EXPLORATION & DISCOVERY: IRON ORE

Use of iron ore in Canadian blast furnaces remained low for the third year in a row. Relative to 1991, however, consumption of domestic ores increased by 11%, to 7.6 million tonnes. Iron ore imports, mainly from the United States, remained at 4.6 million tonnes.

Canadian iron ore mines and plants produced 34 million tonnes of concentrates, pellets and sinter from hematite and siderite ores in 1992. Shipments reached only 33 million tonnes, the lowest level since 1983. Employment at Canadian iron ore mines, concentrators, agglomerating plants and support services declined again, amounting to 5,800 at the end of 1992 and, with announced layoffs, will be below 5,600 in 1993.

World trade in iron ore was 181 million tonnes in the first six months of 1992, and will likely reach only 370 million tonnes for the year, a decline of 5% from 1991. Brazil and Australia were again the leading exporters at 107 million tonnes each, significantly less than in 1991. Canadian exports were 27 million tonnes, the lowest level since 1983.

The Intergovernmental Group of Experts on Iron Ore (IGE), under the United Nations Conference on Trade and Development (UNCTAD), met in Geneva Oct. 26-28, 1992. Representatives from 28 countries and several international agencies exchanged information which improved iron ore market transparency. The secretariat, under the direction of the IGE will be producing preliminary 1992 statistics in early 1993.

The iron ore outlook for 1993 is dependent on the forecast flat performance of the world steel industry. Eastern European steel production is projected to continue to decline into 1994 while North America and Western Europe are projected to produce slightly more steel. The real gains will be made in Asia and Latin America. Japan is forecast to continue producing steel at the low 1992 level.

Negotiations for shipments in 1993 are expected to be difficult because of announced demands by steelmakers for lower iron ore prices. Canadian producers should be able to maintain volumes of sales, but they may not be able to increase revenues. For example, the Iron Ore Co. of Canada renewed its contract with Japanese steelmakers to supply 2.3-2.7 million tonnes/year for another five years, but price negotiations are not complete. To improve their prospects, Canadian producers are researching ways to improve iron ore recoveries and to provide products to more stringent client specifications.