China Games the Iron Ore Market

Recent gyrations in the price of iron ore, Australia’s biggest income earner, appear to be inexplicable. However, the fall in ore prices means the government could lose as much as A$25 billion in royalties over the next four years. Treasurer Joe Hockey has resisted media calls for a government inquiry into the workings of the market, issuing only a short statement confirming that an investigation is off the table. Nonetheless, it appears that China is gaming the market, and that the Australian government is not interested in looking too deeply into why, possibly for fear of the political implications from awakening touchy domestic producers.

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