Global iron ore prices are set to decline sharply in 2009 as demand for the steelmaking ingredient shrinks dramatically as a result of deepening world economic recession.

Following are tables of the world’s top iron ore producers and consumers as well as updated investment plans and output cuts announced by iron ore miners to cope with reduced demand from steel mills.

The top three iron ore producers in 2007

COMPANY PRODUCTION (MLN TONNES)

1. Vale 296
2. Rio Tinto 144.7
3. BHP Billiton* 112.3

TOTAL 553

- Production figures for BHP are for its business year ended June 30, 2008, and for Vale and Rio are for calendar year 2007. Data is from each company. The three companies together control 35 percent of the global iron ore market.

Seaborne iron ore supply and demand in 2007

COMPANY EXPORTS (MLN TONNES)

1. Vale 249
2. Rio Tinto 159
3. BHP Billiton 105

TOTAL EXPORTS 756

Share of big three 68 pct

Source: Metalytics, Merrill Lynch

The top five iron ore exporters in 2007:

COUNTRY EXPORTS

1. Australia 295
2. Brazil 275
3. India 100
4. South Africa 28
5. Canada 27

TOTAL EXPORTS 825

The top five iron ore importers in 2007

COUNTRY IMPORTS

1. China 383 Mt
2. EU 25 186 (2006)
3. Japan 139
4. S.Korea 44
5. Taiwan 17

TOTAL IMPORTS 840 (2007)

Sources: Raw Material Group (www.rmg.se)

MAJOR EXPANSION PROJECTS

- VALE (VALE5.SA)

Investment: $10.1 billion
Project: To develop Serra Sul iron ore project in Brazil’s Para state
By when: early 2012

Amount of new annual output: 90 mln tonnes

- RIO TINTO LTD/PLC (RIO.AX) (RIO.L)

Project 1: To expand the Corumba mine in Brazil. The plan was announced in July 2008 but delayed in January 2009 due to weak demand.

Investment: $2.15 bln to boost annual capacity of the mine to 12.8 million tonnes from 2 million tonnes.

By when: Prior to delay, Rio planned to start new production in Q4 2010

Project 2: To expand the annual production at its Pilbara operations in Western Australia

By when: year-end

Targeted annual output: 220 million tonnes, eventually rising to 600 million tonnes.

Longer term: To dig a huge iron ore mine in Simandou in Guinea, which it calls the world’s largest unknown undeveloped iron ore province.

By when: Rio said on Dec. 10 that it would delay its planned $6 billion investment in the project. Before the announcement, production was due to begin in 2013 at 8 million tonnes, ramping up to 70 million tonnes by 2018.

* BHP BILLITON LTD/PC (BHP.AX) (BLT.L)

Background: Rapid Growth Project 5 was approved in February 2008 as the company’s next step in its phased growth path.

Investment: $4.8 billion

Targeted annual capacity to rise to 205 million tonnes from 50 million tonnes

Starts: in the second half of 2011

MAJOR OUTPUT CUTS

Dec. 20 – Rio Tinto closes all its iron ore mines in Australia’s Pilbara region for two weeks to cut production by 10 percent by the end of 2008 to between 170 million and 175 million tonnes because of weakening demand from China.

The move, which was announced on Nov. 10, reduces output by up to 20 million tonnes from its previously targeted output of around 190 million tonnes in 2008.

Dec. 10 – Kumba Iron Ore (KIOJ.J) said it would stick to plans to expand its Sishen South mine. The firm said previously it would spend some 8.5 billion rand to raise the output of the mine to 9 million tonnes a year, with production expected to start in the first half of 2012 and to peak by 2013.

Dec. 8 – Vale said it suspended operations at two of its iron pellet plants in Espirito Santo with a combined capacity of 7.3 million tonnes a year, increasing total plants idled to six and slashing annual capacity by 29.3 million tonnes of pellet.

Dec 3 – Nippon Steel (5401.T), the world’s No.2 steel firm, said BHP and other big miners had agreed to delay deliveries of iron ore and coking coal in response to output cuts at steel mills. [ID:nT303777]

Nov. 20 – Fortescue Metals (FMG.AX), Australia’s No. 3 iron ore miner, has increased its sales to China in stark contrast to gloom surrounding the sector. [ID:nSYD375336]

Nov. 20 – Metalloinvest, Russia’s largest iron ore miner, has slashed output to 65 percent below peaks reached earlier in the year. [ID:nLK561080]

Nov. 17 – BHP Billiton said it had requests from some customers to defer up to 5 percent of this year’s production, about 6 million tonnes of total production for the year to June 2009. But it said it had not cut output. [ID:nSYD372218]

Nov. 12 – Chinese trading firm Minmetals Corp has cut imports of iron ore by about 3 percent this year amid falling prices. [ID:nPEK158010]

Nov. 10 – Fortescue has brought forward a planned shutdown of port and iron ore mining processing facilities in Australia for upgrading work, which will affect calendar 2008 production.

The firm also said on Oct. 28 it had deferred some spending on expansion and pushed out its target of lifting annual output to 80 million tonnes amid weakening orders from China.

Nov. 3 – Gibson Iron (MGX.AX), Australia’s fourth-largest iron ore miner, said it would temporarily cut a third of its workforce and raise new capital as it cut its sales target in the 2008/09 business year by 30 percent to 5 million tonnes.

Oct. 31 – Vale said it would cut iron ore output by 10 percent from November, for an output cut of 30 million tonnes a year.

Oct. 20 – Atlas Iron (AGO.AX), Australia’s newest iron ore producer, said it had decided to sell its output on China’s spot market after failing to tie up long-term contracts.

Source: Reuters

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