Iron ore production has shifted dramatically in the past year following mine closures due to global oversupply in 2013.
Specifically, lower-than-expected Chinese demand for iron ore coupled with dramatic increases in output forced mines in Australia, Canada and China to close or halt production. Those closures could bring the market for iron ore back into a state of equilibrium, but it may take some time.
Equilibrium could also be spurred by improvements in the global economy, which would propel demand for steel and elevate demand for iron ore. Again, however, that will likely take some time.
With those factors in mind, it’s interesting to look at the 10 top iron ore-producing countries of 2014. Here’s an overview of those countries based on statistics provided by the US Geological Survey (USGS).
Mine production: 1,500 million tonnes
China is both the world’s largest iron ore consumer and its biggest producer. The country’s mine production dwarfs that of other major producers, and despite the mine closures mentioned above, its production is expected to remain strong in the future.
That said, the rapid decline in the iron ore price has made it difficult for China’s less-efficient iron ore producers to compete. In response, the country recently announced plans to cut the tax on domestic iron producers by as much as 40 percent, according to Reuters. While that will increase the competitiveness of those producers, it will also bring more iron ore into market, exacerbating current oversupply issues and likely keeping the metal’s price low.
Mine production: 660 million tonnes
Australia’s 2014 iron ore production came in at 660 million tonnes, a huge increase from 609 million tonnes in 2013. That increase has contributed to the current oversupply and in turn the oversupply is expected to impact the Australian economy. Australia’s treasurer, Joe Hockey, told the Australian Financial Review that the decline in iron ore demand will reduce the country’s revenue by AU$25 billion over the next four years.
Mine production: 320 million tonnes
Like other major iron ore producers, Brazil is feeling the negative effects of the lower price and weak demand. However, it still put out 320 million tonnes of the metal last year.
The country is home to the world’s largest iron ore mine, the Carajás mine. The mine, which is owned by the Brazilian industry giant Vale (NYSE:VALE), has proven and probable reserves of 7.2 billion tonnes of iron ore.
Mine production: 150 million tonnes
Indian iron ore production has held steady over the past two years at 150 million tonnes, but the country is rapidly becoming a major importer of the metal, and could offer hope to countries that need a market for their iron ore output.
Production of iron ore in India may increase in the future, but that will require substantial investment into new mining technologies. Until that point, the country is likely to remain a net importer of the metal.
Mine production: 105 million tonnes
Despite the global slowdown in demand for iron ore and the huge decline in its price, Russian companies intend to grow their iron ore production during the next few years. Bloomberg reported at the end of last year on the plans of Metalloinvest Holdings, which will invest billions of rubles in new iron ore production.
Mine production: 82 million tonnes
The closure of steel production facilities in Ukraine has the potential to push a greater amount of the country’s annual iron ore production into the export market, according to research firm Wood Mackenzie. That could further contribute to oversupply and downward pressure on the iron ore price.
7. South Africa
Mine production: 78 million tonnes
Mining Weekly notes that South Africa was the third-largest exporter of iron ore to China as of 2013. That should provide an indication of how dramatic the effect of faltering Chinese demand could be on the South African economy.
8. United States
Mine production: 58 million tonnes
Despite the weakening global market, US iron ore mine production is anticipated to increase in 2015, according to the USGS. As of 2014, the country produced and consumed just 2 percent of the world’s overall iron ore.
Mine production: 45 million tonnes
Iran’s 2014 production of 45 million tonnes of iron ore represents a decline from previous years and an effort to respond to changing market conditions.
Prior to the slowdown, Mineweb reported massive increases in the amount of iron ore being exported from Iran to China. In 2013, the government instated heavy export taxes on the metal to capitalize on the high level of exports.
Mine production: 41 million tonnes
Canadian iron ore production fell last year, and the USGS notes that will likely increase the amount of iron ore it imports. Meanwhile, domestic production will likely sink further moving forward.