❓ Dr. Thomas questions Treasury's iron ore price modelling given rising prices. The Treasurer's representative provides limited information, citing a forecast of price reversion to the long-run average and highlighting price volatility.
AnsweredQoN 69Legislative Council
QuestionView source ↗
IRON ORE ROYALTY REVENUE
69. Hon Dr STEVE THOMAS to the minister representing the
Treasurer:
I refer to the 2018–19 to
2020–21 mini boom in iron ore royalties and to articles in last week's The West Australian suggesting that ''Expectations are rising
that benchmark prices can get to $US200 a tonne as Chinese steelmakers ramp up''
and ''sky-high commodity prices'' are fuelling confidence and
business investment.
(1) What modelling has Treasury done
on high iron ore prices remaining for —
(a) the rest of 2021; and
(b) the entire 2021–22
financial year?
(2) Please provide that modelling.
(3) What is Treasury's
predicted spot price for iron ore for —
(a) the rest of 2021; and
(b) the entire 2021–22
financial year?
(4) Is an iron ore spot price above
$US130 a tonne for the rest of 2021 ''highly unrealistic''?
69. Hon Dr STEVE THOMAS to the minister representing the
Treasurer:
I refer to the 2018–19 to
2020–21 mini boom in iron ore royalties and to articles in last week's The West Australian suggesting that ''Expectations are rising
that benchmark prices can get to $US200 a tonne as Chinese steelmakers ramp up''
and ''sky-high commodity prices'' are fuelling confidence and
business investment.
(1) What modelling has Treasury done
on high iron ore prices remaining for —
(a) the rest of 2021; and
(b) the entire 2021–22
financial year?
(2) Please provide that modelling.
(3) What is Treasury's
predicted spot price for iron ore for —
(a) the rest of 2021; and
(b) the entire 2021–22
financial year?
(4) Is an iron ore spot price above
$US130 a tonne for the rest of 2021 ''highly unrealistic''?
AnswerView source ↗
I thank the Leader of the Opposition
for some notice of the question. I note that this answer is current as at 6
May.
(1) (a)–(b)
The Department of Treasury made a budgeting assumption in the 2020–21 Pre-election
financial projections statement that the iron ore price would revert to its
long-run average by August 2021.
(2) See the answer to (1).
(3) (a) Iron ore
price forecasts are based on whole financial years.
(b) It is $US65.60 per tonne, as per
the 2020–21 PFPS.
(4) The iron ore price is highly volatile and there
exists a large range of plausible price paths over the remainder of the
year.
for some notice of the question. I note that this answer is current as at 6
May.
(1) (a)–(b)
The Department of Treasury made a budgeting assumption in the 2020–21 Pre-election
financial projections statement that the iron ore price would revert to its
long-run average by August 2021.
(2) See the answer to (1).
(3) (a) Iron ore
price forecasts are based on whole financial years.
(b) It is $US65.60 per tonne, as per
the 2020–21 PFPS.
(4) The iron ore price is highly volatile and there
exists a large range of plausible price paths over the remainder of the
year.
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