By Robert Young — Exclusive to Iron Investing NewsPrior to the mid-1960s, iron ore production in Australia, particularly Western Australia, was negligible, with production ranging less than ten million tonnes a year. In 1965, the first mine to be developed in the Pilbara region was the Goldsworthy mine. It was developed with a railway line as well as port facilities at Finucane Island, and on 1 June 1966, the first shipment of iron ore from the Pilbara region left port.
By the mid-1970s, production figures had reached 100 million tonnes, with the majority coming from Western Australia. Production declined in the 1980s but improved in the 1990s, reaching 150 million tonnes for the country by 1997. Now, according to the USGS, Australia is the second largest producer of iron ore, contributing 420 million tons to the global supply in 2010. These figures follow China at 900 million tons, but place Australia ahead of Brazil's contribution of 370 million tons and India's at 260 million tons. China's iron imports China represents more than 60 percent of Australia's iron ore exports, and its demand is expected to remain strong. Currently, iron ore sells for around $135 a ton to China, but the cost in Australia is about $20 to $30 a tonne to mine. With China's increased resource tax on iron ore, lower production costs in Australia, and the close proximity of the two countries, the iron market should remain stable. Western Australian Pilbara iron ore The Pilbara region of Western Australia accounts for nearly 98.6 percent of Australia's iron ore output. The bulk of the mining activity and production in this region comes from two major operations: BHP Billiton and Rio Tinto.