2021 was a year of global economic recovery from the Covid-19 pandemic which has persisted since early 2020. The global iron ore market in 2021 experienced a rollercoaster ride, with iron ore spiking in the first half of the year as China’s mills rushed to front-load volumes ahead of additional production restrictions being rolled out. The iron ore 62% Fe fines CFR North China spot price reached a historic high of US$234/t in May. However, the price gradually dropped to below US$90/t in November as China's government put pressure on steelmakers to maintain crude steel output in 2021 at the 2020 level of 1,065Mt.

In addition, the Beijing Winter Olympic Games will be held in February 2022, which has prompted the government to restrict industry in the area to reduce pollution. Major steelmaking provinces are obliged to take measures to limit crude steel production output. Jiangxi Province, Hubei Province and other provinces have issued targets for crude steel production reduction in July. Steelmakers in Jiangsu Province received clear instructions for this year’s output not to exceed that of last year. Shandong Province issued a notice clearly stating that the annual output of crude steel production should not exceed 76.5Mt. Tangshan City implemented a 30% reduction in production in the second half of the year.

The iron ore price recovered to above US$120/t at the end of December due to continuing recovery in China’s domestic steel prices and the market’s expectation of the resumption of production by steelmakers.

Lump and pellet premiums are expected to remain well supported by China's carbon emissions policies. China’s government expects that carbon emissions from the steel industry will peak by 2025 and achieve a 30% (~420Mt) reduction from the peak by 2030. There will be a substantial decline by 2035, and the steel industry in China will be significantly decarbonised by 2060. The decarbonisation of the industry is expected to boost demand for direct feed iron ore products, including pellet and lump. Pellet demand in China will be seen to significantly increase as China’s steel industry tries to lift the pellet ratio in blast furnaces to 30% by 2025 from 17% in 2020.

Closures and Production Cuts

As the iron ore price increased significantly during the first half of this year, many junior miners responded to the opportunities provided by strong demand and high iron ore prices by developing small-scale iron ore projects. With the 62% Fe iron ore price declining significantly to US$100/t in September from highs of over US$230/t in May and expected to remain weak beyond 2021, several junior iron ore miners in Australia are facing pressure and have had to revise their mine plans.

Venture Minerals announced in September 2021 that its Riley mine in Tasmania had been put on care and maintenance after shipping the first iron ore of 46kt. Indus Mining has announced that its Ridges mine in Western Australia has been put on care and maintenance, as the mine has reached its breakeven point due to a low Fe grade of 52%. In addition, GWR Group announced on 19th September that its Wiluna West C4 deposit in Western Australia had been put on care and maintenance. Mount Gibson Iron also suspended its Shine iron ore mine in October 2021 in response to the recent adverse movements in the price of iron ore.

New Mines, Restarts and Expansions

BHP’s US$3.6bn South Flank iron ore project in the Pilbara, Western Australia, achieved first iron ore production in May. The production capacity of South Flank is 80Mtpa, with a mine life of over 25 years. BHP said that South Flank’s high-quality ore will increase WAIO’s average iron ore grade by 1% to 62% and the overall proportion of lump from 25% to 30-33%. The planned ramp-up of South Flank to its full production capacity of 80Mtpa (on a 100% basis) over three years remains unchanged.

In addition, BHP expects to extend the life of the Yandi mine by another five years, with potential production of 17Mtpa. Iron ore from Yandi is favoured by Asian steel mills due to its low levels of impurities such as phosphorus and alumina.

Eurasian Resources Group’s (EGR) Bamin stated operations in early of 2021 with initial production capacity of 2Mtpa. It is expected to produce 1Mt of iron ore in 2021. ERG has signed a concession agreement with the Brazilian Federal Government to construct a section of 537km FIOL (East-West Integration) railway which will link BAMIN iron ore mine to the Port of Porto Sul, currently under construction in Ilhéus, Bahia. BAMIN's investment in the railroad and rolling stock will be around BRL3.3b (U$683m).

