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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Page 56 of 91

IRON ORE OUTLOOK OCTOBER 2018 • E&MJ 55 China and the Production of Iron Ore In 2017, the production of raw ore in China was 1.322 billion mt, an increase from last year of 1.9% (1.296 billion mt), according to the Chinese National Bureau of Statistics. The actual need for iron ore based on the production of pig iron would be 695 million mt (if a 96% Fe content is applied to the pig iron), an increase of 3.1% compared to 2016. While the most commonly traded iron ore is 62% Fe, there are iron ores traded with higher and lower grade. For example, of Rio Tinto's exports, 73% is related to Pilbara products, which has a 62% Fe grade, but another 17% is the Yandicogina fines, which has an Fe grade of 58%. BHP Billiton stated they have an average Fe content of 61% in their products. FMG's products range from 56%-59% Fe. While Vale and Kumba has slightly higher grades in their products, both around 64% Fe. Thus, if this is taken into consideration, the average grade of imported iron ore into China is around 61% Fe. This would be equal to a need of 1.14 billion mt of iron ore. The actual import of iron ore into China was 1.075 billion mt in 2017, making the need for locally produced iron ore reach 84 million mt. After that, the resulting figure has been adjusted to a 20% loss in trans- port, concentration and the pig iron production. Further, a loss in the blast furnaces of 1% is added, which equals 11 million mt. These adjustments may appear high, but it has to be re- membered that concentration losses in the country are likely to be high compared to international practice, given the low grade of the run of mine ore and losses in the blast furnaces may very well be high compared to other countries with a more developed steel industry. Further, there has been a buildup of stocks in Chinese ports equal to 23 million mt over the year, which would push up the need for locally produced ore by the same amount. Consider- ing these calculations, the need for locally produced iron ore reaches some 115 million mt. An important caveat in this cal- culation is that it does not take into account stocks of locally produced iron ore. Considering the sharp decrease of produc- tion of raw iron ore in China for the first eight months of 2018, down 40% compared to the same period last year, it seems likely that many mines have been forced to close. It is further not implausible that these mines carried on operations for a certain time in the hopes of selling their iron ore and thus built up some stocks before shutting down production. This would make the calculated figure of needed locally produced iron ore an understatement in comparison to the actual production of iron ore in China. However, stocks of local iron ore at steel plants seem to have been limited during 2017 without much, if any, buildup, which implies that sales of locally produced iron ore should be in line with the calculated figure of needed locally produced iron ore. The Australian government's Depart- ment of Industry Innovation and Science in their Resource and Energy Quarterly June 2018 estimates the Chinese iron ore production to roughly 150 million mt in 2017, a slight in- crease from 2016. Rio Tinto in a presentation from June 2018 to investors estimates Chinese iron ore production to around 250 million mt. It is clear different views exist on how to eval- uate the Chinese iron ore production and within this article, we have chosen to quote the need for iron ore calculated above instead of the production of iron ore as this gives a better un- derstanding of the balance globally. Mined raw materials travel along extensive transport routes. Overland and pipe conveyors are an energy e cient, reliable and environmentally friendly way of transporting the commodities over long distances to the plant or storage area. We customise the curved belt conveyors to overcome any challenging topographical circumstances. This minimises the transfer points and the number of systems and reduces investment, operational and maintenance costs. For more information visit SOME THINK RAW MATERIAL TRANSPORT REQUIRES A COMPLEX INFRA- STRUCTURE. WE THINK DIFFERENT.

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