Turbulent times by: Roskill Information Services
W
it h the disruption of supplies from India, concerns over slowing economic growth in China, and the effects of large stockpiles forcing the price of iron ore through a series of supposed “price floors”, the iron ore industry has faced a turbulent time during 2011 and 2012. While the price of iron ore appears set to make a partial recovery, Roskill’s new report offers a deeper level of insight into the dynamics driving the market, and offers a market outlook to 2020.
12 | Be mining
From 2006 to 2011, the promise of a high return on investment led to a decrease in the concentration of corporate control of seaborne trade in iron ore. During this period, the share of seaborne trade controlled by Rio Tinto, BHP Billiton and Vale (the “Big Three”) fell to 57.3 percent of the world total. This trend is expected to reverse to 2020, as the limited availability of capital will make securing project financing increasingly difficult for emerging producers. Much of the increase in capacity is
expected to come from capacity expansions in Australia and Brazil and from projects backed by leading steel producers seeking to secure future supply. Dow nwa rd rev isions in the long-term outlook for iron ore demand and prices are likely to lead to the delay, suspension or cancellation of a large nu mb e r of pr ojec t s. Nonet heless, Rosk ill estimates that 425 million tonnes per year (mtpy) of nameplate capacity will be added from the middle of 2012 to the end of 2014 and that capacity additions