TREADGOLD appears not to be able to see past the point of his nose. he endlessly sprouts on about the superiority of hemetite over magnetite but fails to recognise that global economics and demand have taken a quantum leap forward resulting in magnetite having a major role to play in feeding steel mills.
global iron ore demand has outstripped supply and the end users are happy to invest in setting up joint ventures with magnetite mine owners to supply the feed for their blast furnaces.
chinese steel mills and state enterprises are willing to invest in magnetite join venture resources because they want a better product and they only have to pay half the price for the ore, ie they are buying it from themselves.
if they buy ore from from the big 3 monopoly ore suppliers they have to pay full price.
high grade hemetite is in short supply and the next big player FMG has to benificate its low grade ore at extra cost.
treadgold sees the iron ore world in simplistic terms but the reality is far more complex. sure RIO, BHP,CVRD will expand output but they will have to stage manage production carefully in a very controlled manner so that they dont demolish the price of iron ore.
high demand for iron ore will enable new players to get into the action provided they have a sizeable, good quality, efficiently mineable resource with adequate infrastructure, adequate funding and a big chinese steel mill as a jv partner who will take on a prefered basis all the iron ore that can be dug up.
quite the contrary mr treadgold, it will be BHP,RIO etc who will need to be carefull that they dont overextend their operations and find that the ore consumers are not buying from them but from their own jv iron ore mines.
the tables have now turned and the chinese are no longer beholden to the big 3. the chinese now have plenty of surplus capital and are getting into the iron ore business themselves by setting up JV operations with australian mine owners which results in them getting iron ore at half cost.
HEMETITE ore MAGNETITE ? back in the old days of low demand and plentifull hemetite there was no incentive for independant mine owners to invest in magnetite operations evan though magnetite mining is more efficient and results in a better end product.
but now with plentifull chinese funding through jv operations magnetite is becoming the ore of 1st choice for them.
the chinese are locked out of ownership of any predominant hemaetite resources but are able to persue opportunities in magnetite because magnetite had been passed by previously.
there are many new ore hopefulls chasing hemetite outcrops all over the country but 95% of these will never be dug up because they are limited in size and grade and are too far from infrastructure.
