Marketing
The Iron Ore market continues to be dominated by growth in demand from China. In CY 2006, China imported 328.2Mt of iron ore with Chinese imports for Jan/Feb 2007 being 26% above the same period in 2006.
Iron Ore prices have risen considerably over the past four years.
- 2004 + 18.6%
- 2005 + 72.0%
- 2006 + 19.0%
- 2007 + 9.5%
Industry analysts are predicting a further price increase for 2008.
China's economic growth is expected to average approximately 9% to 2011. Steel production is also forecast to contining growing to a stage where Chinese Iron Ore imports could exceed 600Mt by 2011.
Production and seaborne trade in Iron Ore is dominated by three companies: BHP Billiton, Rio Tinto and CVRD of Brazil, the three companies controlling +75% of the world’s seaborne trade.
As a result of the market domination by the ‘Big Three’, Chinese steel mills and trading organisations, (both private and Government owned/controlled), are actively courting small Iron Ore producers to secure independent sources of supply.
RMC is participating in discussions with potential end-users including privately owned Chinese steel mills and other interested parties with the objective of securing equity participation in the Argyle Project to support further work.
China’s dramatic increase in Iron Ore demand, particularly for Fines, has been met from a variety of sources.
A portion of the Iron Ore import demand is satisfied by spot sales from India suppliers where the Fe content varies from 56 to 63.5%. The lower grade material, (Fe 56% to 60%), fetches a lower price. As a result, companies such as RMC need to be able to differentiate their products to maximise price and revenue return. Ideally, fines need to have an Fe content above 60%.
Iron Ore of the type found at the Argyle Iron Ore deposit, varies in terms of grade and clay type minerals. In order to meet the Fe content objectives of above 60%, the majority of the Argyle ore will require some processing to ‘beneficiate’ (upgrade), the ore quality.
RMC believes that there is potential to improve the ore grade by a crushing and screening process.
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