COVID-19, climatic disruptions and auction delays to reduce global iron ore production by 1.2% in 2020, says GlobalData

Global iron ore production is expected to decline by 1.2% in 2020 to 2,230.8 million tonnes (Mt) as the leading producers are affected by a range of factors including weather-related disruptions, auction adjournments and mine closures due to COVID-19, says GlobalData, a leading data and analytics company.

In Australia, which is the world’s largest producer of iron ore, production is forecast to increase by just 0.9%. The growth is being limited by the impact of cyclone Damien. The extensive damage caused by the cyclone to Rio Tinto’s rail, road and mining infrastructure led the company to reduce its production guidance for 2020 by around 6Mt. The other major producers, BHP and Fortescue Metals Group, were not affected and none of the three main producers expect any reduction output due to COVID-19.

In Brazil, however, heavy rains in the Southeastern parts in early 2020 severely impacted production at Vale’s operations during the first quarter. Subsequently, the abrupt spread of COVID-19 in Brazil led to reduced shipments from the country. As a result, the company has reduced it’s guidance for 2020 by up to 30Mt.

Vinneth Bajaj, Senior Mining Analyst at GlobalData, comments: “Brazil will still record a growth of 4.5% in its iron ore output for 2020 with the country recovering from the sharp fall in output due to the Brumadinho disaster in 2019. The production dropped by 12% to 404.9Mt during this time.

“Meanwhile, delays in the auctioning of mines in the Indian state of Odisha, which were to be held in March 2019, are expected to damage India’s iron ore output in 2020, which is expected to fall to 205.7Mt – a 12.5% decline compared with 2019.”

Between  2021 and 2024, global production is expected to grow at a CAGR of 3.5%, to reach 2,553.8Mt, with Australia, Brazil, Russia and India being the key contributors towards this growth. The combined production in these countries is expected to increase from a forecasted 1,721.0Mt in 2021 to 1,927.7Mt in 2024.

Some of the key iron ore projects expected to commence operations during the forecast period include BHP’s US$3.1bn South Flank project and Rio Tinto’s US$2.6bn Koodaideri project, both in Australia. These projects are currently under construction and expected to commence operations by 2021.

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