Iron ore production has been been on a tear lately.
Leading iron ore companies in Australia and Brazil are working to increase output, and last year Brazil’s Vale (NYSE:VALE) produced a record 349 million tonnes of iron ore — above its own guidance, according to Reuters. The lift in India’s mining ban has also played an integral role in increasing iron ore output.
Prices for iron ore are also on the rise. Market Realist notes that prices finished 2016 up 80 percent, and averaged $58.50 per tonne for the year. Unsurprisingly, Chinese demand was instrumental in pushing prices up. In 2017, iron ore prices have continued to rise, reaching $92.23 per tonne on February 13. That’s the highest level since August 2014.
With that in mind, it’s interesting to look at the 10 top iron ore-producing countries in 2016. Here’s an overview of those countries, with data provided by the US Geological Survey (USGS).
Mine production: Useable ore: 825 MT; iron content: 491 MT
First on the list is Australia, whose useable iron ore output was 825 MT in 2016. That’s a higher number than was seen in 2015, and the increase was no doubt helped by Australia’s leading iron ore producer, BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT).
The company reported record production for the second half of 2016 at its Jimblebar mine. More specifically, it put out 136 million tonnes of iron ore in the last half of the year — a 6-percent increase from the previous year.
Mine production: Useable ore: 391 MT; iron content: 254 MT
Useable iron ore production in Brazil totaled 391 MT in 2016. As mentioned, Vale achieved record production, with 349 million tonnes of iron ore produced. Bloomberg notes that 2016 was the second year in a row that the company reached a production record.
Moving forward, Vale plans to shift its focus from production in Minas Gerais state to higher-grade deposits in the north of the country. The shift is an attempt to bring down costs.
Mine production: Useable ore: 353 MT; iron content: 219 MT
China is the world’s largest consumer of iron ore, despite being only the third-biggest producer of the material last year.
The country’s iron ore purchases reached an all-time high in 2016, recording an annual rise of 7.5 percent and passing 1 billion tonnes. According to Market Realist, the increase was the result of two things: strong steel demand, and domestic iron ore replacing imports from Australia and Brazil.
Mine production: Useable ore: 160 MT; iron content: 98 MT
Iron ore production in India has turned a new page since mining bans were lifted. However, the country is now a less significant supplier to China than it once was. Historically, it supplied up to 10 percent of China’s iron ore, but in 2016 it accounted for only 1.5 percent of China’s total iron ore imports.
Iron ore production in India is expected to grow by 185 million tonnes over the next four years, with average annual growth of 6.9 percent projected from 2017 to 2021.
Mine production: Useable ore: 100 MT; iron content: 60 MT
Iron ore production in Russia is trending upward, and its mining and steel group, Metallionvest, reported higher output of the material last year. In total it put out 25.2 million tons of iron ore, up 5.9 percent from 2015.
Mine production: Useable ore: 58 MT; iron content: 35 MT
In 2016, useable iron ore production in Ukraine was 58 MT. Iron ore companies in the country are currently producing less than they have in the past because Alchevsk Steel Works has halted the smelting of cast iron.
7. South Africa
Mine production: Useable ore: 60 MT; iron content: 38 MT
Mine production: Useable ore: 48 MT; iron content: 29 MT
Production in Canada totaled 48 MT of useable iron ore in 2016.
Champion Iron (TSX:CIA) is one company pursuing iron ore production in the country. It is focusing on developing iron ore resources in Quebec, and in 2016, it acquired the Bloom Lake mine. The completion of a feasibility study was announced on February 16, 2017; it shows that the mine has the potential to be competitive in the global iron ore market.
9. United States
Mine production: Useable ore: 41 MT; iron content: 26 MT
According to the USGS, iron ore production in the US dropped in 2016 due to a decrease in steel produced from oxygen furnaces. Overall, US steel production fell to 78.9 MT in 2015 from 88.2 MT in 2014. Steel production rose to 80 MT in 2016.
Furthermore, last year six iron ore mines in the US were either idled, closed permanently or had their output reduced. The USGS notes that one open-pit mine in Minnesota remained “indefinitely idled” as of November 2016, with no plans for reopening. In Michigan, an open-pit mine was permanently shut down at the end of August 2016.
Mine production: Useable ore: 26 MT; iron content: 11 MT
Closing out the list is Iran. As the Financial Tribune notes, the country exported 15.15 million tons of granulated iron ore during the 10 months ended January 19, 2017; that’s up 50 percent from the previous year. The country is hoping to export between 20 and 25 million tons of steel by 2025.
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.
This article is updated each year. Please scroll to the top for the most recent information.
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.