india hasnt even started yet

Fortescue takes iron ore bullishness to new heights

June 19, 2008 - 5:30PM

Mining companies in the Pilbara have brushed off forecasts of a worldwide glut of iron ore, saying growth in Asia will support the industry in Western Australia for another 100 years.

Fortescue Metals Group chief operating officer Graeme Rowley said India would overtake China as the Pilbara's biggest customer for iron ore and that country's insatiable demand would more than offset a forecast global glut in the commodity that had been forecast by Citi Investment Research.

"We haven't seen the end of what is happening to China and India hasn't even started yet,'' Mr Rowley said. "India not only needs iron ore for its own growth, it is currently supplying ore onto the world seaborne iron trade.

"There is no doubt that when India starts its expansion ... that I would expect those overseas sales to be retained in India, which just increases the demand both into China and the rest of Asia.''

Aditya Birla Minerals group manager of geology and business development Richard Holmes said India's demand for iron ore would be "as strong if not stronger'' than China's.

Expectations that India will soon cease exporting its own iron ore because of insatiable domestic demand were heightened last week when its government raised export taxes on the commodity to 15%.

"Anyone who is trying to predict the market at the moment, I can't imagine you could do it and ignore India,'' Mr Rowley said. "There is an enormous appetite for iron ore, which can only benefit Australia and WA, which has an enormous ore resource and we're still only just scratching the surface.

"This is not something that is running out in five or 10 years time: we are talking about an industry in the Pilbara region that will be around, as large as it is now, a hundred years from now.''

Mr Rowley referred to the much-touted magnetite iron ore boom that was expected to transform Western Australia's iron ore industry.

He said there would be shift in mining - from hematite or direct shipping iron ore, which was favoured now because it required little or no processing - to magnetite ore, which does require processing but had higher ore grades.

Mr Rowley said it was wise for emerging iron ore producers to maintain a sense of urgency and speedily develop their projects while prices for the bulk commodity remained high.

"Don't miss an opportunity to take a piece of the market share at the moment,'' Mr Rowley said. "There is considerable expectation or hope in the steel marketplace that the suppliers can grow.

"They would like to see more competition and obviously we're (Fortescue) an opportunity to be in that game.''

Shares in a new generation of Perth-headquartered iron ore miners have proved resilient despite global economic woes.

In afternoon trading, Fortescue shares were up 45 cents, or 4.1%, to $11.42.