Hi, I thought I'd combine a couple of posts over the year to try and give a better picture of BCI's Bonnie Fines. There could be some doubling up on things said, only because several posts have been pasted together.
The term dry is not related to the LOI (volitiles in the rock) but the inherent moisture as free water in any mass of rocks due to cavities and pore spaces in rocks. Clayey rocks tend to have moistures up to 9%, whereas granite has moistures of <4%. So all rock masses need to be converted to dry content by multiplying by (1-moisture%). Iron ore is ~ 5%. BCI's combined moisture (cystallized water) and Carbonates (C and CO2) exceeds 12%, quite extraordinary.
There are several types of iron ore from the highest quality Brazilian and Brockman lump, to the lower quality fines. All pricing takes into account the inherent metallurgical properties of ores, so no adjustment further to grade needs to be made when pricing a product by the appropriate benchmark price. These days, pricing is based more on CFR62 or CFR58, than the older benchmark system of Dry Metric Tonne Units (DMTU), which was a price based on each percentage of iron that the ore contained. 62 is based on 62%Fe (Iron content of the material). CFR62 is primarily for lump producers, whilst CFR58 is primarily for fines producers. Which is why it's extraordinary, or in Mike Young's words remarkable, that Bonnie fines have been linked to CFR62, and not CFR58, which as mentioned is suppose to be for fines producers. During the old benchmark system there was not only a benchmark price but also a fines product which all others were graded against. In the case of fines it was Yandi fines @ 58% Fe. Just some other types of products on the market are Carajas Fines, Brockman Premium Lump, Hamersley Fines, Yandi Fines, etc etc etc. Each of these have differeing prices and the most appropriate should be used. Because BC Iron (bonnie fines) is a pisolite ore, it typically produces mainly fines (<10mm) product. The ore is inherently a very weakly structured ore, which supports the assertion that the ore also has a very high LOI figure, ie it is a very porous ore.
Most don't appreciate the importance of the 'Loss on Ignition' (LOI) number. Because Bonnie fines (BCI) has such a high LOI figure it's even more important for BCI holders to try and understand LOI. Basically the higher the LOI figure, the more porous the material is as mentioned above. The lower the LOI figure, the more the material is like Granite. Magnetites fall into this category. Magnetite fines need to be "pelletized" in order for the material to be suitable for a furnace feed. Hematite fines need to be sintered in order for the material to be converted into artifical lump.
This is very important. The higher the LOI figure for fines producers, the lower the grade that can be sold on the overseas market. Keeping in mind that the furnace feed for Asian mills needs to exceed 62% CaFe. In BCI's case 54.5% Fe will still exceed 62% CaFe (the required benchmark). An example of low LOI ore, and Bonnie fines high LOI ore:
These are my Calcined Iron (CaFe) figures. I will use WPG's Peculiar Knob fines @ 63.21% Fe, with a LOI figure of 0.44%. Compared to BCI's Bonnie fines @ 57% Fe, with a LOI figure of 12.1%. Fines MUST be converted into artifical lump in order for the material to drop into the 'dead man's chamber' of the blast furnace. Fines are too light. They won't drop below properly below 10mm. <10mm ~ fines. >10mm ~ lump.
WGO
1000-4.4=995.6 632.1/995.6= 63.49% CaFe
BCI
1000-121=879 570/879= 64.85% CaFe
Now and example of your average fines producer in the Pilbara, in this case Atlas Iron (ASX:AGO). AGO's DSO is 56.5% Fe. It's LOI figure is 9.1%. AGO cannot lower that DSO number otherwise it'll go under the 62% Fe furnace feed requirement.
AGO:
1000Kg - 91Kg (carbonates and water) = 909Kg 565Kg Fe divided by 909Kg = 62.16% CaFe ~ Post Sintering
The following isn't 100% correct, but for the purpose of the post it'll do. Fines when sintered with heat will turn to "globules" at different heat levels. This level ranges between 1000 to 1300 degrees. The higher the LOI level, usually the lower the heat level required for conversion to artifical lump. For example, Bonnie fines and FMG fines cannot be blended together because the two ores don't globulate at a simular enough heat level. Also, the geology and metallurgy of the ores are very different. BCI's ore is like Yandi and Robe River, a pisolite ore, that is sold only as a fines product specifically because it sinters well. Sintering is the process of converting fine ore to Lump ore so that it can go into the blast furnace.
BCI's ore has been rated as a first class "value add" sinter feed. That is to say, that if you were to break up the ores into categories you have three distinct types with BCI in the best category.