The capacity of FIOL will be 60Mtpa, with BAMIN's products accounting for a third of this capacity (18Mtpa). More than 40Mt cargo capacity will be made available for other businesses in both the mining and agricultural sectors, as well as other industries in the Bahia region. The construction of the port and FIOL are expected to be completed in 2026.

The Tombador mine is a small-scale operation located in the State of Bahia, Brazil. It started operations in the June quarter of this year. The mine was granted a five-year operating licence in May. It produces hematite DSO iron ore for the seaborne market, with Resource of ~10Mt.

ArcelorMittal Nippon Steel (AMNS) has announced that it has commenced operations at the Ghoraburhani-Sagasahi iron ore mine in the district of Sundargarh in Odisha. The block has an estimated reserve of around 98.6Mt. AMNS said that it expects to produce ~2Mt of high-quality iron ore in 2021 and potentially ramp up to 7.16Mtpa. The iron ore produced from the mine will be supplied to the beneficiation plant in Dabuna, from where the feed will be sourced for the company's pellet plant at Paradeep.

Indian company Yashomann Industries’ Ikongwe mine in Botswana has started production and delivered its first iron ore to China. Yashomann said that an order of 50kt per month has been booked by a Chinese state-owned steel manufacturing company. Exports from the mine currently travel to China via South Africa, but Yashomann is in discussions with Botswana Railways to export iron ore via Mozambique’s port of Maputo. The Ikongwe mine will produce 1Mtpa of iron ore with Fe content of 65% over a 10-year mine life. The output from Ikongwe is expected to be both exported and sold on the domestic market, with Yashomann planning to set up a pig iron plant in the country.

Gerald Group restarted the Marampa iron ore mine in Sierra Leone on 1st June 2021. The company received Large-Scale Mining Agreement, which allows it to ramp up the mine’s production capacity to 3.25Mtpa from its current 2Mtpa. Gerald has resolved the dispute with the Sierra Leone government which caused it to shut the mine down in September 2019, paying the final US$10m instalment of the US$20m payment to the government agreed upon as part of the settlement.

Over the year, Rio Tinto progressed with the engineering, procurement and construction on the US$2.6bn Koodaideri iron ore mine in Pilbara, Western Australia. The project will be the most technologically advanced mine owned by the company and will include autonomous operations, such as autonomous trucks, trains and drills, and implement systems connecting all components of the mining value chain. The mine is planned to commence operations in 2022 and will have an annual capacity of 43Mt of iron ore.

Fortescue Metals Group (FMG) has revised the capital cost of its Iron Bridge project to US$3.3-US$3.5bn, including FMG’s share of US$2.5–US$2.7bn. Initially, Iron Bridge was expected to cost a total of $2.6bn in early 2019, but the cost rose to ~ US$3bn in February this year on the back of inflation, foreign currency exchange rates and labour constraints. Development began in 2019 and first production is planned for December 2022. Once it is completed and fully ramped up, the mine is expected to deliver 22Mtpa of high-grade 67% Fe magnetite concentrate product. The company estimates that the life of mine cost will be US$33–US$38/wmt.

Anglo American has signed an agreement with the state of Minas Gerais, Brazil, to invest up to BRL4.4bn (U$800m) in local operations by 2025. Most of the investment will be put into the Minas-Rio iron ore mine, where the company plans to upgrade the mine's technology and undertake the construction work necessary for future expansions. The Minas-Rio expansion project includes a 529km pellet feed slurry pipeline. Anglo American expects the mine to reach capacity of 26.5Mtpa by 2022.

Brazilian steelmaker CSN has announced that, between 2022 and 2026, it will invest BRL12bn (US$2.1bn) in phase 1 of a project to expand its iron ore production and purchases from third parties by 33Mtpa to 69Mtpa. The phase 1 plan includes various projects, such as 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. Phase 2 of the project will expand the company's iron ore capacity to 104Mtpa by 2031, making the company the fifth-largest iron ore producer in the world. Ultimately, the company plans to achieve iron ore capacity of 116Mtpa from 2032 onwards.

