AME‘s iron ore 62% spot price averaged US$122/t over 2022, a decrease of 24% from US$161/t in 2021. The 65% and 58% iron ore spot price averaged US$139/t and US$94/t in 2021, down by 25% and 26% year on year, respectively.
Last year was shaped by the recovery from the Covid-19 pandemic and disruptions caused by
Russia’s invasion of Ukraine. In 2022, the global iron
ore market reached US$160/t in early April due to expected robust restocking demand in China
when covid-19 restrictions were lifted.
However, the price gradually dropped to below US$85/t in early November as China’s
government was willing to take the economic damage rather than relinquish its
zero-Covid strategy.
In addition, China's government has put pressure on steelmakers
to maintain crude steel output in 2022 at the 2021 level of 1,035Mt. The
slowdown in China’s crude steel output also indicates its resolve to continue
reducing annual output in line with its decarbonisation goals. China produced a
total of 860.6Mt crude steel during the first ten months of 2022, down 2.2% year on
year. Therefore, AME expects China met its crude steel output target in 2022.
The price returned to above US$110/t in mid-December as China lifted the zero-covid policy and the expectations on production
resumed among steelmakers. The Chinese government has implied that it will further
support the country’s real-estate sector, as the government describes it as a fundamental “pillar” of for its economy growth.
AME expects the Chinese government will further invest in the
real estate and infrastructure sectors to boost economic growth. It is
estimated that real estate and infrastructure sectors account for ~30% and 25%
of steel demand in China, respectively. These sectors have been key to China’s
economic growth, but widespread lockdowns have led to lower activity.
Lump and pellet premiums are expected to remain well supported
by China's carbon emissions policies. China’s government estimates that carbon
emissions will reach their peak by 2030 and will be significantly decarbonised
by 2060. Therefore, it is expected that decarbonisation will boost demand for
direct feed iron ore products—pellet and lump. Pellet demand in China will be
seen to significantly increase as the domestic steel industry tries to lift pellet
ratio in blast furnaces to 30% by 2025, up from 17% in 2022.

Imports/Exports
The Chinese government has
established a state-owned enterprise group, China Mineral Resources Group,
which has registered capital of RMB20bn (US$3bn). Meanwhile, The China Iron and
Steel Association also approved the establishment of a committee for the iron ore
industry. The main aims of these measures are to provide more bargaining power
and secure stability by reducing external dependence on seaborne markets.
The new organisation is expected to become
the largest iron ore buyer who will import iron ore from 2023 on behalf of ~20
of the largest steel companies in China, including steel giant Baowu and
Ansteel. The two companies jointly produce over 230Mt of steel a year and are
expanding by merging with rivals. That indicates the new company will likely import
at least 460Mt of iron ore a year, or more than 40% of the Chinese demand.
Closures and Production Cuts

Pau Branco
French steel pipe maker Vallourec had to suspend
its Pau Branco iron ore mine in Brazil for five months from early January of
this year as the National Mining Agency (ANM) ordered after a dike at the
mine overflowed and cut off a federal highway. The dike overflow was caused by
rainfall on 9th January. Operations were partially restarted in May using an
alternative waste pile, albeit at lower-than-normal capacity levels. Vallourec
estimates that iron ore production from Pau Branco mine in 2022 will be 3.6Mt,
compared with 8.1Mtpa in 2021.
Vale
Vale’s production guidance in 2022 was revised to
310-320Mt, compared with a previous forecast of 320-335Mt due to heavy rain during
the March Quarter in 2022.
CSN
Brazilian steelmaker CSN estimates its production and
purchase guidance at 34Mt in 2022, down from previous production guidance of 39-41Mt,
due to heavy rain during the March Quarter of 2022.
Minas-Rio
Anglo American’s iron ore production from Minas-Rio
operation in Brazil for 2023 to 2025 will drop to 22–24Mt of iron ore in 2023,
24–26Mt in 2024 and 25–27Mt in 2025. The lower production forecast between 2023
and 2024 was primarily attributed to harder, more compact ore, while pipeline
inspections will impact 2025 volumes. Anglo American estimates Minas-Rio’s
iron ore production in 2022 to be ~22Mt, the low end of an original guidance of
22-24Mt.
