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.
BHP Billiton (NYSE: BHP) Iron Ore has seven extensive high-grade iron ore mining operations. The Mount Whaleback mine, which was established in 1968, is the largest single-pit open-cut iron ore mine in the world. According to a report released by the company in January of this year, Western Australia production rose to a record annualized rate of 178 million tonnes per annum, a 25 percent increase over the previous corresponding period. BHP Billiton Iron Ore has a long and sustainable future in Western Australia, with reserves for at least another 30 years and additional resources for future development.Rio Tinto (NYSE: RIO,LSE:RIO) began its operations in 1966 with the Mount Tom Price mine. Mount Tom Price now has an annual capacity of 28 million tonnes a year. The company plans to invest approximately $15 billion over the next five years to expand its Pilbara operations by 50 percent to 353 million tonnes per annum by 2015. Rio Tinto has a network of 14 mines, three shipping terminals, and the largest privately owned heavy freight rail network in Australia. Fortescue Metals (ASX: FMG) is also a prominent producer in the Pilbara region of Australia. Fortescue started construction of its port, rail, and mine project in early 2006. The project was completed in 2008, with operations underway at the Fortescue Herb Elliott Port and at the company's flagship mine, Cloudbreak. In the first full year of operations, the company mined, railed, and shipped more than 27 million tonnes of iron ore to customers in China. South Australia South Australia has started to come to the forefront of Australia's iron mining industry. Australia's second-largest steelmaker, OneSteel (ASX: OST), has been developing and mining a magnetite iron ore resource in South Australia, which has added to the overall future of the industry. About 2.5 percent of the country's production is mined in South Australia by operations such as OneSteel and Rio Tinto, with the region's production dedicated to domestic steel. In the Savage River region of Tasmania, iron mining is undertaken by Shree Minerals (ASX: SHH). The company produces iron which is processed into iron ore pellets, of which about half are used domestically while the remainder is destined for export. Attracting foreign investment Brazilian miner Vale (NYSE: VALE) is considering investment in Australian iron ore mines to overcome the cost disadvantage of shipping to China. “Vale is trying to diminish this handicap by investing more in Australia and eventually being able to sell iron ore from Australia straight to China,” the Brazilian ambassador to Australia, Rubem Antonio Correa Barbosa, told The Australian Financial Review. At a time when iron ore has shifted from being priced on a free-on-board basis to a price that includes freight, the Australian miners have a significant advantage over Vale. It costs about $8 a tonne to ship the product from Western Australia to China versus $20 a tonne from Brazil to China. “A ship from Australia takes about nine days to get to China, for instance, while a ship of iron ore from Brazil takes almost six weeks,” Barbosa said. “That is a major handicap for us.”