Central and West Africa to be next major iron ore supplier

AFRICA DOWNUNDER: Perth – Central and West Africa will be the world’s next major supplier of iron ore according to Africa-focused Australian iron ore developer, Equatorial Resources.

Speaking in Perth on the first day of the 2012 Paydirt Africa Downunder conference, Equatorial managing director John Welborn said China, by 2015, wanted to import 50 per cent of its iron ore from Chinese-owned mines elsewhere in the world – and this meant resolving the issue of alternative sources of supply.

“China remains by far the dominant buyer of seaborne iron ore, importing more than 650 million tonnes last calendar year or 63 per cent of total global seaborne iron ore demand,” Welborn said.

“Historically more than 75 per cent of China’s seaborne iron ore supply has come from Australia, Brazil and India where China has relied heavily on the big three producers.

“Chinese steels mills are suffering from high input costs and low profitability and need to find new sources of supply.

“Global demand is forecast to be more than 3.5 billion tonnes by 2030 and with current annual production figures showing approximately 500 million tonnes coming from Australia, 240 million tonnes from India, 390 million tonnes from South America, and 55 million tonnes from south Africa, it poses the question of where the extra supply will come from.

“Increased production from the traditional iron ore regions will not fill the gap and so it is a certainty that projects in central and western Africa will be developed to fill the demand gap.”

Welborn said this had generated a “race to production” along the western African coastline with companies from all over world racing to develop a range of iron projects in that province, both as stand-alone projects or as part of iron ore clusters.

“Central and west African iron ore offers the upside of massive scale, high quality resources, coarse grained ore bodies and low cost of production,” Welborn said.

“The challenge is the infrastructure reality, as the area needs the development of railways, ports, and mines amid many regional opportunities. New iron ore production is only coming on stream in Africa where two conditions exist –the presence of high grade, near surface iron ore bodies in close proximity to existing rail infrastructure.”

Welborn said the near term focus from the region would therefore continue to be growing output from mines close to infrastructure ports needed to get ore to market.

In the medium to longer term, new rail infrastructure development will drive large-scale production.

Equatorial is focused on developing two iron ore projects in the Republic of Congo including the Mayoko-Moussondji iron project (targeting maiden resource in 2H 2012) and the Badondo iron project.

The company is midway through a 70,000 metre drilling program at Mayoko-Moussondji targeting high grade direct shipping ore hematite over a 12 kilometre strike length.

It has also defined an exploration target of 1.3 billion to 2.2 billion tonnes at 30 to 65 per cent iron for the Badondo iron project.