Pilbara Operations
Rio Tinto indicated that full year 2022 shipments from
Pilbara Operations in Australia to be at the low end of the original 320Mt to
335Mt. This was impacted by rail outage on the Yandicoogina and Gudai-Darri
lines.
Yilgarn Hub
Mineral Resources’ iron ore production from Yilgarn
Hub in Western Australia is estimated to drop to 8Mt in 2022, down from 10.5Mt
in 2021, mainly due to increased operating costs for higher grade products and
falling realised prices.
Kumba Operation
Anglo American’s production from its Kumba operation
in South Africa will drop to 35–37Mt of iron ore in 2023, 37–39Mt in 2024 and then,
increase to 39–41Mt in 2025. the lower production forecast between 2023 and
2024 is mainly due to Transnet constraints on the line from Sishen to Saldanha
port.
Anglo American mentioned that it will take a lot of work to get Kumba
back to the 41Mt to 43Mt levels previously forecast. Anglo American
revised down Kumba's iron ore production in 2022 to 37Mt, from an original
38-40Mt, due to Transnet’s 12-day strike in October.
JWD
Australian junior miner CuFe has put its JWD iron ore
mine in Western Australia on care and maintenance, amid a drop in iron ore
prices and high haulage costs. CuFe said Its iron ore price declined
significantly from highs of over US$158/dmt in March to its current level of
~US$82/dmt. The company uses hedging to offset falling prices, but the coverage
is ending, resulting in a suspension of mining.
Ukraine
AME estimates that the iron ore production from
Ukraine will drop to 40Mt in 2022, from 76Mt in 2021 due to Russia’s invasion. Ukraine’s major iron ore producers, including Ferrexpo,
Metinvest and ArcelorMittal, had to reduce production due to logistical issues
and high energy costs in 2022. Production recovery and eventual increases are anticipated
to be a longer-term prospect.
New Mines

Miralga Creek
Atlas Iron’s
Miralga Creek iron ore mine in the Pilbara Region of Western Australia has
achieved first iron ore production. The Miralga Creek project is an extension
of the Abydos iron ore mine and will employ around 300 workers directly and
indirectly.
The Miralga
Creek mine is comprised of five open pits and is located 100km southeast of
Port Hedland. Atlas expects to extract 8Mt of iron ore from the mine over a
period of 4-5 years.
Bomi
Vedanta has
started mining operations at the Bomi iron ore project in Liberia. It had its
ground-breaking ceremony at the Bomi mine on 8th June, according to a
regulatory filing by Vedanta.
Rio Tinto’s
US$3.1bn (A$4.3bn) Gudai-Darri iron ore project, in the Pilbara region of
Western Australia, has achieved first iron ore production. The production
capacity of Gudai-Darri is 43Mtpa with a mine life of over 40 years. Production
output is expected to reach full capacity during 2023.
Gudai-Darri
Rio Tinto’s
US$3.1bn (A$4.3bn) Gudai-Darri iron ore project, in the Pilbara region of
Western Australia, officially opened on 21st June 2022.
The
production capacity of Gudai-Darri is 43Mtpa with a mine life of over 40 years.
Production output is expected to reach full capacity during 2023.
Rio Tinto
said that its Gudai-Darri mine is the most technologically advanced mine, which
utilises a host of new innovations, including the use of robotics for the ore
sampling laboratory, as well as for distribution of parts in the new workshop.
The mine also
adopts autonomous trucks, trains and drills to a full digital replica of the
processing plant which allows teams to monitor and respond to data collected
from the plant.
Moreover, Rio
Tinto has increased its focus on environmental issues. The mine uses paperless
field mobility technology to provide real time data and to eliminate paper base
system. Meanwhile, a solar farm will provide one third of mine’s average
electricity demand after it is completed in August 2022.
Iron Bridge
Fortescue
Metals Group (FMG) has confirmed that production from its Iron Bridge project
will start in the March Quarter of 2023, with 1Mt of iron ore concentrate
output in fiscal year 2023. The company indicates a 12-to-18-month ramp-up for
the project and expects to produce 7–11Mt in fiscal year 2024.
Onslow
The joint
venture between MinRes, Baowu, AMCI and POSCO, has made a final decision to
invest in the Onslow iron ore project in Western Australia.
