While the collapse in crude oil prices has captured most of the headlines in the U.S., the price of iron ore has suffered a decline of roughly equal magnitude over the past year. That’s no small thing to Australia, which is the world’s largest exporter of the base metal, or to our Aggressive Holdings BHP Billiton Ltd. (ASX: BHP, NYSE: BHP) and Rio Tinto Ltd. (ASX: RIO, NYSE: RIO), two of the world’s leading producers of iron ore.

Although Australia certainly has an abundance of in-demand natural resources, iron ore is not only the country’s top export, it dwarfs the runners-up in terms of total value. According to Australia’s Department of Foreign Affairs and Trade, in the 2014 financial year (ended June 30) the country exported USD68.6 billion worth of iron ore and concentrates, accounting for about 22.6% of total exports by value.

By comparison, coal and natural gas, which are also hugely important to Australia’s economy, ranked second and third, accounting for 12.1% and 4.9% of total exports by value, respectively.

To be sure, that was a record year for iron ore exports, and it also marked the last gasp of the country’s decade-long resource boom. Unexpectedly strong demand resulting from Chinese restocking during the latter half of 2013 helped the metal defer a widely expected decline until 2014.

But even in the prior financial year, when the total value of exported iron ore was almost 24% less, it still accounted for nearly 19% of the country’s exports by value. And with Australia’s exports contributing around 20% of the country’s annual gross domestic product, the metal’s retreat has been consequential for the economy.

From its last peak in December 2013 at $138.70 per metric ton, iron ore has fallen 55%, to $62.42 per metric ton, and currently trades just above the cycle low hit early last week.

A big part of the story is flagging demand from China, whose massive investment in construction and infrastructure—and the steel that undergirds it—has made the country the world’s top consumer of iron ore.

Australia’s proximity to China has been fortuitous, with it well situated to accommodate the Middle Kingdom’s seemingly insatiable demand for raw materials. But now that China’s slowdown has caused demand to wane, it also highlights the extent to which Australia’s economy had become overly dependent on the mining sector for growth.

Of course, there is one last phase of the mining boom: A number of projects that were in their investment phase at the peak began entering production over the past year. But that actually helped hasten the decline in iron ore prices, as miners attempted to offset falling prices by ramping up volume, ultimately creating a glut of supply.

At current levels, the price of iron ore simply can’t sustain the mining operations of many small- and medium-sized players. Naturally, this has not escaped the attention of the mining giants, which have boosted their production to sideline higher-margin competitors.

For instance, Rio Tinto says it plans to produce 18% more iron ore from its Australian mines this year, while BHP says it will raise its production by 11%.

“Putting more material into an oversupplied market may seem foolish, but if you’re the best at what you do and the higher-cost mines drop out, why wouldn’t you do it?” said Ric Ronge, a Melbourne-based fund manager for Pengana Capital, in an interview with the Wall Street Journal.

If that sounds familiar, it’s because it’s broadly similar to the drama playing out in the crude oil arena, where OPEC has refused to cut production in an economic and geopolitical power play.

Regardless of the industry, a downturn gives the players with strong balance sheets and sufficient scale the opportunity to expand market share while picking up solid assets from troubled competitors on the cheap.

But even if the big boys successfully position themselves to extend their dominance over the long term, that doesn’t mean they won’t suffer in the short term, as the volatility in share prices attests.

The process may be painful, but at a certain point a bust becomes a prelude to the next boom. Of course, the cyclicality of key commodities such as iron ore is ultimately tied to the health of the global economy. And the dramatic moves in recent weeks among the world’s central banks to shift into monetary-easing mode don’t exactly instill confidence.

China, itself, has not been immune to fears that disinflation will turn into deflation, and its policymakers have also undertaken easing measures.

As we’ve seen previously, central bank largess tends to hit rate-sensitive sectors such as real estate first, and with iron ore as the primary feedstock for steel, that could eventually provide support for the base metal.

But that may not happen until supply and demand come back into balance. And with the likelihood of another record year of iron ore production, a meaningful price rebound seems increasingly distant, as is characteristic of a bust phase.

For example, Australia & New Zealand Banking Group Ltd. grabbed headlines earlier this week when it slashed its price forecasts for iron ore by as much as 30%.

The bank’s analysts expect the raw material will average $58 per metric ton in 2015, down from its earlier estimate of $77 per metric ton, and $60 per metric ton next year, down from a prior forecast of $85 per metric ton. Underpinning these projections is an estimated jump in the global surplus to 85 million tons from 39 million tons in 2014.

On the bullish front, analysts with Morgan Stanley expect iron ore prices to average $78 per metric ton this year, though they’re admittedly counting on the seasonally strong period that follows the Chinese New Year through the summer to provide the impetus for the lift from current levels.

They acknowledge that the risk to this forecast is that a number of Chinese steelmakers have idled production in recent months as local steel prices tumbled to lows last seen during the Global Financial Crisis.

As per usual, the consensus essentially splits the difference. Based on data aggregated by Bloomberg, the consensus forecast among the 14 analysts who’ve updated their numbers since the beginning of the year is for iron ore to average $72.55 per metric ton this year, and then rise to $77.55 per metric ton in 2016.

DIVIDEND WATCH LIST: Impaired Resource

Mining services provider/iron ore producer Mineral Resources Ltd., late of the AE Portfolio Aggressive Holdings, is on the verge of declaring a much lower fiscal 2015 interim dividend versus what it paid a year ago.

MinRes remains one of the best mining services companies in Australia, with a top-tier client list and solid revenue tied to production rather than exploration. This side of the business continues to book new contracts, too. But the company’s recent foray into iron ore production coincides with a steep decline in the price of the commodity.

Output continues to ramp up at MinRes’s key mines in the Pilbara and Yilgarn regions of Western Australia, as management reported company-record fiscal 2015 second-quarter and first-half iron ore shipments.

The trouble is the price of iron ore has tumbled another 14% so far in 2015 after falling 47% in 2014.

MinRes’s management has always described its iron ore production activities as peripheral to its core mining services business, with an eye on eventually selling the former assets. The commodity slump extends the timeline for a cash-generating disposition.

Meanwhile, MinRes, based on management’s policy of distributing 50% of net profit and the consensus earnings forecast, will likely pay an interim dividend of AUD0.15 per share, down 50% from AUD0.30 a year ago.

We sold MinRes from the Portfolio to streamline our basic materials exposure to those companies best suited to ride out commodity-price weakness due to their scale, BHP Billiton Ltd. (ASX: BHP, NYSE: BHP) and Rio Tinto Ltd. (ASX: RIO, NYSE: RIO).

Mineral Resources remains a sell.