Miners’ Iron Ore Expansion Plan to Proceed amidst China Slowdown
Global miners have agreed that economic slowdown set to be seen in China this year could temper demands for iron ore but insisted that their expansion goals will not be re-calibrated.
According to Reuters, China had slashed its growth target this year to 7.5 percent, the lowest in the past eight years that were marked by the country's ascent to dizzying economic heights and capped last year by its crowning as the world's second biggest economies.
Along with the country's frenetic industrialisation moves in the past years, mining giants like BHP Billiton and Rio Tinto capitalised on the demand spikes for iron ores that filled up the steel requirements of China's almost relentless infrastructure build-ups.
China's growth also spurred iron ore production hikes in Australia, which already reached close to 500 million tonnes of output for all major companies each year, Reuters said.
Both companies, however, have maintained that their expansion plans will roll out as planned despite the slight slide on China's projected GDP growth for 2012.
BHP Billiton iron ore division president Ian Ashby has admitted that shifts in the Chinese economy would most likely flatten the demand for the company's major product but the downward trend would not remain for long.
However, he cited earlier estimates that in the years ahead, some 100 million Chinese would migrate into industrial zones, a spectre that should trigger more construction activities and therefore the need for more iron ores.
In the near term, demand for iron ores would most likely retreat, Ashby said, but the by middle part of the next decade, steelmaking would again shoot up by up to 60 percent, he added.
BHP is currently positioning for such eventuality and is pushing ahead with its $10 billion iron ore expansion program, with goals of achieving 165 million to 170 million tonnes of output per year, Ashby said.
Floor price for iron ore has been hovering between $120 and $150 in the past four months, media reports said, and those figures alone should prompt for additional investments that would increase production levels, according to Rio Tinto.
In February, Rio Tinto chief executive Tom Albanese had informed company shareholders of its ramped up production goals, which he clarified will be guided by existing market situations.
Its current expansion blueprint, Rio Tinto said, would lead to annual iron ore production of 283 million tonnes by next year.
Part of the program are the establishment of new iron ore projects and the likely expansion of presently operating mines, the company said, which currently boasts of 225 million tonnes production capacity.
Over the next two decades, experts have forecasted that global demands for iron ores would peak to more than three billion tonnes, making the case for expansions as smart moves on the part of the mining giants.