We have access to 4 major mines in Western Australia to supply new clients.
Please submit your LOI made to Winney Sun & Bruno Gillier (CAPITAL MERCHANT LIMITED & DIPLOMATIC GROUP)
Information required on Letter of Intent:
Buyer’s Company Name:
Company Address:
Contact Details:
Brief Introduction of Buyer and Its Product Ranges:
Origin of Current Suppliers:
Iron Ore Required: Magnetite OR Hematite, pls specify
Type: Iron Ore Fine OR Iron Ore Lump, pls specify
Fine Size: Granular size of up to 10mm for up to 90% of cargo OR other pls specify
Lump Size: 10-30mm OR other pls specify
Port of Destination:
Monthly Order Quantity: 1 million tonne per month at minimum
Length of Contract: 12 months, 24 months or 48 months
Estimated Commence Date of Contract:
Payment Method: Irrevocable Revolving Letter of Credit at sight
Performance Bond: 2%
Iron Ore Specifications Required:
- % fe
- % moisture
- % silica
- % alumina
- % phosphorus
- % sulfur
- Other gangue elements
Iron ores
Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in color from dark grey, bright yellow, or deep purple to rusty red. The iron is usually found in the form of magnetite (Fe
3O4, 72.4% Fe), hematite (Fe2O3, 69.9% Fe), goethite (FeO(OH), 62.9% Fe), limonite (FeO(OH)·n(H2O), 55% Fe) or siderite (FeCO3, 48.2% Fe).
Ores containing very high quantities of hematite or magnetite (greater than about 60% iron) are known as “natural ore” or “direct shipping ore”, meaning they can be fed directly into iron-making blast furnaces. Iron ore is the raw material used to make pig iron, which is one of the main raw materials to make steel—98% of the mined iron ore is used to make steel. In 2011 the Financial Times has speculated that iron ore is “more integral to the global economy than any other commodity, except perhaps oil”.
For every 1 ton of iron ore concentrate produced approximately 2.5–3.0 tons of iron ore tailings will be discharged. Statistics show that there are 130 million tons of iron ore discharged every year. If, for example, the mine tailings contain an average of approximately 11% iron there would be approximately 1.41 million tons of iron wasted annually. These tailings are also high in other useful metals such as copper, nickel, and cobalt, and they can be used for road-building materials like pavement and filler and building materials such as cement, low-grade glass, and wall materials. While tailings are a relatively low-grade ore, they are also inexpensive to collect as they don’t have to be mined. Because of this companies such as Magnetation, Inc., have started reclamation projects where they use iron ore tailings as a source of metallic iron.
The two main methods of recycling iron from iron ore tailings are magnetizing roasting and direct reduction. Magnetizing roasting uses temperatures between 700 and 900 °C for a time of under 1 hour to produce an iron concentrate (Fe3O4) to be used for iron smelting. For magnetizing roasting it is important to have a reducing atmosphere to prevent oxidization and the formation of Fe2O3 because it is harder to separate as it is less magnetic. Direct reduction uses hotter temperatures of over 1000 °C and longer times of 2–5 hours. Direct reduction is used to produce sponge iron (Fe) to be used for steel making. Direct reduction requires more energy as the temperatures are higher and the time is longer and it requires more reducing agent than magnetizing roasting.
For every 1 ton of iron ore concentrate produced approximately 2.5–3.0 tons of iron ore tailings will be discharged. Statistics show that there are 130 million tons of iron ore discharged every year. If, for example, the mine tailings contain an average of approximately 11% iron there would be approximately 1.41 million tons of iron wasted annually. These tailings are also high in other useful metals such as copper, nickel, and cobalt, and they can be used for road-building materials like pavement and filler and building materials such as cement, low-grade glass, and wall materials. While tailings are a relatively low-grade ore, they are also inexpensive to collect as they don’t have to be mined. Because of this companies such as Magnetation, Inc., have started reclamation projects where they use iron ore tailings as a source of metallic iron.
The two main methods of recycling iron from iron ore tailings are magnetizing roasting and direct reduction. Magnetizing roasting uses temperatures between 700 and 900 °C for a time of under 1 hour to produce an iron concentrate (Fe3O4) to be used for iron smelting. For magnetizing roasting it is important to have a reducing atmosphere to prevent oxidization and the formation of Fe2O3 because it is harder to separate as it is less magnetic. Direct reduction uses hotter temperatures of over 1000 °C and longer times of 2–5 hours. Direct reduction is used to produce sponge iron (Fe) to be used for steel making. Direct reduction requires more energy as the temperatures are higher and the time is longer and it requires more reducing agent than magnetizing roasting.
Iron ore market
Over the last 40 years, iron ore prices have been decided in closed-door negotiations between the small handful of miners and steelmakers which dominate both spot and contract markets. Traditionally, the first deal reached between these two groups sets a benchmark to be followed by the rest of the industry.
