Global iron ore output to grow 3.6% over next 4 years: Report

Global iron ore production growth will accelerate in the next few years, bringing an end to the stagnation that has persisted since iron ore prices hit a decade-low average of $55 per tonne in 2015, Fitch Solutions said in a report.

“We forecast global mine output growth to average 3.6 per cent over 2021-2025 compared to -2.3 percent over the previous five years. This would lift annual production by 571 million tonne in 2025 compared to 2020 levels, roughly the equivalent of India and Brazil’s combined 2020 output,” said the report.

Supply growth will be primarily driven by Brazil and Australia. Brazilian miner Vale has aggressive expansion plans, while miners in Australia, including BHP Billiton, Rio Tinto and Fortescue, will re-invest profits into additional production.

In China, iron ore production will rise once again in the next 3-4 years as the country works to increase its self-sufficiency and reduce Australian imports, having declined significantly over recent years. Fitch Solutions expects Chinese firms to prioritise investment in overseas iron ore mines, such as the Simandou deposit in Guinea.

Looking beyond 2025, the agency expects that lower prices will eventually drag on production growth rates.

“We forecast annual production growth to average just 1.1 per cent over 20262030, with output levels stagnating by the end of the decade,” said Fitch Solutions.

Fitch Solutions sees India’s iron ore output to grow and the country’s Mines & Minerals (Development & Regulation) (MMDR) Act to help streamline licensing and reopen closed mines.

Although the MMDR Act will support ore output growth, the royalties included in the Act will limit the sector’s overall growth potential, it said.

“The decision by India’s top court to cancel all iron ore permits in Goa in February 2018 will mean that production from that state is likely to head lower rather than increase. As a result, we forecast India’s iron ore output to grow from 174 million tonnes in 2020 to 194 million tonnes in 2030, with annual output growth averaging 1.1 per cent over the period,” it said.