PERTH (miningweekly.com) – Australian Federal Treasurer Joe Hockey on Monday said he could have been “more prudent” with an iron-ore price forecast when announcing the mid-year Budget update, in December, and that he was factoring in a price as low as $35/t for next month’s Budget announcement.

Speaking to the ABC TV from New York on Monday, Hockey said that there was no doubt that the falling iron-ore price would have an impact of Australia’s Budget, given that the commodity was the country’s largest export.

“When we came to government it was hovering around $100/t. Now, it's close to $40/t. Everyone said that I was being way too conservative writing down the prices. I'm glad I was prudent, with the benefit of hindsight I could have been even more prudent.”

In the December mid-year Budget update, the Treasury used a $60/t estimate for iron-ore prices.

Hockey also told The Australian Financial Review that the government was contemplating an iron-ore price as low as $35/t, which meant that $25-billion in revenue could be lost over the next four years.

However, Hockey said in his ABC interview that the federal government would not chase the fall in revenue left by the falling iron-ore prices.

“We're not going to be imposing new taxes in order to try and recover that lost revenue. What we want to do is to grow the export opportunities in Asia, particularly for services exports; but whatever the case, we've got to be able to have a very clear, predictable trajectory back to surplus based on reducing expenditure and living within our means,” Hockey said.

Prices of iron-ore, a key steelmaking ingredient, have slumped over the past year as demand, particularly from China, slowed rapidly.

The price crumble had already led to at least one Australian iron-ore miner pulling the plug on production, with Atlas Iron announcing on Friday that it would mothball its production as prices were at a point that it was no longer viable for the company to continue operations.