The collapse in iron ore prices was a bit of a shock for the Australian economy, highlighting our recently developed dependence on China and the mining sector.
Indeed, iron ore is now Australia's largest single export, accounting for 20% of export revenues. furthermore, 70% of our offshore sales go to China.
Along with higher coal prices, the huge price rise in iron ore over the past decade (from around US$30 per tonne to about US$100 per tonne at present) largely accounts for the surge in export prices in recent years. As a result, exports boosted national incomes and Federal Government budget revenues. Importantly, these prices placed a rocket under mining sector share prices.