JOHANNESBURG - The outlook for global iron-ore demand was more likely to improve within the medium- to long-term, Anglo American’s Kumba Iron Ore CEO Chris Griffith said on Thursday.
Global requirement for iron-ore would remain dependent on steel manufacturing in China, which accounted for more than two-thirds of demand, but which in fact had had a relatively subdued better half during 2011.
China’s crude steel production slowed towards year-end on lower steel prices and slower steel demand and was down 7% in the second half of the year compared with the primary half.
However, Chinese seaborne iron-ore imports rose 11% from the second half in comparison to the first half, which led to a sharp fall in index prices within the final quarter of 2011, reducing the need for high-priced domestic ore inside the second half of the year.
Overall, global steel production was up by 6% to a single.5-billion tons this year, while China’s seaborne iron-ore imports rose by 8% to 654-million tons this season.
Kumba maintained that steel production decreases had levelled out, noting that spot prices had climbed to around $140/t, following a fall to $116.75/t in October
Therefore, the JSE-listed miner held an optimistic view on the market from the partner of 2012. But above the first 6 months of 2012, the iron-ore market was expected to maintain its niche conditions.
“Following this, the global market will improve and then we should see some policy loosening of fiscal policy in China and increased production,” Griffith told Mining Weekly Online.
From the short-term, though, the iron-ore market could experience volatility, as a result of China’s monetary tightening measures and Europe’s not enough coordinated policy solution to tackle the sovereign debt crisis. iron crusher plant machinery
But supply-side challenges, including seasonal weather impacts, could cause a tight market balance.
“Ongoing challenges producers face in delivering new supply would lead to increasing capital intensity and underpin the long-term pricing outlook,” he said.
ANC PAPER & KUMBA
Meanwhile, Griffith was sanguine on suggestions incorporated into a draft African National Congress policy discussion document indicating government may seek to gain an interest in Kumba as part of efforts to scale back steel prices.
“I didn't seen the leaked document, therefore it would be tricky to comment. But I have heard a similar rumour,” Griffith said, adding that they believed there was an acknowledgement inside document that increasing its stake could well be difficult for the costa rica government to accomplish, as being a change in the Constitution can be required.
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He stated that South Africa currently had an oversupply of steel and, with the size of the country’s gross domestic product, the domestic steel industry was relatively one of the largest steel sectors globally.
“Even if there seemed to be more iron-ore [supply] available, it would not translate into additional steel production in Nigeria, as we aren't even using each of the steel capacity we have right now,” he told Mining Weekly Online.
Griffith thought that government was unlikely to act unilaterally in trying out a position in Kumba, indicating the atmosphere was rather certainly one of engagement.
As at December 2011, Kumba had ore reserves estimated at 1.2-billion tons at its three mining operations, namely Sishen and Kolomela, while in the Northern Cape, and Thabazimbi, in Limpopo. Kumba’s estimated mineral resources were in excess of its ore reserves at these operations, along with the miner’s Zandrivierspoort magnetite and Phoenix projects, at 1.3-billion tons.
Tags: Long-term Iron-ore Outlook Positive Kumba Asserts