Strike Resources has undertaken a review of production ramp-up and export logistics at thehe Paulsens East Project located ~200km west of Paraburdoo, ~600km by road from Port Hedland in Western Australia. The review is intended to optimise project economics, reducing upfront capex and LOM opex and allowing for earlier cashflows. The 2022 production guidance for the mine has been decreased to 400kt from the previously planned 1.1Mt. A final investment decision on Paulsens East will be made pending the finalisation of contracts with key contractors and service providers and the finalisation of the structure and terms for iron ore offtake and project financing.

Mergers and Acquisitions

Mineral Resources (MRL) this year completed the A$20m purchase of the Parker Range iron ore project in Western Australia from Cazaly Resources. Mineral Resources has also agreed to a royalty of 50c for every tonne of iron ore extracted and removed from the project after the first 10Mt. The Parker Range project has a current reserve of 31.4Mt targeting an iron-ore fines product grading 56.4% Fe. It is located some 400km east of Perth.

MRL has also completed the acquisition of Red Hill Iron’s (RHI) 40% interest in the Red Hill Iron Ore Joint Venture (RHIOJV) in the West Pilbara region of Western Australia. MRL will pay RHI US$150m (A$200m) on completion of the acquisition and a further US$150m (A$200m) cash when the first commercial shipment of iron ore extracted from RHIOJV tenements departs port. In addition, MRL will pay RHI a royalty of 0.75% of FOB revenue. RHIOJV’s mineral resource is estimated at 820Mt grading 56.44% Fe. The proposed acquisition of the RHIOJV interest aligns with MRL’s strategy to expand its resource inventory around the Ashburton Hub to underpin a long-term, sustainable iron ore export business. MRL is expected to extract and export 30Mtpa from Ashburton Hub.

TerraCom is looking to acquire the Kalia iron ore project in the Republic of Guinea. It has signed an exclusive Non-Binding Memorandum of Understanding (MoU) with Bellzone Holding SA to acquire the project. The Kalia Iron Ore Project is located approximately 300km from the Kanta Port and comprises 4.7Bt of magnetite in banded iron formation, 900Mt of oxide and supergene banded iron ore formation targeting ferronickel, and a 20km-long magnetite strike, which demonstrates a development resource potential of up to 8Bt of magnetite banded iron formations. TerraCom is a coal producer currently operating the Blair Athol coal mine in Queensland, Australia, as well as several coal assets in South Africa acquired from Universal Coal in June 2020.

Hancock Prospecting has signed an agreement with Legacy Minerals (LCY) and Hawthorn Resources (HAW) to acquire a 30% interest in the Mt Bevan iron ore project in Western Australia for an initial investment of A$9m (US$6.6m). Currently, LCY and HAW hold a 60% and 40% interest in the project, respectively. A$8m (US$5.9m) in cash will be paid to Legacy and Hawthorn in proportion to their interest in the project, so that Legacy will receive A$4.8m (US$3.5m) and Hawthorn will receive A$3.2m (US$2.4m). The remaining A$1m (US$0.7m) will be working capital. The Mt Bevan iron ore project is located 250km north of Kalgoorlie in Western Australia and hosts 1,170Mt of magnetite resource with Fe content of 34.9%. After Hancock acquires a 30% interest in the project, LCY and HAW will hold a 42% and 28% interest, respectively. Hancock can earn an additional 21% interest by funding the completion of a pre-feasibility study (PFS).

4B Mining Participações has acquired a 51% interest in and operational control of Mineração Pirâmide Participações (MPP) for an undisclosed amount. MPP owns the Corumba iron ore project in the state of Mato Grosso do Sul, Brazil. 4B Mining has also entered into a contract with one of the world's largest iron ore traders for the sale and purchase of 100% of the Corumba project's iron ore during the first five years of production. The Corumba iron ore project will produce a high-grade low-impurity iron ore lump product (DSO, +65% Fe). 4B Mining expects the project to start operations in 2022, with production of 0.6Mt of iron ore for the first year. Production will ramp up to 1.2Mt in the second year and 2.1Mt in the third year. The company did not provide any figures for capital expenditure.