Perth: The world needs at least 100 million tonnes of additional iron ore supply each year for the next eight years to meet demand growth projections in steel making, miner Rio Tinto said on Thursday.
At that rate, global iron ore production would almost double over the period, based on industry trade data — largely covered in the early years at least by expansions underway among the major miners, including Rio Tinto.
“This represents a staggering increase in demand as markets like, China, India, Indonesia, Vietnam and countries in Africa and South America continue to industrialize and urbanise,” David Joyce, head of expansion projects for Rio Tinto’s iron ore group, told an industry conference in Australia on mining in Africa.
Emerging markets comprise 75% of global iron ore demand and 90% of that is Chinese demand.
Rio Tinto, the world’s second-largest producer behind Brazil’s Vale , also said its Simandou iron ore joint venture with China’s Chinalco in Guinea was on track to make its first shipment by mid-2015.
“We remain committed to ambitious timeframes of shipping our first tonnes of iron ore by mid-2015,” Joyce said, adding that the company has invested $1.5 billion in the project to date.
The joint venture targets initial production from the Simandou mine of 70 million tonnes per year, with estimates for potential future output reaching up to 170 million tonnes.
Joyce also said Rio Tinto was on track to expand its iron ore production capacity in Western Australia to 333 million tonnes a year from about 225 million now..
Rio Tinto last month moved up its the target date to reach the higher figure by six months to the first half of 2015.
Rio Tinto isn’t the only miner that sees gold in mining more iron ore.
AngloAmerican expects to nearly double iron ore production to around 80 million tonnes by 2014 as it digs new mines in Brazil and South Africa.
But that’s still well below current production figures for others, including Vale , BHP Billiton and Fortescue Metals Group each of which has massive expansion plans in the works.
BHP Billiton is proceeding with a $7.4 billion expansion of its Western Australia iron ore operations with its own share of the investment totalling $6.6 billion.
That expansion will raise capacity to over 220 million tonnes per year, with first production expected from its new Jimblebar mine in early calendar year 2014.
World trade in iron ore was 1.036 billion tonnes last year, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.