Anyone get an idea on how big the iron ore expansion could be...

Anyone get an idea on how big the iron ore expansion could be for CSM through the J/V with Fortescue Metals?

I missed the Business Sunday segment but have seen press articles. Big numbers being bandied about.

Love or hate Ziggy he does things on a big scale and gets them moving. This time he will be tightly collared by a disciplined CSM Board.


October 18, 2004


Iron ore demand to outstrip mine gains

CATIE LOW

A 300 million tonne jump in global iron ore consumption is likely to leave Australian producers struggling to keep pace with demand, as fresh evidence emerges to support forecast price hikes of more than 20 per cent.

A report by Sydney-based AME Mineral Economics said BHP Billiton and Rio Tinto's moves to fast-track mine expansion in Australia would do little to ease demand.

AME has predicted global demand for iron ore will soar from 1.3 billion tonnes to a staggering 1.6 billion tonnes by 2009.

In 2000, China was importing just 70 million tonnes of iron ore. This year it will import close to 200 million tonnes

AME said it expected iron ore consumption in Asia to swell to more than one billion tonnes by 2010, providing a boost for global iron ore trade.

Dallas Horadam, principal iron and steel analyst for AME, said steelmakers in Asia and Brazil were already suffering from supply shortages and many had been rushing to secure supply for next year and beyond through long-term contracts with iron ore producers.

After the 18.62 per cent increase in the benchmark price for iron ore fines earlier this year, analysts are forecasting prices to spike by more than 20 per cent in the current round of talks with Japanese steel mills.

Mr Horadam expected iron ore prices would hold their record levels, before coming off a bit after 2005.

"We see 2005 as a peak year but that's not to say that prices won't stay strong," he said.

Daiwa Securities senior resource analyst Mark Pervan said that, although AME was taking a strong view in relation to China's demand for iron ore, a strong call was not necessarily a bold call in the current market.

The appetite for iron ore was being driven by demand for major infrastructure such as roads, power plants and even Beijing Olympic sites in China.

"These areas are critical and need to be developed quickly so the demand is unlikely to be affected," Mr Pervan said.

Fat Prophets Mining resource analyst Stephen Bartrop said the mooted capacity expansions by Australia's miners should be able to keep up with the forecast increases in global demand.

"Like a lot of the market we are expecting the iron ore price to fall in 2006-2007 with the rapid increase in production," he said.

And a strong iron ore price could see Fortescue Metals Group's joint venture with Consolidated Minerals at Mindy Mindy up and running.

But Fortescue chief executive Andrew Forrest claims WA has already "dropped the ball" because the multinational miners operating here refuse to share infrastructure.

He said the demand from China was still being underestimated and the big miners were now being forced to rush major infrastructure projects to meet the surge in demand for iron ore.

Mr Forrest was speaking from the airport before flying out to China and India to meet representatives from steel mills.

"WA has lost market share to Brazil, South Africa and India and it is all infrastructure related," he said.

Mr Forrest plans to build a rail line in the Pilbara that would link up with the BHP Billiton line. He told Nine's Business Sunday that at least six land-locked companies would benefit from a Fortescue rail line.

But record oil prices could prove a stumbling block for China's burgeoning economy and demand for raw materials, according to Hartleys analyst Kevin Tomlinson.

He said if the oil price stayed high it could erode consumer spending in the US and put pressure on China's manufacturing sector. The US is the major buyer of Chinese-made consumer goods.


© 2004 West Australian Newspapers Limited
All Rights Reserved.
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