(Matthew Dunn’s post from the YAHOO! NEWS on 27 October 2026.)
China’s huge mining move 11,000km
away sparks grave fears for Australia: A massive new mining project in Africa
could threaten one of Australia's biggest money-makers, with experts warning
billions of dollars are potentially at stake.
China's growing investment in
Guinea's massive Simandou iron ore project could threaten Australia's lucrative
mining exports, with billions of dollars potentially at stake. Australia's
biggest export industry is facing a multibillion-dollar threat from a massive
$30 billion Chinese-backed mine in Africa, sparking fears that funding for
essential mining services and jobs within the sector will be impacted.
For decades, Australia's economy has prospered on iron ore exports — the essential raw material behind global steel production for infrastructure, housing, and vehicles. WA's Pilbara region generates over $100 billion annually from iron ore sales to China, however the emergence of the massive Simandou mine in Guinea allows Beijing to diversify its steelmaking supply and reduce its reliance on Australia.
In an ironic twist,
Australian-based mining giant Rio Tinto is helping develop the African project,
which will compete with its own local operations. Rio Tinto is the majority
shareholder in the joint venture controlling three of the four blocks of the
Simandou mining project.
AustChina Institute senior research
fellow Dr Lauren Johnston, who has previously researched the project's
potential impact on Australia, warned the development could reshape the global
iron ore market and increase pressure on Australian exporters. "It
definitely changes the dynamics of the market and elevates that risk," she
told Yahoo News Australia.
Johnston said the consequences
could extend beyond mining companies, potentially affecting government revenue
and jobs in industries dependent on the nation's resources sector. However, she
cautioned that the scale of the threat remained uncertain and would depend
partly on whether Simandou's iron ore was ultimately shipped to Asia, Europe or
used within Africa.
Government predicts drop in earnings from iron ore
The warning comes as fresh federal
government forecasts predict Australia's iron ore export earnings will fall
from $123 billion in 2025–26 to $107 billion in 2026–27, before dropping to $79
billion in inflation-adjusted terms by 2030–31.
It attributes the decline to
falling prices, lower export volumes, declining ore grades and growing global
competition. "Elevated iron ore inventories at Chinese ports indicate
ample available supply and lower demand," the forecast explained.
"At the same time, strong
shipments from major exporters and the gradual ramp-up of new supply, including
from Simandou, have reinforced expectations of a well-supplied seaborne market.
"Together, these factors have capped price upside and raised downside
risks, especially while Chinese steel demand remains subdued."
The forecast predicts Guinea's
Simandou project could flood the international market with up to 120 million
tonnes of iron ore annually by 2030. Australia exports nearly 900 million
tonnes of iron ore a year, mostly to China.
At full capacity of 120 million
tonnes annually, Simandou's production represents a chunk equal to roughly 13
per cent of Australia's entire output — equivalent to around $16 billion in
lost potential revenue. But it's not just the size of the project worrying
Australian exporters.
The Simandou deposit contains
exceptionally high-grade iron ore, with average iron content of 65 per cent to
68 per cent and very low levels of impurities, significantly higher than the
roughly 58 to 62 per cent typically found in Australia's major exports. "This
allows steelmakers to blend it with lower-cost, lower-grade ores while
maintaining blast furnace performance and product quality," the forecast
explained.
What is the Simandou mine in Guinea?
Tucked away in the mountains of
West Africa, Simandou holds one of the planet's richest untapped iron ore
deposits. Backed by Rio Tinto, Chinese state-backed companies, and the Guinean
Government, the massive development spans two major mining operations, more
than 600 kilometres of new railway, and deep-water port infrastructure.
After years of construction, the first shipment left Guinea in December 2025, with production now ramping up towards a combined target of 120 million tonnes annually. Johnston also highlighted another factor favouring the African project, pointing out China's exceptionally close political and economic relationship with Guinea, which spans back decades.
"The People's Republic of
China and the Republic of Guinea established diplomatic relations on October 4,
1959," explained China's Ministry of Foreign Affairs. "Guinea was the
first sub-Saharan country to establish diplomatic ties with China. Over the
years, the bilateral relationships has progressed smoothly."
Why is Rio Tinto
helping build Australia's new rival?
One of the biggest players behind
the African project is mining giant Rio Tinto, which has spent decades
extracting iron ore from Western Australia's Pilbara region. Despite its
extensive Australian operations, the company is investing approximately $8.8
billion in its share of the Simandou development.
"Rio Tinto's board answer to
their shareholders, not to the Australian national interest," explained
Johnston. In its latest production update on October 14, Rio Tinto revealed its
Simandou operation had reached an annualised production rate of approximately
10 million tonnes during the September quarter, with plans to ramp up to 60
million tonnes annually by the second half of 2028.
However, Rio Tinto is also
continuing to invest in Australia, with new Pilbara mines under development and
plans to maintain its substantial iron ore production in Western Australia. Yahoo
News Australia contacted Rio Tinto for comment but had not received a response
at the time of publishing.
