Global Iron ore futures have witnessed moderation after gaining for last few months as signs of overheating in base metals market clubbed with concerns over Iron ore demand from steel-making companies capped the upside in the mineral. The global Iron ore futures had hit a high of $ 78 per tone in early March 2018 before correcting and the near term outlook is turning tepid amid comfortable supplies. The market seems to have factored in the strong global economic growth and unless a clear evidence of supply moderation appears in next few months, the action is expected to be rather shaky with selling pressure appearing on every rally for the industrial commodity. Iron ore is a key ingredient in steel making and its pricing depends upon global steel demand, trends in equities and cues from Chinese economy.
Last week, leading global miner BHP Billiton approved US$ 2.9 billion in capital expenditure for the South Flank project in the central Pilbara, Western Australia. BHP President Operations, Minerals Australia, Mike Henry, said the South Flank project will fully replace production from the 80 Mtpa (100 per cent basis) Yandi mine which is reaching the end of its economic life. The South Flank project expands the existing infrastructure at Mining Area C, and involves construction of an 80 Mtpa crushing and screening plant, an overland conveyor system, stockyard and train loading facilities, procurement of new mining fleet and substantial mine development and pre-strip work.
First ore from South Flank is targeted in the 2021 calendar year, with the project expected to produce ore for more than 25 years. South Flank iron ore will contribute to an increase in Western Australia Iron Ore (WAIO) average iron grade from 61% to 62%, and the overall proportion of lump from 25 per cent to approximately 35%. It is expected to have a strip ratio in line with the WAIO average.