PERTH (miningweekly.com) – Western Australian Premier Colin Barnett has called on the state’s iron-ore producers, which include majors BHP Billiton and Rio Tinto, to be more ‘circumspect’ in their plans to increase expansion, given the current iron-ore market.

Barnett told delegates on the first day of the Global Iron Ore and Steel Forecast, in Perth, that while global steel production was set to increase, the increase would be at a much more modest rate than previously thought.

“It is not a good environment to boast internationally about how much more iron-ore you can produce,” the Premier said.

Barnett warned that the industry ran the risk of oversupply in the future, and as such, the Western Australian government was hoping that the industry would maintain a ‘reasonable’ balance between supply and demand.

Western Australian iron-ore producers currently produced nearly 800-million tonnes a year of product, up from the 160-million tonnes produced in 2000. Barnett expected iron-ore production to expand at a much more modest rate by the end of this decade, with government figures projecting iron-ore production to reach some 880-million tonnes.

Currently, Western Australia accounted for about 37% of world iron-ore production and some 50% of international seaborne iron-ore trade.

“The state has risen from 40% to 65% of Chinese iron-ore imports, maintained around 60% of Japanese imports, and 70% of Korean and Taiwanese imports. They are extraordinary shares of world production and extraordinary market shares into steel producing countries. If we can maintain those shares into the future, we will be very pleased.”

Barnett noted that since the start of iron-ore production in Western Australia, some 50 years ago, the industry had seen significant changes, including the introduction of a number of new major producers, as well as 12 smaller producers, resulting in a more competitive marketplace.

“The government is happier with more larger producers and with a fringe of smaller ones, which will develop the resources considered too small for the big guys,” the Premier said.

Another change had been the emergence of a magnetite processing industry in Western Australia, which Barnett said would likely become increasingly important in the future.

Barnett noted that the state had significant magnetite resources, which compared well with other global sources of magnetite, in terms of iron content. With investment in upgrading the magnetite resource to a 66% iron content product, a premium product could be created to attract buyers, he said.

“For China in particular, they have a policy that it needs 50-million tonnes of high-grade magnetite pellets to be produced to meet its need for higher quality and specialty steel. It doesn’t have that at the moment,” the Premier said.