Back to jail you go, Victoria
And here we go again. Victorians, Welcome to your 160th day of lockdown, which according to our Acting State Premier, is of course the Federal Governments fault; and so, the finger pointing game begins.
Regardless, there’s no upside in banging on about it, so we’ll focus elsewhere today. The market was much steadier and stronger this week, rising 2.1%.
One interesting development: China have finally revealed a 5-year plan to dramatically reduce their reliance on external supplies of iron ore (Australia accounts for 60% of China’s iron ore consumption).
China is investing in countries such as Russia, Myanmar, Kazakhstan and Mongolia, as they seek alternative supplies.
Their plan is to have a 45 per cent iron ore “self-sufficiency” by 2025. This would be achieved by greater use of scrap metal, developing more efficient mines and investing in international mines. The Chinese barely recycle or have access to any cost-effective scrap at present, their domestic mines are too high cost and inefficient and international investment has been disallowed by many countries to date.
Changes are coming and there seems little doubt that Australia can no longer ‘ride on the sheep’s back’ and should expect both a substantial decline in the iron ore price and lower demand. Fortunately, the Government seems well aware of our dangerous reliance on iron ore as an export and from the income tax of iron ore miners and royalties.