Magnetites can be of a good iron grade with low contaminants but suffer as a fines product. Most magnetites have extremely low LOI figures in comparison to Hematites. This has several problems. Magnetites can't be blended with hematites in a furnace feed because the two don't convert to artifical lump at a simular enough heat level. Which leads to the second problem. Magnetites need extremely high energy levels for the material to be converted to artifical lump. The term used is for magnetites is the product is "pelletized" and it's due to the fact that magnetites are like granite, unlike hematites which are generally porous requiring lower heat for conversion. Which leads to the third problem. Magnetites will generally have a much higher opex cost to their hematite counterparts. That inturn means that as the spot price drops, magnetite miners are always the first to be vulnerable. BCI placed an interesting chart in the last update showing the opex cost of world miners. It was pleasing to see BCI at the lower end of that chart. Infact BCI is almost in line with the worlds largest iron ore supplier, VALE. In the last GFC the benchmark fall to USD$60. Some were expecting the benchmark to have gone lower but many failed to understand an important factor. Almost all magnetite miners were no longer economical at USD$60. Infact it begun to hurt magnetite producers at a much higher price level to $USD60. If you strip so many producers out of the supply market, you have just placed a floor on the price of iron ore. The current floor is now well above $USD80 for Magnetite producers. These higher production costs are due mainly to the cheaper to extract magnetites vanishing from the market. There's also the fact that all exporters, hematite and magnetite, will also have a freighting fee on top of their opex costs. Much higher for South American exports, and to a lesser degree, South Australian magnetite producters, than Pilbara producers via port Hedland. The old Free On Board (FOB) system invented by Japanese importers seems to becoming less and less relevant year by year. This system didn't discriminate on a exporters location. The importer would take care of costs once the ore was on the ship.
Onto hematites. Second in the hematite category of fines product is the Pilbara blend. This is an ordinary ore meant only for it's iron content with high Phosphorus. High P ores, any ore over 0.07%, can be a problem to sell. Pilbara Blend is a RIO product at 0.10% P and is used as a sinter feed blend. Higher P can be sold, but only in smaller consignments as the mills have to find low P ores to blend which means holding stocks of Hi P ore which costs money.
The best fines are the "value add" ores. BCI falls into this category. Low in contaminants, and high LOI. BCI's ore has been graded first class as a sinter feed. P level on average of 0.015% for Bonnie fines (BCI). The Outcamp mesa with an average grade of 0.011%. And grades as low as 0.008% from drilling results.
Everyone concentrates on Fe grade as they don't know any better. But more critical is the ores Phos figure.
Iron grade is important, but the grade of the other elements is also very important. It is frustrating that the ASX does not enforce the reporting of the other elements, called Deleterious Elements (DE) such as SiO2 (silica), Al2O3 (Alumina), P (phosphorus), S (Sulphur), and LOI (Loss on ignition). several other elements can also be considered DE but the ones above are by far the most common.
Silica and Alumina are DEs that affect the blast furnace. P and S affect the quality of the steel. P is especially bad as it makes steel brittle.
Sulphur in high amounts makes the material 'spit' in the furnace. Different DE's will seperate from the fines material at different heat levels. Carbonates and crystallized water will burn out of the material at moderate heat levels, like the ones you find during sintering. While the heat level required for Silica and Alumina are much much higher. In order for these two DE's to seperate from the Fe (iron) and join the slag. Extremely high heat levels are required. Normal coal cannot be used in a furnace. It doesn't contain enough Carbon. Only coking coal contains the high carbon required for blast furnaces to release the Silica and Alumina from the iron. Silica and Alumina will slow the furnace feed as a result. It's just a pain in the backside for the steel mills. Phos will never be able to be removed from the Fe. It says in the steel. Phos cannot be removed from the Fe the conventional way. High Phos steel becomes too brittle above 0.07%. This 0.07% isn't a hard and fast rule. The steels requirements come into play. For example, if the steel was to be used for high quality kitchen knives. Ultra low Phos steel must be used. However, if the steel was to be used as reinforcement in concrete slabs. A ultra low phos steel wouldn't be consider as important. The product from BCI's Bonnie mines has always been considered a bouquet product for a niche market by analysts. That's because it's has the lowest phos hematite in the Pilbara, arguably the world. An utra low phosphorus product.
Steel makers can blend different ores with different DEs to achieve a proper blend for their furnace. The usual specifications they are after for furnace feed is <2.5% Al2O3, <5.5% SiO2, (or Al2O3 + SiO2 <8%), <0.07% P, and <0.1% S. LOI needs to be low for lump ore but can be high for fines ore as it is burnt off in the sinter process resulting upgrading the iron grade!
If an ore falls outside these specs, it can still be sold as the steel mill normally blends ores from different sources to acheive the desireable feed grade.
However if ore falls outside the specs, the buyer may require a discount for the DEs.
Hi P ores have to be sold at a discount and ore of 0.15% P grade might need to be sold at between 10 and 25% discount.
Some people talk about "de-phossing" but this can only be done by acid leach or akali-leach and is obviously expensive. Some chinese ores are >1% P so they are obviously working on it.
BCI Price at posting:
$2.45 Sentiment: Buy Disclosure: Held
(20min delay)