The Australian government sensibly assumed the Brazilian mine would come back online and the ore price would revert to $US55 per tonne by March 2020.
But just think about the 2020-21 fiscal year. The government’s own sensitivity analysis shows for the full 2020-21 budget year a difference in the iron ore price of US$10 a tonne translates to a A$3.7 billion difference in the budget bottom line.
That has helped this year, but it also shows how dependent the budget’s relatively small A$7.1 billion “underlying cash balance” is on a commodity price that’s out of our control.
Yet, given the political non-negotiability of the surplus, we can expect assumptions that stretch credulity to maintain a surplus forecast.
https://theconversation.com/vital-signs-australias-wafer-thin-surplus-rests-on-a-mine-disaster-in-brazil-128705
I have posed the question on several occasions , what product / market segment will take up the slack of iron ore?
I cant see one on my horizon.
Raider
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