The total
investment is estimated at ~ A$3bn (US$2.1bn). The first shipment from the
project, located at the western of the Port of Ashburton in the Pilbara region,
is expected in December 2023.
Rio Tinto and
China Baowu Steel Group have entered into a joint venture to develop the 25Mtpa
Western Range iron ore project in Western Australia's Pilbara region. The total
investment is estimated at US$2bn, with Rio Tinto contributing US$1.3bn and
Baowu US$700m. Rio Tinto and Baowu account for 54% and 46% interest in the
project, respectively. Construction is expected to begin in early 2023 with
first production anticipated in 2025.
Xi’anshan
Ansteel Group’s
ROM 30Mtpa Xi’anshan iron ore project in Liaoning province has begun
construction. The project will require investment of CNY22.9bn (US$3.25bn). In
September, the Liaoning government approved the mining licences of Xi’anshan
with design to produce ~10Mt of iron ore concentrate, securing the company’s
iron ore supply over medium to long term. The Xi’anshan project is expected to
be commissioned by 2027.
Expansions

Middleback
Ranges
GFG Alliance
has commenced an expansion at its Middleback Ranges magnetite iron ore mine, in
Whyalla, South Australia. The production rate will reach 2.5Mtpa with high iron
ore content to be fed to DRI processes at the steelworks in Whyalla, or could
be exported. In addition, it has produced the first GREENSTEEL pellets from its
Whyalla Plant in South Australia. The pellet feed was produced from the
company’s Middleback Ranges magnetite expansion operations.
Bloom Lake
Champion Iron
has achieved the first iron ore rail freight from the Bloom Lake mine expansion II
project in Quebec, Canada. Champion Iron recommissioned the mine in February
2018, starting with the Phase I project that had a nameplate capacity of
7.4Mtpa of 66.2% iron concentrate over a mine life of 21 years. According to a
feasibility study released in 2019, The Phase II expansion doubled the
nameplate capacity to 15Mtpa with a remaining mine life of 20 years.
Marampa
Gerald Metals
received all approvals to expand its Marampa iron ore mine in Sierra Leone to
7Mtpa, from the current capacity of 2Mtpa. Gerald Metals expects to achieve
7Mtpa by 2023. Marampa mainly produce 65% of iron ore for the export market.
The Sierra Leone government owns 10% of the Marampa mine.
Marcona
Shougang
Hierro Peru, a subsidiary of China’s state owned Shougang Corporation, will
invest US$1,045m to its Marcona operations in Peru until 2027. The investment
includes US$240m to update the iron ore processing plant between 2023 and 2027,
US$455m to develop and exploit mines 9, 10 and 5 from 2022 to 2025, and US$250m
to expand the Port in ICA during the years 2023 and 2026.
Casa De Pedra
Brazilian
steelmaker CSN will invest BRL13.8bn (US$2.6bn) in phase 1 of a project to
expand its iron ore production and purchase from third parties by 34Mtpa in
2022 to 68Mtpa in 2027. The phase 1 plan includes various projects, including
Itabirito P15 and Itabirito P4+ projects. It also includes the expansion
of the company's central iron ore plant, the reconditioning of a tailings dam,
and the expansion of the company's Tecar terminal.
Restarts

Wiluna West
C4
GWR Group’s
Wiluna West C4 deposit in Western Australia came back full production after
restarting in early January 2022. GWR Group idled the Wiluna West C4
deposit in September 2021 due to iron ore price volatility. The mine
resumed operation in early January 2022 due to the increase of the 62% Fe
iron ore price to ~US$130/t.
Ngwenya
Mwelase
Mining Eswatini has restart its Ngwenya iron ore mine in Swaziland. The
production capacity in the initial stage will be 1.2Mt of ROM ore (Fe grade of
40–44%) over three years. The Ngwenya iron ore mine is located at Bomvu Ridge,
northwest of Mbabane and near the northwestern border of Eswatini in Swaziland.
The mine was operated by the Indian group Salgaocar between 2011 and 2014. It
has been in care and maintenance since September 2014, due to weak seaborne
market.
