Iron ore prices are still fairly low, but the base metal has been on the rise so far in 2016. In light of that change, many investors may be looking for information on what exactly what differentiates the various types of iron ore out there.
Put simply, the different types of iron ore consist of rocks and minerals from which iron can be extracted. The metal is most often found in the form of hematite and magnetite, though goethite, limonite and siderite types of iron ore are also common. Approximately 98 percent of the types iron ore produced in the world is used to make steel.
Here’s an overview of what iron investors need to know about hematite and magnetite types of iron ore.
Types of iron ore: Hematite
Hematite gets its name from the Greek word for blood, haima, because of its reddish color. This is one of the types of iron ore that has very high iron content, and although the iron content of hematite itself is lower than that of magnetite, the mineral sometimes occurs in higher-grade deposits, often referred to as direct-shipping ore (DSO). This means that, due to its high iron content, such hematite ores may be mined and extracted with a fairly simple crushing and screening process before it is exported.
As Australia’s Magnetite Network explains, “[d]irect shipping ores, when mined, typically have iron (Fe) content of between 56% Fe and 64% Fe … By comparison, magnetite ore typically has a much lower iron content when mined of between 25% and 40% Fe and in this form is unsuitable for steel making.”
Hematite ore is found in abundance throughout the world, but the most utilized deposits are in Brazil, Australia and Asia.
Hematite ore has been the primary type of ore mined in Australia since the early 1960s, according to Geoscience Australia. Approximately 96 percent of the continent’s iron ore exports are high-grade hematite, and the majority of its reserves are located in the Hamersley province of Western Australia. The mountainous Hamersley Range is at the center of hematite ore exploration and development because it sits on a banded iron formation.
Brazil is another one of the world’s main sources of hematite ore. Its Carajas mine is the largest iron ore mine in existence, and is operated by Brazilian mining company Vale (NYSE:VALE). Vale is the third-largest mining company in the world and the largest producer of iron ore pellets. Vale’s headquarters are in Rio de Janeiro and its primary iron ore assets are in the Iron Quadrangle region of Minas Gerais.
In Asia, a great deal of mining for hematite ore is done in China. Known reserves include the Tung-Yeh-Chen hematite ore deposit and the Dongye hematite ore deposit.
Types of iron ore: Magnetite
As mentioned above, magnetite ore has a higher iron content than hematite ore, but often occurs in lower concentrations. That means it has to be concentrated before it can be used to produce steel. However, the ore’s magnetic properties help separate magnetite ore from rock during this process.
Magnetite ore is currently mined in Minnesota and Michigan in the US, as well as in taconite deposits in Eastern Canada. A major mining site in Michigan is the Marquette Range. The deposit was discovered in 1844, and ore was first mined there in 1848, as per the Michigan government’s website. Magnetite ore and hematite ore are among the four types of iron ore deposits found in this area.
In Minnesota, magnetite ore is mined mainly in the Mesabi Range, one of the four ranges that make up the Iron Range of Minnesota. In Canada, Labrador is home to the majority of magnetite ore mining. In particular, mining companies focus exploration and development on the iron-rich Labrador Trough.
Magnetite ore’s most distinctive property is its magnetism. It is the most magnetic mineral in the world. Additionally, obtaining iron from hematite ore can produce a great deal of carbon emissions, and the process for magnetite ore is much less harmful.
End products made from this type of iron ore are also of higher quality than that produced from hematite ore. The former has fewer impurities, making it a premium product that can be sold to steelmakers for higher prices. In this way, the elevated cost of processing magnetite ore can be balanced out.
Cliffs Natural Resources (NYSE:CLF) is a major player in the magnetite ore mining industry, with five iron ore mines that are focused on magnetite ore. For instance, the Empire mine, located in Michigan’s Marquette Range, has a rated annual capacity of 4.5 million tons. Additionally, its Hibbing taconite mine is in Minnesota’s Mesabi Range and has an annual rate capacity of 8 million tons of magnetite ore.
The company also owns an iron ore mining complex in Western Australia.
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This is an updated version of an article first published on Iron Investing News on September 5, 2013.