Since this year, international iron ore prices have fallen by more than 30%. Nevertheless, the world's four major mines have not competed to reduce production. Instead, they continue to actively increase iron ore production capacity, trying to offset the adverse effects of the decline in ore prices, and hope to use cost advantages to squeeze high-cost miners out of the market, thereby competing for market share.
　　The iron ore business is crucial to the profitability of mining giants, so mining giants such as 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 production capacity, iron ore production from the world's four largest mines hit a record high in the second quarter of this year. Driven by increased productivity, Rio Tinto's iron ore production in the second quarter increased by 11% year-on-year to 73.1 million tons.The company's 2014 production target remains at 295 million tons, an increase of 11% from 266 million tons in 2013.In May this year, the company's Pilbara mine, railway and port operation system achieved an annual operating rate of 290 million tons of iron ore, two months earlier than originally planned.At present, the company is working on the next stage of expansion. With the commissioning of some low-cost mines, the annual iron ore production capacity will reach 330 million tons by 2015 and further increase to 360 million tons by 2017.
　　BHP Billiton's iron ore production in the second quarter was 56.64 million tons, an increase of 19% year-on-year. The output in the 2013/14 fiscal year reached a record 204 million tons, exceeding the initial target production by more than 8%, mainly driven by the gradual increase in Jimblebar iron ore production and the improvement of comprehensive supply chain capabilities.The company expects that Western Australia's iron ore production in the 2014/15 fiscal year is expected to increase by 20 million tons to about 245 million tons .The company is working to increase its annual iron ore production capacity to 260-270 million tons, expand the annual production capacity of the Jimblebar mine to 55 million tons at low cost, and de-bottleneck the supply chain will support it to achieve this goal.
　　FMG Group's iron ore production in the second quarter increased by 28% year-on-year to 43.8 million tons, mainly due to improved production efficiency and strong production continuity in the dry season.In June this year, the company shipped 13.3 million tons of iron ore, and its annualized production capacity reached a record 160 million tons.In the 2013/14 fiscal year, FMG's US99.2 billion expansion project to expand its annual production capacity to 155 million tons has been completed. The company continues to focus on cost control and aims to become a low-cost producer in the global iron ore cost curve.
　　Brazilian mining giant Vale is also actively expanding production, aiming to compete for market share with Australian miners.The company's iron ore production in the second quarter was 79.45 million tons (excluding Samarco production), an increase of 12.6% year-on-year, the highest level in the same quarter.The company is actively increasing the production of the Karagas mining area. After the completion of the SerraSul project and the SerraNorte project, the annual iron ore production capacity is expected to reach 460 million tons by 2017. Mining giants generally believe that the rise in the supply of iron ore by sea from Australia and Brazil will force high-cost miners such as China and India to withdraw from the market, which will help alleviate the oversupply situation in the market, thus forming a certain support for ore prices.In addition, these large-scale mines have low costs and economies of scale, and can withstand a certain degree of decline in ore prices.
　　At the same time, mining giants are also optimistic about the outlook for Chinese demand.Rio Tinto recently said that the oversupply of iron ore in the short term has indeed had an impact on prices, but market demand is still quite strong.In addition, with the increasingly serious pollution problem, China's demand for high-quality iron ore has also increased.FMG believes that due to the strong performance of important Chinese economic data and the continuous self-adjustment of the market in recent months, iron ore prices have bottomed out.Vale also expects that Chinese demand will maintain a growth trend, and iron ore prices will recover to US1110/ton in the long run.