Haematite V's Magnetite, page-4

Well we have been able to keep Lion away so here is some more information to keep him at bay.

"Can you explain your analysis again but from a non-chemical perspective? I don’t understand why you prefer Magnetite over hematite "

Hotrock answer; which reflects that the discussion is 3+ years ago :-

"Hematite has higher grade re out of ground, but the supply of high grade DSO, > 60%Fe, material is diminishing rapidly .Lower grade DSO shipments, in the 50's%, are growing in volume to fill orders with a consequent reduction in FOB dollars received by the miners.

Current "spot" price (as of last Friday)for high grade Iron ore 2 ,benchmarked at 62% Fe using the Platts Index, was a midpoint CFR China (Qindao) price of $157.25.

Take out the shipping cost (say $25/dwt) and you come up with roughly $132 FOB. Not bad.

However, for a penalty of $4 for each 1% reduction in Fe, DSO @ 55% would then reduce the price sold by $4 x 7 percentage points = $USD28 meaning an FOB of $104 ...still OK...but and I mean
BUT , the long term contract prices are different matter. Long term 62% may be more like $85-100 FOB and if you are shipping 55% DSO then it may be a very marginal mining proposition.

on the other hand if you have a magnetite mine producing and exporting 69% Fe product, you long term average prices will look more like circa, USD$110-120.


NOTE BELOW

There really is not too much difference between very efficient magnetite mines and average Hematite mines in terms of OPEX FOB costs...however the returns on high grade magnetite are more attractive, especially if you convert the magnetite to Pellets.



65% Fe Pellets attract, circa, a 30% price premium above the
going price for 65% fines.

The price formula's can be complex and price negotiations even more complex but for me, Magnetite will soon be King in the Iron Ore business.

These are my totally biased summary from a commodities trading point of view...there are many variables involved in the final price determinations .. but it will give you an idea.

Here's a link for a bit more info:

http://www.pir.sa.gov.au/minerals/geology/mineral_resources/commodities/iron_ore