Iron ore exploration budgets decline for fourth year

News | 31 July 2017

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Iron ore exploration budgets fell in 2016 by US$460m, down to US$685m from the peak of US$3.98bn recorded in 2012.

The figures come from UNCTAD’s latest Iron Ore Market Report, which also shows that despite demand and supply, seaborne trade, and price all making gains throughout the year, Australia and China have continued to reduce their exploration budgets and accounted for almost 50% of the fall.

Iron ore producers have reduced costs over the past four years due to tightened capital controls and the end of high supply costs, with the mining industry as a whole spending US$22 per dry metric ton (dmt) less than it did in 2013.

The production-weighted average cost for the seaborne market was US$34/dmt in 2016, while the lowest cost producer achieved US$23/dmt, the report finds.

“The market for base metals such as iron ore is a yardstick for the global economy, and in recent years it has fluctuated closely with the state of emerging and developing countries' economies,” said Yanchun Zhang, chief of UNCTAD’s Commodity Policy Implementation and Outreach Section.

“The report’s comprehensive analysis of the global iron ore market will be useful for both professionals interested in the iron ore market but also for developing economies with huge needs to import the metal for domestic industrial production.”

Production in the iron ore market grew throughout the year, registering a 5% year-on-year growth to end the year with a total production of 2,106 metric tons (MT).

Exports exceeded 1,513 MT in 2016, compared with under 1,439 MT in 2015 – the net increase in global trade was led by Australia, which contributed 44 MT of incremental seaborne supply. 

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