The Brazilian Ministry of Mines and Energy has forecast that the country’s iron-ore production will nearly triple over the next 20 years to reach one-billion tons a year.

Currently, the country’s production of iron-ore is running at about 380-million tons per year (Mtpa), and the Ministry expects this to increase to some 585-Mtpa in 2015 and to 785-Mtpa in 2022, with the billion-ton mark being reached in 2030. The main force driving this expansion will be Chinese demand.

The Ministry also predicts that Brazilian steel production in 2030 will be 103- million tons, which will only be enough to meet 50% of Brazil’s demand for the product by then. The Brazilian government is trying to promote the export of steel rather than iron-ore, arguing that steel production and exports will create up to 20 times as many jobs as iron-ore production and exports, assuming the same levels of production.

As is well known, Brazil’s top iron-ore miner, Vale, is also the world’s top iron-ore miner. But another recent report, this time from the United Nations Conference on Trade and Development (Unctad), states that Vale’s number one position is under threat, from both world number two iron-ore miner Rio Tinto and third-placed BHP Billiton.

In 2008, Vale had a 17,3% share of the global iron-ore market, but this fell to 16% in 2009.
Moreover the amount of iron-ore produced by Vale fell from a peak of 308- million tons in 2007 to 205-million tons last year. Meanwhile, Rio Tinto ramped up its iron-ore production from 150-Mtpa to 172-Mtpa in 2009. Australian iron-ore exports from all mining companies combined rose by 17% last year, to 363-million tons, while Brazilian exports declined by 3%, to 266-million tons. (The number three iron-ore exporting country is India, with 116- million tons in 2009). Still, Unctad expects Vale to seek to maintain its number one position.

While the Australians have been ramping up their iron-ore production, in China production has been falling. As a result, and for the first time since 2004, the combined market share of the Big Three iron-ore miners increased last year. Together, they controlled 35,4% of global production and 61% of maritime trade in the commodity.

China is still the number one market for iron-ore. Despite the global down- turn, Chinese imports of the ore rose by 41% in 2009, reaching 628-million tons. Global production of iron-ore actually fell by 6,2% last year (compared with figures for 2008), the first decline in seven years, but worldwide sales hit a record of 955-million tons, representing a 7,4% increase over 2008. In terms of total iron production – not just exports – Australia ranked first in 2009, with 394-million tons, followed by Brazil (300-million tons), then India (257-million tons) and, in fourth place, China (234-million tons).

In recent years, Vale has been devoting a lot of attention to becoming a diversified mining group and not only an iron-ore producer. The company has had great success in this. Its latest step in this regard is an offer of $1,1-billion to buy Brazil’s biggest copper producer, Paranapanema. Vale’s offer represents a premium of 8,6% on Paranapanema’s share price.

Paranapanema currently produces some 220 000 t/y of copper cathodes, with an expansion project under way to increase this to 277 000 t/y. Acquiring Paranapanema would free Vale from having to expand its own smelting capacity to process the output of its Alemão and Salobo copper projects. Vale would also secure Paranapanema’s three downstream copper products manufacturing plants.

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