Mining investment in Australia is expected to grow for the first time in seven years by four per cent in 2019/20 and another 9.5 per cent in 2020/21.

However, the Morrison government’s latest budget update assumes Australia’s iron ore price will decline to $US55 a tonne by the end of the December quarter.

Finance Minister Mathias Cormann said on Thursday that despite the iron ore price being around $US100 a tonne in recent times, the government was taking a prudent approach to it.

“It’s well known there can be volatility when it comes to iron ore prices so we continue to make sure we protect the stability of our budget settings in that context,” Senator Cormann told reporters in Canberra.

The budget update forecasts mining exports to increase by three per cent in 2020/21 after a rise of only 0.5 per cent in 2019/20.

“Iron ore exports are expected to increase due to ongoing demand from China as project expansions support production volumes,” it said.

“However, lower global coal prices are likely to result in some reduced Australian coal production.”

Investment in large iron ore projects is expected to continue.

“However, global uncertainty and lower commodity prices have led to delays in final investment decisions for new projects.”