Recently, Fitch’s advisory company – Benchmark Mineral Intelligence (BMI), Benchmark Mineral Intelligence released a forecast report, 2023-2027, the average annual growth rate of global iron ore production is expected to be 2.3%, In the previous five years (2017-2022), the index was -0.7%. This will help boost iron ore production by 372.8 million tonnes in 2027 compared with 2022, the report said.
At the same time, the pace of global iron ore production will further accelerate.
The report pointed out that the future global iron ore supply increase will mainly come from Brazil and Australia. At present, Vale has revealed an active expansion plan to the outside world. At the same time, BHP Billiton, Rio Tinto, FMG also plans to invest in new expansion projects. Examples include Iron Bridge, which is being pursued by FMG, and Gudai Darri, which is being pursued by Rio Tinto.
The report said that in the next three to four years, China’s iron ore production will increase. At present, China is trying to increase the level of self-sufficiency and gradually wean itself from the dependence on Australian mines. The active development of the “cornerstone plan” has promoted the expansion of production of Chinese mining enterprises, and also accelerated the development of overseas equity mines by Chinese companies such as Baowu, such as the Xipo project of China Baowu and Rio Tinto. The report expects mainland Chinese companies to prioritise investment in overseas iron ore mines, such as the huge Simandou mine.
The report also predicts that from 2027 to 2032, the average annual growth rate of global iron ore production is expected to be -0.1%. According to the report, the slowdown in production growth may be caused by small mines shutting down and lower iron ore prices causing large miners to reduce investment in new projects.
According to the report, from 2023 to 2027, Australia’s iron ore production will grow at an average annual growth rate of 0.2%. It is reported that the average production cost of iron ore in Australia is $30 / ton, West Africa is $40 / ton ~ $50 / ton, and China is $90 / ton. Because Australia is at the bottom of the global iron ore cost curve, it is expected to provide a healthy buffer against a fall in global iron ore prices over the next few years.
Brazil’s iron ore production is set to rebound over the next few years. According to the report, this is mainly due to the region’s lower production and operating costs, more adequate project reserves, resource endowments, and increasing popularity of Chinese steelmakers. The report predicts that from 2023 to 2027, Brazil’s iron ore production will grow at an average annual growth rate of 3.4%, from 56.1 million tons to 482.9 million tons per year. However, in the long run, the growth rate of iron ore production in Brazil will slow down, and the average annual growth rate is expected to be 1.2% from 2027 to 2032, and the production will reach 507.5 million tons/year in 2032.
In addition, the report also revealed that Vale’s Serra Norte mine Gelado iron ore will expand production this year; The N3 project is expected to start in 2024; The S11D project has already ramped up production in the first three quarters of the financial year, helping to boost iron ore output by 5.8 per cent year-on-year to 66.7m tonnes, with the project expected to expand capacity by 30m tonnes a year.