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Mining saved the nation from complete ruin says Finance Minister Cormann

BHP iron ore
BHP iron ore

Mine workers are helping Australia recover from the worst recession in a century, an elected Liberal in charge of national finance said.

Federal Finance Minister Mathias Cormann has applauded the resources industry for being a main reason why the national economy was not completely wiped out when the Chinese coronavirus outbreak spread in January.

‘Incredibly important’

“The mining industry and the resources sector more broadly has been incredibly important to keeping a level of strength in the Australian economy,” he said in his July economic update. “It has been very important to our economic resilience, there is no question.”

Since the February low of about US$78 (A$110.4) a tonne iron ore spot prices have jumped by nearly 35 per cent to US$105.6 (A$148.8) a tonne, according to the Markets Insider website.

“Export volumes have remained high,” Cormann said. “The iron ore price is higher now than what it was at the beginning of this crisis, so it has been a significant support to our economy through this period.”

Exports and investment rise

The Department of the Treasury predicts mining exports will rise by 3 per cent in the 2021 financial year despite a much smaller increase of just 0.5 per cent in fiscal 2020.

Investment in projects is also expected to increase for the first time in seven years by 4 per cent in the 2020 financial year plus a further 9.5 per cent in fiscal 2021.

‘Respect’ required

However, this outlook will depend greatly on Australia’s relationship with the Chinese Communist Party (CCP), which has been hostile towards the Scott Morrison government’s attempts to have an independent investigation into exactly how the worldwide pandemic started in Wuhan city, Hubei province.

Cormann believes the CCP’s dependence on Australian resources could be the nation’s strongest bargaining chip to earn respect from the Asian country, which reported just 1.75 per cent gross domestic product growth for 2020.

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“We are selling our iron ore into China predominantly but that is because China needs our iron ore in order to continue to grow and develop their economy,” he said.

“We are keen to see the relationship move forward on a mutually beneficial and respectful basis.”

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