The British-Australian mining concern Rio Tinto sees opportunities to increase the supply of iron ore on the market despite weakening demand for steel in China, as reported by Kallanish. The Simandou project in Guinea is expected to bring 60 million tons of iron ore per year to the market, with Rio Tinto’s share at 27 million tons annually.
CEO Jakob Stausholm stated that the first ore will be produced by the end of this year, with a 30-month ramp-up period. The project will contribute only 6% of the world's seaborne ore trade, indicating there is room for its output in the market.
The Simandou project is anticipated to reach its full capacity of 120 million tons per year quickly, and may significantly impact the marine iron ore market. It is projected to supply about 10% of China’s annual maritime ore imports.
High-grade iron ore, with an iron content of approximately 65.3%, will be in greater demand as Chinese steel mills aim to decarbonize. The launch of the Guinea project may lead to a reduction in supply from major exporters in Australia and Brazil, possibly triggering a new investment boom in adding value to ore in Australia.
The increased supply from Guinea, combined with stagnant demand from China, is likely to put downward pressure on prices. The Guinean government expects the Simandou project to reach its maximum production in the second year of operation.
