Engineering & Mining Journal

OCT 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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IRON ORE OUTLOOK OCTOBER 2018 • E&MJ 51 www.e-mj.com Phone: (970) 259-0412 | www.miningequipmentltd.com Mining Equipment has been supplying the tunneling and mining industries with top quality underground equipment for more than 35 years. With our depth of experience and broad range of new and used equipment, our dedicated sta will work closely with you to determine and fulfill your equipment needs. Locomotives Rolling Stock Scooptrams Drill Jumbos Mine Hoists Stage Winches Ventilation Equipment GOING Mining Equipment has been supplying the tunneling and mining industries with top quality underground equipment for more than 35 years. With our depth of experience and broad range of new and used equipment, our Locomotives Rolling Stock Scooptrams GOING GOING ABOVE & BEYOND Fe qualities exported from Australia be- came the globally recognized pricing ba- sis. Through the boom years, steel compa- nies were more interested in feeding their blast furnaces than worrying about quali- ties. The 62% Fe price worked well as a basis for price setting of various qualities. The global increase of iron ore production consisted mainly of low-quality ores with iron content less than 62%. A lack of high-quality iron ores has been the result. Attempting to reduce environmental prob- lems and diminish waste of energy as well as to improve productivity, China has start- ed to demand higher qualities of iron ore. The price spread between low-quality iron ores (below 58%) and the 62% standard product on the one hand and high quali- ty (above 65%) and the 62% standard on the other, has increased. The discount for 58% iron ore price compared to 62% ore increased to on average $29/mt in 2017, compared to $14/mt in 2016. The premi- um paid for 65% Fe is substantial, in some periods during 2017, it has reached 40% on top of the 62% Fe index price. On av- erage, over 2017, the premium paid has reached $16/mt, up from $7/mt in 2016. Thus, it will be more important to clarify which quality is referred to, when giving an iron ore price projection in the future. Project Pipeline In 2017, global production of iron ore increased by 58 million mt. Most of this tonnage came from Australia where large- scale project ramp-ups took place. In Bra- zil, Vale continued to gradually increase production at the 90-million-mt-per-year (mt/y) S11D mine in Carajas. The project is currently 88% complete, after $6.576 billion have been invested. Full capacity is expected in the second half of 2019. Production in 2017 at S11D reached 22 million mt. The project accounts for 82% of Vale's investment budget for 2018. Rio Tinto had two major projects in the pipeline: the Koodaideri at a feasibili- ty stage and the 10-million-mt/y Silver- So far in 2018, iron ore price, 62% Fe CFR China, has been rather stable.

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