May 17, 2020

Rio Tinto Pushes Ahead with Flagship Iron Ore Mine Expansion Despite Falling Prices

Iron ore
Rio Tinto
Yandicoogina iron ore mine
2 min
Loaded with iron ore, one of Rio Tinto's trains leaves the Yandicoogina Mine in the Pilbara region of Australia.
Rio Tinto(LSE:RIO) (ASX:RIO) (NYSE:RIO) is forging ahead in its quest to remain the top iron ore producer as the company announced it will open a new mi...

Rio Tinto (LSE:RIO) (ASX:RIO) (NYSE:RIO) is forging ahead in its quest to remain the top iron ore producer as the company announced it will open a new mine expansion at its Pilbara iron ore division in Australia.

The UK-based company has obtained permission from federal regulators to build a new brownfields mine next to its existing Yandicoogina iron ore mine in the Pilbara region despite falling prices for the steel-ingredient, which have hit a five-year low.

The “Yandicoogina Pocket and Billiard South Iron Ore Mine” project is expected to last for 16 years and become an integral part of Rio’s Pilbara iron ore division, which is expected to export roughly 270 million tons in 2014. The new mine expansion will also help in providing a much-needed boost in production volumes as the company continues to grow its Pilbara exports to 360 million tons per year.

According to documents submitted to the federal government, production for Rio's mine would commence in 2017 if approved.

"The proposed action is a large-scale iron ore mining project, with an estimated operational mine life of approximately 16 years. Subject to obtaining all relevant internal and external approvals, construction for the project is scheduled to commence in 2016. Production is scheduled to commence in 2017," the company said. 

"The project is centered on substantial iron ore deposits in the Hamersley Ranges and is anticipated to make a significant contribution to Rio Tinto's iron ore exports over the next few decades.”

Prices for iron ore have fallen from $139 a ton to $77 in the last 10 months alone. Despite the declining price, Rio’s chief executive Sam Walsh remains committed to being Australia’s lowest-cost producer.

"Regardless of what the price is, we will be the last one standing.”

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May 6, 2021

Copper, iron ore surge as Chinese investors unleash demand

Iron ore
3 min
Iron ore broke $200 a tonne for the first time, while copper approached a record high as Chinese investors unleashed fresh demand following May holiday

The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.

In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.


Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.

“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”

Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.

Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.


Iron Ore

Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.

The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.

Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.

Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”


Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.

The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.

Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.



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