Mergers & Acquisitions
Amapa
Cadence Minerals completed the acquisition of a 20% interest in
the Amapa iron ore project in Brazil from Indo Sino. As a result, the Cadence
and Indo Sino joint venture company, Pedra Brance Alliance (PBA), now owns 100%
of the equity of DEV Mineração S.A. (DEV). DEV owns the large-scale Amapa iron
ore mine, beneficiation plant, railway and private port.
In May 2019, Cadence signed an agreement with Indo Sino for the
right to acquire a 27% interest in the Amapa iron ore project over two stages.
The consideration of the first stage is US$2.5m for a 20% interest in PBA. The
consideration of the second stage of 7% is US$3.5m.
Pharos
Fenix Resources executed a Deed of Amendment agreement to
acquire an extra 30% interest in the iron ore rights of Scorpion Minerals’
Pharos Project in Western Australia. Consequently, Fenix Resources can earn
100% of the iron ore rights by sole funding exploration and resource definition
drilling to identify up to 10Mt of iron ore.
In February 2021, the two companies entered into a binding term
sheet to transfer a 70% interest in the iron ore rights of the Pharos project
to Fenix. The binding term sheet provides for Fenix to undertake exploration
activities for iron ore, whilst leaving Scorpion to focus on its gold and PGE
Ni-Cu targets within the tenements.
The Pharos Project Tenements cover 640km² in the Murchison
region of Western Australia and are contiguous to the tenements comprising
Fenix’s flagship Iron Ridge project.
Bramfield
Australian mining company OAR Resources has completed the sale
of its Bramfield iron ore project in South Australia to Hoa Phat Group, a
Vietnamese-based steelmaker. The total consideration is A$440k (~US$300k) in
cash.
OAR believes its other operations, such as its Crown
nickel-copper-PGE project in Western Australia and its gold assets, offer
better opportunities to increase shareholder returns.
The Bamfield iron ore project is located on the Eyre Peninsula
in South Australia. OAR said resources at the project cannot currently be
estimated. However, OAR has an aspirational exploration target of between 250Mt
and 300Mt with Fe content of 31.8% to 42.4%, based on the extent of magnetic
anomalism at the site.
Hawsons
Hawsons Iron signed an agreement with Starlight Investment to
acquire a 6.037% interest in the Hawsons iron ore project for A$10m (US$7.1m).
The acquisition will give Hawsons Iron 100% control of the project located in
the Australian state of New South Wales.
The company said the deal will enhance the decision-making
process as well as deliver material flexibility for offtake agreements and
project financing options.
In addition, Hawsons Iron has increased the scope of the
bankable feasibility study (BFS) for the Hawsons iron ore project to
investigate production capacity of 20Mtpa, up from the previous 10Mtpa.
The Hawson’s magnetite iron ore project is located 60km
southwest of the mining city Broken Hill, abutting the South Australian border.
Pavarotti
Mineral Resources signed an agreement to acquire the iron ore
rights at Western Mines Group's Pavarotti project in Western Australia. The
deal consideration is A$200k (US$150k) cash, plus 1.25% future production
royalty payable.
WMG will retain a 100% interest in all other minerals relating
to the Pavarotti project. WMG remains to focus on the Ni-Cu-PGE potential of
the project, whilst leaving iron ore to Mineral Resources.
Pavarotti is WMG’s second nickel sulphide project along with the
flagship Mulga Tank Ni-Cu-PGE Project. The Pavarotti project comprises
exploration licence E77/2478 and exploration licence application E77/2746,
covering 12.8km2.
The project is located approximately 50km north-northeast of
Southern Cross, in the Southern Cross Domain of the Youanmi Terrane of the
Yilgarn Craton, Western Australia.
Midwestern System
Vale sold its Midwestern System, including the Corumbá iron ore
mine and logistics system, as the company looks to simplify its portfolio and
focus on its main businesses and growth opportunities.
Corumbá is located in the southwest of Brazil, in Mato Grosso do
Sul near the border with Bolivia, and far from the mines in the Iron
Quadrangle. The mine produced 2.7Mt of iron ore and 0.2Mt of manganese ore in
2021, contributing with US$110m in adjusted EBITDA.
Vivash Gorge
London-listed Alien Metals completed the acquisition of the
Vivash Gorge iron ore project in the Pilbara region of Western Australia.
