The premier of Australia's biggest resources state warned that the days of heady growth for China's steel industry are over and iron ore mining companies face a much more competitive environment as they look to complete expensive expansion programs.

Mr Colin Barnett premier of Western Australia state said that "The days of simply producing more iron ore and then just getting it absorbed into a market with a rapidly growing China have changed."

By the end of the decade, China's steel industry will have reached a stable level of production in opening BHP Billiton Limited's Integrated Remote Operations Center in the state capital of Perth.

With China's steel production forecast to reach about 780 million tonnes this calendar year up from 720 million tonnes in 2012 there is some growth left. But the days of heady growth figures, I think, are gone.

Mr Barnett expects BHP Billiton to continue expanding beyond the current iron ore upgrade which will take output to 220 million tonnes a year and is due to come on line next year. But it is going to be a far more competitive industry.

Western Australia is responsible for virtually all of Australia's iron ore exports, which have expanded rapidly in the past decade because of China's surge in demand for the steel making ingredient. But falls in iron ore prices, combined with rising costs, have seen several mining and construction projects deferred as the growth outlook for China moderates.