Treasurer Ben Wyatt has predicted WA’s short-lived iron ore bonanza is drawing to a rapid end with the spot price for the key commodity on track to fall back in line with the State Budget’s predicted $US73.50 a tonne.

The world’s biggest iron ore producer Vale was forced to close several of its mines in Brazil following dam collapses earlier this year, sparking a surge in prices that peaked at $US121/t in July.

The spot price today has fallen back closer to $US93/t and Mr Wyatt believes further falls are on the way.

“You look at the futures contracts, it is expected to decline over the next couple of years quite rapidly,” Mr Wyatt said.

“Ultimately we are now driven by uncertainty in global trade but also the fact that Brazil is bringing on supply much quicker than we thought.

“That is obviously going to put downward pressure on iron ore.”

Mr Wyatt said the volatility in the iron ore price – and the associated royalties returned to WA each year – highlighted the importance of conservative budgeting.

“Any Budget that is based on the upside of a volatile price is a dangerous Budget,” he said.

“That is why we have budgeted very, very conservatively. And even with short-term increases we haven’t gone about just assuming it is here to stay and spending it accordingly.”