Australia is the world leader in iron ore production; much of that comes from Rio Tinto’s operations in the Pilbara region of Western Australia | Courtesy of Rio Tinto
Humble and ubiquitous, iron has been mined for at least 3,000 years and has played a critical role in human cultural history, from weapons and vehicles to
literature and medicine. Today, iron in the form of steel underpins and encases our daily life, while iron oxides give it detail in places as disparate as
lipstick and ATM cards.
Pure raw talent
World reserves of iron are estimated at 87 billion tonnes. Of the 1.6 billion tonnes mined yearly, almost 99 per cent goes into steelmaking via a blast
furnace or similar vehicle. Most iron mines extract the ore as hematite and magnetite, which have different properties and different implications for sale
and processing. The highest grades of hematite, 60 to 67 per cent iron, are known as direct shipping ore (DSO) because they can be fed directly into a
blast furnace with minimal or no processing. Magnetite ore is typically lower grade and requires more energy to grind it finely, extracting the magnetite
and then pelletizing it before smelting can occur.
Miners also consider the fragility of the ore and the presence of deleterious elements in judging ore quality. A phosphorus concentration of more than .08
per cent can cause problems for steelmakers. As the availability of high-quality deposits tightens, techniques to remove phosphorus may be more
sought-after. It is especially tricky with hematite, says Ralph Holmes, theme leader, carbon steel materials, at the Commonwealth Scientific and Industrial
Research Organisation (CSIRO), Australia’s national science agency. “The process that we’ve been working on, which is still at the laboratory stage, is a
heat treatment process at as low a temperature as possible, followed by a leaching process to leach out the phosphorus,” says Holmes.
Prices on the move
Iron ore prices have risen 500 per cent in the last decade, to approximately US$182 per tonne. Benjamin Cox, founder of research group Oreninc and CEO of
Roche Bay PLC, traces this back to 2000, when a previously fragmented iron ore industry consolidated to three major producers — Vale, Rio Tinto and BHP
Billiton — and gained the upper hand in negotiating the yearly price contracts that had been the industry norm since the 1960s.
As Chinese steel production ramped up in 2004, Cox says, its steel mill structure and hot demand for iron ore encouraged high-priced spot trading. Seeing
the upward trend, BHP led Vale and Rio Tinto in switching to a quarterly pricing system indexed to Chinese spot prices. Smaller steel producers have taken
issue with the switch, but analysts think the shorter term pricing appears to be here to stay.