In 2020, China alone produced 57% of all global steel.4 India, in second place, produced just about 5%. World steel production thus overwhelmingly depends on Chinese forges, while China’s steel production in turn drives huge demand for Australian iron. Australia is also the world’s top producer of bauxite—used to make aluminum—and lithium, which is key to batteries for electronics and electric vehicles. Australia is also the only Western country other than the United States with an appreciable capacity to mine rare earth elements, another key raw material for electronics.