[INFOGRAPHIC] Australia, Brazil controlling Chinese supply of iron ore
According to data from General Administration of Customs, China imported 453.1 million metric tons of iron ore in the first six months of 2015 with 83 percent of it coming from either Australia or Brazil. That is an increase of 74 percent from the same time period in 2014.
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Mining giants Vale, Rio Tinto, BHP Billiton and Fortescue Metals Group each reported increased output in its second-quarter results from April-June. However, the output of iron ore from smaller mining companies has taken a steep fall.
The Platts IODEX CFR China price of iron ore was recently assessed at $56.75/Dry Metric Tons (dmt), which is up from a record low of $44.50/dmt earlier in July as the market finally stabilized. Many believe the drop was due to recent chaos on Chinese equity markets.
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When the price dips below $50, it’s often much more difficult for smaller mining companies to survive.
As a result of the fluctuation, supply from smaller miners has become far less stable. Although some of the major steel mills would rather purchase from top miners, others continue to work out negotiations with the smaller companies
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Miners both large and small have begun searching for way to cut costs any way they can due to weak low prices and China’s weakening demand. A slowing economy and property market has cut China’s steel usage by over five percent during the first five months of 2015.
With a crackdown on China’s most polluting industries along with little hope of an increase in demand, things look quite bleak for the industry for the remainder of the year.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.