Properties and Uses
Iron ore is the basic raw material used for the iron and steel making industry. It is primarily used in the production of steel. Steel is the main structural metal used in engineering and building projects and accounts for 90% of all metal used each year. Steel is commonly alloyed with other metals (chromium, manganese, nickel, molybdenum) or carbon to increase strength and durability.
Iron ore consumption in China for domestic building programs is a major driver of world demand.
Brazil, China and Australia are the world’s major producers of iron ore with Brazil and Australia being the major exporters. UNCTAD reports that world iron ore exports increased by 8.1% in 2007 (6.1% in 2006). Brazil is now the leading exporter at 269 Mt, overtaking Australia. Indian exports grew for the seventh consecutive year, and, at 94 Mt, the country is the third most important exporter, ahead of South Africa, Canada, and Russia. China continues to be the most important importing country, accounting for 41%, (43% 2006) or 383 Mt of world iron ore imports in 2007. Mining operations in Australia and Brazil have been expanding rapidly to meet growing demand from China. Despite the expansion in supply iron ore prices have increased dramatically in the last two years.
In February, 2008 Japanese steel companies announced a 65% increase in prices to be paid to Brazilian company Vale which was the sixth annual increase in a row. In June 2008 Rio Tinto announced it had reached a price agreement with China’s Baosteel which equated to a rise of 96.5% for its Pilbara lump blend. The new reference prices per dry metric tonne Fe unit for 2008 are US$1.4466 for iron ore fines, and US$2.0169 for iron ore lump.