Pilbara Ports Authority boss Roger Johnston has predicted elevated iron ore prices above $US200/t to last for another 18 months with the world’s number two producer Brazil continuing to underperform.
The head of the WA Government trading enterprise made the comments after the PPA posted record annual throughput of 724.7 million tonnes in the 2020-21 financial year, 676.4Mt of which comprised iron ore exports.
The PPA — which operates the world’s biggest bulk commodity port of Port Hedland as well as ports at Dampier and Ashburton — has estimated the value of commodities passing through its facilities at $160.56b in 2020-21, up 33 per cent on the previous year’s figure, largely because of surging iron ore prices.
Mr Johnston predicted iron ore prices to remain at elevated levels for more than a year on continuing strong demand and ongoing supply constraints for Brazilian metals giant Vale.
He said supply from Brazil had been disrupted since the Samarco dam disaster which killed 19 people in 2015 and the interrupted supply had continued with the Mariana dam disaster at the beginning of 2019 and more recently COVID infection rates.
“So I think there’s a lack of reliability in their mining and infrastructure, I don’t believe that’s going to go away any time soon,” the Port Hedland-based 10-year veteran of the PPA said.
Mr Johnston was also dubious about new, near-term supply coming online from Africa, saying the Simandou deposits of Guinea would deliver just 80Mtpa and could take up to 10 years to develop.
“So I certainly think it (iron ore) is going to maintain its pricing for 18 months,” he said.
Pilbara Ports Authority chief executive officer Roger Johnston. Credit: Robert Dougherty/North West Telegraph
Mr Johnston’s prediction comes as iron ore producers that export from Port Hedland jostle to expand their port capacity to cash in on the high prices. The PPA is in the middle of a capacity review to identify options to boost exports from the constrained Port Hedland harbour, which Mr Johnston described as a dug-out creek.
He said the capacity review, which was expected to be completed before the end of the year, would seek to provide port users with an incentive to invest and ship more iron ore. “We’re probably about 100Mt away from full capacity, so why wouldn’t you try and see how you can facilitate developments that get the port to its full capacity aspirations,” he said.
BHP, Gina Rinehart’s Roy Hill, Andrew Forrest’s Fortescue Metals Group and Chris Ellison’s Mineral Resources all have plans to boost exports using new or existing infrastructure at Port Hedland. BHP last year applied to boost its annual export capacity at Port Hedland from 290Mt to 330Mt while Fortescue wants to be able to ship as much as 210Mt and Roy Hill is seeking to lift exports to 70Mt.
MinRes last year unveiled ambitious plans to boost its iron ore output from 14Mtpa to 92Mtpa, with the 50Mt South West Creek facility a focus of its growth aspirations. The company currently ships from the Utah Point multi-user facility at Port Hedland but also exports iron ore out of Esperance from its Koolyanobbing operation. Expansion talk has centred on a new outer harbour at Port Hedland, while MinRes is eyeing two proposed berths earmarked for South West Creek.
BHP, Fortescue and MinRes are each expected to post record annual iron ore exports in their looming June quarter updates.
The surging iron ore price, which was $US217.85/t yesterday, helped push WA Government’s mineral royalties to a record of more than $11b last financial year.
The high prices also delivered a 45 per cent jump in iron ore export earnings in 2020-21 to a record $149b, which represented nearly half the record $310b in income generated by Australia’s resources sector.
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