What does 2026 hold for WA’s mining industry? Predictions for iron ore, gold, rare earths and lithium

After a year where iron ore defied gloom, gold boomed, rare earths emerged and lithium resurged, what does 2026 hold for Australia’s most important industry? Iron ore Of all the minerals and metals dug up across the country, one remains supreme — iron ore. The steel-making ingredient is mainly mined in the Pilbara and annually generates more than $100 billion of Australia’s export income and more than $8.5b of royalties for WA. Relatively small fluctuations in the iron ore price can be the difference between budget surpluses and deficits for the State and Federal Governments. Government bean counters and economists from the big four banks had predicted the price of a tonne of iron ore would fall from more than $US100 to about $US80 in 2025. The crash never eventuated, with iron ore averaging $US103/t for the year and currently trading at $US104/t, resulting in big budget windfalls. But economists have doubled down on their predictions and are adamant iron ore will finally tumble under $US100/t — and stay there — in 2026. There are arguably more headwinds facing the commodity next year to support their bearish thesis. Maiden iron ore from the Simandou mine in West Africa was exported last month and considerable supply will be added to the global market as the mammoth operation ramps up, putting downward pressure on prices. This comes as China’s economy — the world’s biggest consumer of iron ore — continues to lose momentum heading in to the new year. An ongoing contract stoush between BHP and China’s main iron ore buyer, which wants bigger discounts on the iron ore it purchases from BHP, could also set a precedent that bodes ill for WA’s miners and bottom line. Gold It was nothing short of a golden year for the precious metal. In March, an ounce of gold cracked $US3000 for the first time on record, then the milestones kept tumbling and tumbling with little resistance. Bullion has now surpassed $US4450/oz and most gurus are predicting the $US5000 barrier will be breached next year. US President Donald Trump’s antics have been a boon for gold and the prospect of a United States invasion into oil-rich Venezuela is the latest catalyst for rising demand in the safe haven asset. And there still could be a fair way to run. “Bull markets for gold have historically run for about five to seven years. We’re currently only about three years into the current bull market,” Drummond Knight Asset Management portfolio manager Kenneth Wan told The West Australian in October. Even if the smart money is wrong and the gold price goes south, WA’s miners have a healthy buffer. Most of WA’s gold miners would still make a decent profit if the price drops $US1000/oz. Gold royalties also make a relatively meagre contribution to the State’s coffers compared to iron ore. Rare Earths No commodity was more talked about this year than rare earths — a group of 17 elements with a similar chemical composition. Rare earth elements have a wide variety of manufacturing uses but it is their military applications putting them at the centre of a geopolitical tug of war. Rare earths are required to build things like laser-guided missiles, fighter jets and submarines. China has a near-total control of the global rare earths supply chain, giving it a massive bargaining chip amid simmering trade tensions with the US. In response to China’s growing threat, Uncle Sam and the Albanese Government in October signed a multi-billion-dollar pact to develop rare earth mines and refineries — mainly in Australia. Public and private cash has poured into numerous ASX-listed companies in recent months to build up these sources of rare earths supply. But a big obstacle looms in the year ahead. Take a look at everything around you — most of it is made in China. Mining and refining equipment is no different. Is China willing to sell the goods needed to build a rare earths processing plant at reasonable prices to Australian customers that are going use it to weaken Beijing’s geopolitical position? Probably not. Expect major cost blowouts from the suite of rare earths projects being developed in WA and over east. Lithium It was topsy-turvy year for WA’s lithium miners. The going price of the spodumene concentrate they all produce started the year at about $US820 per tonne, fell below $US600/t by June, then climbed above $US1200/t to end the year. A price of about $US1000/t is seen as the rough benchmark where WA’s lithium industry as a whole is profitable. The price rally during the second half of 2025 was driven by China revoking a number of lithium mining permits as part of a broader regulatory cleanup, plus sharply growing demand for lithium as an input for energy storage systems, such as the Tesla Powerwall. The biggest Chinese lithium mine caught up in the permit drama is expected to come back online imminently. Analysts are divided over whether China’s likely move to boost its lithium mining output in 2026 will outweigh the emerging energy storage demand. It’s shaping up to be another volatile year for the battery metal.