Alien agreed to pay GBP56.5k (US$71.5k) to previous owner,
ASX-listed Zenith Minerals Ltd, with further payments subject to certain
milestones being reached. Alien has also agreed to grant Zenith an ongoing
royalty payment whilst in production of US$1/dwt (Dry Wet Tonne).
The Vivash Gorge iron ore project is located 60km south of the
Alien Metals’s Brockman project and only 80km from Tom Price. The project
covers ~47km2.
Simandou North
Arrow Minerals has signed a non-binding term agreement to
acquire a 60.5% controlling interest in Amalgamated Minerals, a private
Singaporean company.
Amalgamated Minerals currently holds a 100% interest in Simandou
North iron project in Guinea.
Arrow will issue 81,250k fully paid ordinary Arrow shares for a
three-month exclusivity option to Amalgamated. Moreover, Arrow has the
potential option to acquire another 33.3% interest in Amalgamated from Ropa
Investments (Gibraltar) Limited for 500m fully paid ordinary Arrow shares.
The Simandou North Iron project is an exceptional early-stage
project. It consists of exploration permit 22967 and lies at the northern end
of the Simandou Range, Guinea.
Hamesley
London-listed Alien Metals has executed a binding put and call
option agreement with Windfield Metals to acquire an additional 39% interest in
the Hamesley iron ore project in the Pilbara region of Western Australia. After
the completion of the acquisition, Alien will directly hold a 90% interest in
the project.
Alien will pay total consideration of GBP1.8m (US$2.1m) which
consists of a cash payment of GBP60k (US$70.9k) and the issue of 260m ordinary
shares at a deemed issue price of GBP0.0067 (US$0.0079) per share. Alien has an
18-month period to exercise the option, although the company intends to action
the option earlier.
The Hamesley iron ore project includes the Hancock and Brockman
DSO iron ore tenements. Alien currently has a 51% direct interest in the
project, with the remaining 49% held by Windfield.
Santa Fe Mining
India’s JSW Steel sold the entire 70% stake of Chile’s Santa Fe
Mining to Diego Calvo SpA for the consideration of US$700, due to the uncertain
business environment.
JSW Steel owned a 70% stake in Santa Fe Mining through
Inversiones Eurosh Limitada (IEL). In 2008, JSW Steel jointly ventured with
Chile’s Minera Santa Fe to develop iron ore mines in South America.
Santa Fe holds iron ore exploration concessions across mines in
Belavista and Vinita in the Atacama region of North Chile. However, the lease
of Bellavista was terminated in 2021.
JSW Steel bought the eight iron ore mining concessions in 2008
for $52m.
Southdown
Grange Resources has signed a binding agreement with its joint partner,
SRT Australia, to re-acquire a 30% interest in the Southdown magnetite iron ore
project in Western Australia.
SRT Australia is owned by Sojitz Corporation, a Japanese trading
house, and Kobe Steel, a Japanese steelmaker. After the completion of the
acquisition, Grange will hold 100% ownership in the Southdown project.
Southdown has the potential to deliver high grade concentrate
with low impurities, which would make the product suitable for DR grade iron
ore pellets. In February 2022, A pre-feasibility study was completed which
optimised the project to identify a reduced-capital development option.
This involves a smaller 5Mtpa concentrate production operation
within the constraints of existing mineral resources and ore reserves. This is
anticipated to deliver reductions in capital spend from A$2.9bn (US$2.02bn)
down to A$1.39bn (US$970bn). This alternative case extends the life of mine
from 14 years to 28 years for the western zone, and potentially more than 50
years for the total resource.
Zanaga
Zanaga Iron Ore Company (ZIOC) has completed the acquisition of
Glencore’s 50% of interest in namesake iron ore project in the Republic of
Congo. As a result, ZIOC holds 100% ownership in the Zanaga project.
ZIOC is targeting development of the iron ore project to 30Mtpa
in two stages. The company said that capital and operating cost estimates for
the 12Mtpa first stage of the project remain within the guidance provided in
2014.
The initial capital requirement and operating cost for stage one
is estimated at US$2.2bn and FOB ~US$32/t, respectively. The capital
expenditure for the additional 18Mtpa production, including contingency, could
potentially be financed from the cash flows from the stage one operation.