Australia risks losing its iron ore dominance, Fortescue CEO says
Australia faces competition from Guinea mine, green iron projects
Tough lesson in Australia's nickel industry collapse
Fortescue presses for more government, industry collaboration
Adds CEO comments in paragraphs 4, 12-15
By Melanie Burton
Oct 29 (Reuters) -Australia risks losing its dominant position in the global iron ore market if it does not move swiftly to produce green iron, and would do well to learn lessons from the near wipe-out of its nickel industry, Fortescue CEO Dino Otranto said on Tuesday.
Australia is the world's biggest supplier of seaborne iron ore, accounting for around half of global supply. But the Pilbara grades dug up from the country's west are generally regarded as too low to be turned into steel without using coal.
That means as steel makers decarbonise, they are turning elsewhere for iron ore, which could hit Australia's top export earner, Otrantosaid at the IMARC conference in Sydney.
"The message is, take the opportunity," he said on the sidelines of the conference. "We have an abundance of solar and wind... so the logical next step is to get into downstream industries."
Competition is growing from new green steel projects - made without the use of fossil fuels - in the Middle East, while Guinea'sgiant Simandou iron ore mine is set to start up next year, he said.
"That's a high grade deposit going straight into the steel mills in China," he said of Simandou.
"Let's not sit here with our head in the sand thinking it's not going to happen again."
Australia had the opportunity to help build Indonesia's nickel industry but did not anticipate China's speed and technical innovation, and its domestic industry suffered as a result.
"The Chinese ... built the biggest nickel industry the world has ever seen and ... took out an entire market sector in four years," he said, referring to the transformation of Indonesia's nickel industry into the world's dominant supplier, driven by Chinese stainless steel giant Tsingshan.
That flood of supply has hammered nickel producers around the globe, including in New Caledonia and Australia.
Otranto said a similar scenario could play out in Australia's iron ore industry which, along with the Australian government, was underplaying the threat to the sector and that government and industry need to collaborate to lower power costs in particular.
"We have to bring in Chinese manufacturing of solar panels and wind turbines, because they're doing it better than anyone else," he said. Automating robots for installation would cut labour costs to help make green iron production economic, he said.
The world needs Australia's iron ore to sustain steel production so answers must be found.
"We cannot lose the opportunity to place the 600 to 700 million tons of iron ore that Australia ships out," he said. "So we have to work unbelievably hard, even harder than we're doing now."
The world's fourth largest iron ore miner, Fortescue will use green hydrogen from solar farms at its Christmas Creek operations to start producing 2,000 tons per year of green iron using hydrogen next year.
On Monday, Brazilian miner Vale VALE3.SA, the world's second biggest iron ore producer, said it had partnered with China's Jinnan Steel Group to build an iron ore beneficiation plant in Oman to make high quality pellet.
Reporting by Melanie Burton; Editing by Sonali Paul and Lincoln Feast.
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
