Sao Paolo, Brazil: Economic growth in India could spark additional global iron ore demand similar to way rapid urbanization in China sent ore prices soaring, the chief financial officer of Brazilian miner CVRD said on 16 Marc h.
Companhia Vale do Rio Doce SA’s finance chief, Fabio Barbosa, told the Agencia Estado news agency that current iron ore prices didn’t reflect the potential surge in demand for iron ore from India’s expanding economy.
“In the long term, India could represent an effect similar to China since 2002,” Barbosa said. “We are carefully watching economic growth in India and think there could still be upside that is not yet reflected in prices.”
Barbosa made the comments during a meeting with Rio de Janeiro’s Association for Analysts and Capital Markets Professionals. CVRD is the planet’s largest miner of iron ore, a key raw ingredient for steel production.
Earlier this month, the Indian government imposed stiff taxes on iron ore exports in an effort to meet rising domestic demand. According to CVRD, that could lead to additional tightness in the global iron ore supply.
A heated Indian iron ore market is also drawing CVRD’s global diversification interests.
Barbosa said CVRD is seeking ways to reduce freight costs that make the company less competitive in Asia. CVRD wants to boost production of long-haul ships that transport its products, especially to Asia. But the company hasn’t decided whether it will build ships on its own or partner with clients.
CVRD’s American depository shares were up 2.1% on 16 March on the New York Stock Exchange, or $0.75, to $35.83.