The State's iron ore miners will deliver more than half of WA Treasurer Troy Buswell's projected $437 million surplus for 2013-14, with consistently high iron ore prices expected to ram an extra $270 million into Government coffers over the year.
The revenue lift would come from a ramp-up in Pilbara production, with producers expected to ship 10 million tonnes of ore a year more than previous estimates, along with a softening Australian dollar and strong prices, according to the State Government's mid-year financial projections statement, released yesterday.
In a demonstration of how reliant WA is on the iron ore industry, the Treasury lifted its royalty revenue estimate for the financial year to $6.09 billion, with the extra $270 million from iron ore miners only slightly offset by an expected $5.2 million fall in royalty revenue from other commodities, such as the hard-hit gold and nickel sectors.
Over the four-year forward estimates, iron ore royalties are expected to deliver $1.2 billion more than estimates made in August, to a total of $26.7 billion through to mid-2017.
According to yesterday's figures, royalty income accounts for about 22 per cent of the State's total revenue, with iron ore alone contributing 20 per cent.
In the August Budget, Treasury officials estimated the iron ore price would average $US116.70 a tonne at the port for the financial year. They upped that to $US120.90/t yesterday - a figure which translates to a headline spot price for 62 per cent ore of $US130.80/t, including shipping costs.
Spot iron ore prices have sat above $US130/t for most of the past six months.
According to Treasury, every $US1 lift in the average iron ore price equals an extra $45 million in royalty payments, and every US1Â¢ variation in the average value of the Aussie dollar means the gain or loss of $78 million.
The Government is still consulting with the mining industry over changes to WA's royalty regime, tipped in the August Budget to deliver an extra $180 million in revenue from the 2015 to 2016 financial year.
With the Government facing a strong backlash from the gold industry, the sector widely viewed as the most likely target for a royalty hike, yesterday's statement showed some signs of backing away from that figure.
Bankroller 20 The percentage of State income generated by iron ore miners.