The biggest iron ore producers in Australia are spending as much as $10 billion on mines so they can keep pumping out shipments to China as demand in their biggest customer shows little sign of easing.
Led by Rio Tinto Group, the nation’s top three exporters plan to add about 170 million metric tons of new capacity to replace exhausted mines and are studying investments in infrastructure and equipment to boost export capacity to their long-term targeted rates. Output will rise 9 percent to 843 million tons in 2022, according to Deutsche Bank AG estimates.
Forecasts of a slowdown in China’s steel industry are proving to be misplaced with BHP Billiton Ltd. saying production hasn’t yet peaked and likely won’t do so until the middle of next decade, while steel-making raw materials will continue performing well over the coming 12 months. Iron ore prices are trading near a four-month high.
Rio’s Chief Executive Officer Jean-Sebastien Jacques is scheduled Wednesday to open the producer’s $338 million Silvergrass mine, the first of a wave of replacement operations in Western Australia’s Pilbara region. The nation will account for about 56 percent of the global export market by 2019, from 54 percent last year, according to Australia’s government.
Rio, the world’s second-largest iron ore exporter after Brazil’s Vale SA, has approved a $100 million of spending on replacements for depleted operations, and will consider approval for a further $1 billion across the next three years, according to a presentation this month.
For the rest of this article: https://www.bloomberg.com/news/articles/2017-08-29/iron-ore-s-kings-are-spending-again-as-china-can-t-stop-buying