iron ore demand to grow in the next 100 yrs

Miners optimistic about iron ore demand
19/06/2008 05:21:47 PM

Australian Business and Finance News

Mining companies in the Pilbara have brushed off forecasts of a looming 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 eventually overtake China as the Pilbara's largest iron ore customer, with its insatiable demand for the bulk commodity more than offsetting a global oversupply mid next decade, which has 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 Ltd 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 due to strong domestic demand were heightened last week when its government raised export taxes on the commodity to 15 per cent.

"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 did require processing but often had higher 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," he 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.

Fortescue's shares closed up 48 cents or 4.38 per cent to $11.45.