Why quality rules the roost in Australia’s iron ore market

As a fundamental backbone within Australia’s resources and mining economy, iron ore plays a major role in the success of our nation. It’s why our two largest mining companies, BHP Billiton and Rio Tinto, hold extensive portfolios across iron projects.

As a fundamental backbone within Australia’s resources and mining economy, iron ore plays a major role in the success of our nation. It’s why our two largest mining companies, BHP Billiton and Rio Tinto, hold extensive portfolios across iron projects.

Over the past few years, however, the iron ore industry has been undergoing significant change as higher grade resources become more scarce, safety standards are improved and focus shifts to sustainable steel production.

As a result, demand for higher quality iron ore continues to increase, with traders and steel makers preferring grades of 65% Fe or higher for greater production efficiency.

At 70% Fe, this has Carpentaria Resources’s Hawsons Supergrade® positioned well in current market conditions.

Within the market, this demand for higher grades is evident both domestically and internationally. In January 2019 for example, Australia’s biggest steel producer, BlueScope Steel signalled that it was looking into different iron ore supply for the Port Kembla steelworks in Wollongong, looking for better prices and more efficiency.

The supply contract originates from BlueScope’s de-merger from BHP in 2002.

BlueScope has been trialling iron from Africa, India and Brazil, but CEO, Mark Vassella has sights set domestically, “I would expect going forward that the vast majority of our requirements would come from Australian suppliers.”

This is just one example of global trends. We are seeing a similar situation in the Middle-East and Asia, where lower gas prices and improvement in technology has seen a rise in direct reduction furnaces that require these higher quality iron products, which is reflected in the price differentials between grade quality.

Within the current market, standard grades of 62% Fe trade for USD$95 per tonne, 65% Fe for $110/t whilst product of Hawsons Supergrade ® at 70% Fe would fetch $120/t.

It’s a changing landscape and one that Carpentaria are well positioned to exploit, as we aim to complete our final round of funding, continue negotiations with Tier 1 offtake partners and commence our bankable feasibility study.


Carpentaria Resources trades under the ASX code: ‘CAP

Quentin Hill is the Managing Director of Carpentaria Resources.

*Reach Markets have been engaged by CAP to assist with private investor management.

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