China`s aggressive campaign to clean its skies by clamping down on polluting steel mills has fuelled a need for high-grade iron ore, and a prospector in the Australian outback is hoping that will help fund an ambitious plan to develop a full-scale mine.
More Chinese mills are opting for high-grade iron ore to boost productivity and limit emissions, opening the door wider for suppliers of better quality ore to the world`s biggest buyer.
"In October, we had multiple parties looking at the project," Hill told Reuters.
"I`ve since returned from China and the Middle East, where there has been a surge in support to assist us with product development," he said.
Hill said the mine would produce pulverised ore containing a higher-than-normal 70 percent iron that could be fed directly into furnaces as pellets, or sphere-shaped high-quality ore that typically fetches a premium over the sandy iron ore fines.
The spot price for iron ore pellets <.io65bp-cno> topped $125 a tonne in early November, double the price of benchmark 62-percent iron ore fines <.io62-cno> at that time, according to Metal Bulletin.
Hill estimates it will cost A$1.4 billion to get the mine up and running.
China is forecast to increase its pellet imports by 70 million tonnes over the next 10 years, CRU consultancy said.
The annual global supply of pellets has been cut by 30 million tonnes since the closure of the Samarco mine in Brazil in November 2015 by partners Vale
To stem the loss, Vale in October announced plans to restart three pelletising plants in Brazil that have been idled for several years: the 7 million tonnes-per-year Sao Luis plant in mid-2018, and two smaller plants, Tubarao I and II, possibly in early 2018.
Also in Brazil, Anglo American
"There is new competition for scarce pellet feed across all markets," Hill said.
The highest-grade producers of up to 65 percent iron ore, Vale and Rio Tinto
Fortescue is pushing to ensure majority of the 170 million tonnes it mines annually will have higher grades as it replaces depleting deposits with new ones.
"We are looking at pathways to achieve a target of the majority of our product being above 60 percent iron," Fortescue Chief Executive Nev Power said in a statement emailed to Reuters.
Similarly, as old mines run dry, BHP and Rio Tinto are replacing them with higher grade operations.
"Even though there has been capacity reduction in China, it`s actually moving that production from inefficient environmentally polluting mills to ones that are more efficient," said Chris Salisbury, chief executive of Rio Tinto`s iron ore division.
"To do that they need to lift output. To lift output they need higher-grade iron ore, and that`s what we`re seeing," he said. ($1 = 1.3058 Australian dollars)
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)