CANBERRA The Australian government could lose billions in tax revenue due to a sharp decline in global iron ore prices, according to a new treasury analysis released by Treasurer Jim Chalmers, reported Xinhua.

If prices drop to US$60 per tonne by the end of September, it could result in an A$3 billion (US$$2 billion) shortfall in the 2024-25 financial year.

Iron ore prices fell to US$81.80 per tonne last Thursday, the lowest since November 2022, and down from US$120 per tonne when Chalmers handed down the federal budget for 2024-25 in May.

The treasury analysis warned that if the downturn continues, the price could fall to US$60 per tonne by the end of September, six months earlier than forecast in the budget, causing tax revenue to decrease.

Chalmers said in a statement that the falling iron ore price is a reminder that Australia is not immune to volatility and uncertainty in the global economy.

"This is exactly why we take such a cautious and conservative approach to Treasury's forecasts for resource prices and revenue," he said.

"We are following these developments very closely, because of their potential impact on our economy and our budget."

Australia is the biggest producer and exporter of iron ore in the world, with exports worth A$138 billion in 2023-24.