In recent years, however, this benchmark system has begun to break down, with participants along both demand and supply chains calling for a shift to short term pricing. Given that most other commodities already have a mature market-based pricing system, it is natural for iron ore to follow suit. To answer increasing market demands for more transparent pricing, a number of financial exchanges and/or clearing houses around the world have offered iron ore swaps clearing. The CME group, SGX (Singapore Exchange), London Clearing House (LCH.Clearnet), NOS Group and ICEX (Indian Commodities Exchange) all offer cleared swaps based on The Steel Index’s (TSI) iron ore transaction data. The CME also offers a Platts-based swap, in addition to their TSI swap clearing. The ICE (Intercontinental Exchange) offers a Platts-based swap clearing service also. The swaps market has grown quickly, with liquidity clustering around TSI’s pricing. By April 2011, over US$5.5 billion worth of iron ore swaps have been cleared basis TSI prices. By August 2012, in excess of one million tonnes of swaps trading per day was taking place regularly, basis TSI.
A relatively new development has also been the introduction of iron ore options, in addition to swaps. The CME group has been the venue most utilised for clearing of options written against TSI, with open interest at over 12,000 lots in August 2012.
Singapore Mercantile Exchange (SMX) has launched the world first global iron ore futures contract, based on the Metal Bulletin Iron Ore Index (MBIOI) which utilizes daily price data from a broad spectrum of industry participants and independent Chinese steel consultancy and data provider Shanghai Steelhome’s widespread contact base of steel producers and iron ore traders across China. The futures contract has seen monthly volumes over 1.5 million tonnes after eight months of trading.
This move follows a switch to index-based quarterly pricing by the world’s three largest iron ore miners—Vale, Rio Tinto and BHP—in early 2010, breaking a 40-year tradition of benchmark annual pricing.
Australia
Geoscience Australia calculates that the country’s “economic demonstrated resources” of iron currently amount to 24 gigatonnes, or 24 billion tonnes. The current production rate from the Pilbara region of Western Australia is approximately 430 million tonnes a year and rising. Gavin Mudd (RMIT University) and Jonathon Law (CSIRO) expect it to be gone within 30–50 years and 56 years, respectively. These 2010 estimates require on-going review to take into account shifting demand for lower-grade iron ore and improving mining and recovery techniques (allowing deeper mining below the groundwater table).
Pilbara deposit
In 2011, leading Pilbara-based iron ore miners—Rio Tinto, BHP and Fortescue Metals Group (FMG)—all announced significant capital investment in the development of existing and new mines and associated infrastructure (rail and port). Collectively this would amount to the production of 1,000 million tonnes per year (Mt/y) by 2020. Practically that would require a doubling of production capacity from a current production level of 470 Mt/y to 1,000 Mt/y (an increase of 530 Mt/y). These figures are based on the current production rates of Rio 300 Mt/y, BHP 240 Mt/y, FMG 55 Mt/y and Other 15 Mt/y increasing to Rio 360 Mt/y, BHP 356 Mt/y, FMG 155 Mt/y and Other 140 Mt/y (the latter 140 Mt/y is based on planned production from recent industry entrants Hancock, Atlas and Brockman through Port Hedland and API and others through the proposed Port of Anketell). In March 2014, Fortescue officially opened its 40-million-tonne-per-annum (mtpa) Kings Valley project, marking the completion of a US$9.2 billion expansion that increased its production capacity to 155 mtpa. The expansion included the construction of the greenfields Solomon Hub in the Hamersley Ranges, one of the world’s largest iron ore developments comprising Kings Valley and the nearby 20 mtpa Firetail mine; an expansion of the Christmas Creek mine to 50 mtpa; and major extensions of Fortescue’s world-class port and rail facilities.
A production rate of 1,000 Mt/y would require a significant increase in production from existing mines and the opening of a significant number of new mines. Further, a significant increase in the capacity of rail and port infrastructure would also be required. For example, Rio would be required to expand its port operations at Dampier and Cape Lambert by 140 Mt/y (from 220 Mt/y to 360 Mt/y). BHP would be required to expand its Port Hedland port operations by 180 Mt/y (from 180 Mt/y to 360 Mt/y). FMG would be required to expand its port operations at Port Hedland by 100 Mt/y (from 55 Mt/y to 155 Mt/y). That is an increase of 420 Mt/y in port capacity by the three majors Rio, BHP and FMG and about at least 110 Mt/y from the non-major producers. Based on the rule-of-thumb of 50 Mt/y per car dumper, reclaimer and ship-loader the new production would require approximately ten new car dumpers, reclaimers and ship-loaders.
New rail capacity would also be required. Based on the rule-of-thumb of 100 Mt/y per rail line, increasing production by approximately 500 Mt/y would require five new single rail lines. One scenario is an extra rail line for all the majors: BHP (from double to triple track), Rio (double to triple track), FMG (single to double track) and at least two new lines. Hancock Prospecting has recently started production from its Roy Hill Iron Ore Mine located north of Newman. This project included the development of the Roy Hill deposit, the construction of a 344 km railway and a port facility with an annual throughput of 55 Mt and QR National to service non-major producers, as of December 2015 due to the falling iron ore price these plans have been suspended indefinitely.
A 1,000 Mt/y production rate needs to be further considered by proponents and government. Areas of further consideration include new port space at Anketell to service the West Pilbara mines, growth at Port Hedland (BHP has announced the development of an outer harbour at Port Hedland), rail rationalisation and the regulatory approval requirements for opening and maintaining a ground disturbance footprint that supports 1,000 Mt/y of production including, amongst other things, native title, aboriginal heritage and environmental protection outcomes.