The four major mines in the world have actively expanded their production to compete for the market with cost advantages.

The four major mines in the world have actively expanded their production to compete for the market with cost advantages.

Business News
2018/01/24 14:34
International iron ore prices have dropped more than 30% this year. However, despite the fact that the world's four major mines have not been competing to cut production, they have continued to actively raise their iron ore production capacity in an attempt to offset the adverse impact of declining ore prices and hoped to take advantage of cost advantages The high cost of mining out of the market, so as to compete for market share.
Iron ore business is crucial to the profitability of mining giants, so mining giants BHP Billiton, Rio Tinto and Vale are spending billions of dollars to expand iron ore production capacity to meet demand from China. With the continuous release of new capacity, the output of the four major mines in the world hit a record high in the second quarter of this year. Driven by higher productivity, Rio Tinto's iron ore production in the second quarter rose 11% YoY to 73.1mt. The company's production target for 2014 remains at 295 million tons, up 11% from 266 million tons in 2013. In May this year, the company's Pilbara mining, rail and port operations system to achieve an annual output of 290 million tons of iron ore operating rate, two months earlier than originally planned. Currently, the company is working on the next phase of expansion. As some low-cost mines are put into operation, the iron ore production capacity will reach 330 million tons by 2015 and will further increase to 360 million tons by 2017.
BHP Billiton produced 56.64 million tonnes of iron ore in the second quarter, up 19% from a year earlier, reaching a record 204 million tonnes in the 2013/14 fiscal year, exceeding the initial target production by more than 8%, mainly due to the gradual increase in production at the Jimblebar iron mine and Comprehensive supply chain to improve the driving force. The company expects the iron ore production in Western Australia to increase by 20 million tons to about 245 million tons (in 100% shares) in FY 2014/15. The company is working hard to raise its annual iron ore production capacity to 2.6-2.7 billion tons, and its low-cost expansion of Jimblebar's annual production capacity to 55 million tons and the bottleneck of its supply chain will support this goal.
FMG Group's iron ore production in Q2 increased 28% YoY to 43.8mt, mainly due to higher production efficiency and stronger continuity of production during the dry season. In June this year, the company shipped 13.3 million tons of iron ore and recorded an annualized production capacity of 160 million tons. FMG has invested $ 9.2 billion in the 2013/14 expansion to expand its annual capacity to 155 million tons and the company continues to focus on cost control with the aim of becoming a low cost producer of global iron ore cost curves Business
Vale, a Brazilian mining giant, is also aggressively expanding its production to compete with Australian miners for market share. In the second quarter, the company's iron ore output was 79.45 million tonnes (excluding Samarco production), up 12.6% YoY, the highest in the same quarter. The company is aggressively boosting production in the Caracas mine and will be able to reach 460 Mtpa of iron ore by 2017 once the SerraSul and SerraNorte projects are completed. Mining giants generally agree that rising iron ore supplies from seaborne shipping sources in Australia and Brazil will force high-cost miners such as China and India to withdraw from the market and help to ease the over-supply situation in the market, thus supporting ore prices. In addition, these large mines are low cost and have economies of scale and can withstand a certain degree of decline in ore prices.
Meanwhile, mining giants are also optimistic about China's demand outlook. Rio Tinto recently said that the short supply of iron ore in the short term does have an impact on prices, but the market demand is still quite strong. In addition, as the pollution problem worsens, the demand for high-quality iron ore in China has also increased. According to the FMG, the price of iron ore has bottomed due to the strong performance of China's important economic data and the continuous self-adjustment of the market in recent months. Vale also predicts that Chinese demand will maintain its upward trend, with iron ore prices rising to $ 110 / t in the long run.




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