Posted on 20 Aug 2020
Iron ore production will grow by an annual average of 2% to 3.7 billion tonnes in 2029, slowing from 3.4% annual average growth in 2010-2019, says Fitch Solutions. Growth will be driven by mine expansions in Brazil and increasing output from India. Chinese output will decline on the back of falling ore grades and high costs of production.
Australian iron ore output is forecast to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 9.2% growth over the previous ten-year period. This is due to mothballing of mines from junior miners, while major players will stick to their production growth targets to crowd out high cost producers, Fitch Solutions observes.
“Brazil's iron ore production growth will rebound in the coming years following 2019, due to low operating costs and a solid project pipeline,” Fitch Solutions says in a report sent to Kallanish. “Brazil will benefit from producing high-quality iron ore increasingly favoured by Chinese steel producers. We forecast Brazil's iron ore production to increase from 416 million tonnes in 2020 to 546mt by 2029, averaging 2.8% average annual growth.”
In the long term, China's iron ore production will edge lower over the coming years, as weak iron ore prices and tightening environmental regulations force higher-cost operations offline. Fitch Solutions forecasts the country's output to decline from 840mt in 2020 to 791mt by 2029.
China's iron ore imports will slow over the coming years in line with slowing steel production. “While we expect the overall volume growth of China's iron ore imports to decelerate, the country's tightening environmental standards will keep demand for high-grade iron ore relatively strong, putting a premium on prices,” Fitch Solutions says.
India's iron ore output growth will be supported by the removal of export taxes in the Union Budget for low-grade ores and the country's Mines & Minerals (Development & Regulation) (MMDR) Act. The latter will streamline licensing and reopen closed mines. Although the Act will support ore output growth, the royalties included in it will limit the sector's overall growth potential, Fitch Solutions says.
The reduction in export duties for iron ore lumps and fines below 58% Fe content was meant to boost shipments from Goa. However, since all iron ore permits in the state were cancelled in 2018, state output is likely to decline not grow.
Source:Kallanish
