Iron ore is one of the most abundant and widely utilised natural resources globally. It serves as the primary raw material for steel production, essential for industries like construction, transportation, manufacturing, and energy. Its significance extends to everyday products such as cars, appliances, electronics, and medical devices, making it a cornerstone of the global economy.
Iron ore mining occurs in various regions worldwide, with Australia, Brazil, China, India, and Russia being the largest producers, contributing about 75% of global output. Although smaller quantities are mined in regions like Africa, North America, and Europe, these five countries dominate the industry. The iron ore market operates mainly through the spot market, where prices and quantities are negotiated for immediate or short-term delivery. This market is influenced by supply and demand, quality, transportation costs, and exchange rates. Additionally, the futures market allows for contracts specifying delivery dates and prices, providing a hedge against price volatility and ensuring long-term supply or demand.
Iron ore quality is determined by its composition, with hematite and magnetite being the most common and high in iron content, making them ideal for steelmaking. Other grades, such as limonite, goethite, siderite, and taconite, have lower iron content and require extensive processing before use. The ore’s quality and composition significantly affect its market price and demand.
Processing iron ore involves smelting, where it is heated with coke and limestone to produce pig iron, which is then refined into various types of steel, including carbon steel, stainless steel, and alloy steel. These steels are subsequently shaped into products like bars, rods, sheets, pipes, wires, and beams. Beyond steel, iron ore is also used to make cast iron, wrought iron, and iron alloys.
The steel industry, consuming about 98% of global iron ore, is the primary consumer, using it for infrastructure, vehicles, machinery, and tools. Other significant consumers include the iron and steel casting industry, producing parts for various applications, and the iron and steel powder industry, making metal powders for diverse uses. Additionally, sectors such as the chemical industry and military industry utilise iron ore for pigments, catalysts, fertilizers, weapons, armour, and ammunition.
Iron ore remains indispensable to the global economy, driving economic growth, supporting various industries, and enabling the production of numerous essential products. Despite environmental concerns related to its extraction and processing, the ongoing demand for steel and technological advancements in mining suggest that iron ore will continue to be a vital resource for the foreseeable future.
Iron ore’s critical role in the global economy is underscored by its widespread use and the substantial economic benefits it brings to producing countries. As industries and technologies evolve, the demand for iron ore remains robust, ensuring its importance well into the future. However, balancing economic growth with environmental sustainability will be crucial in managing this valuable resource.
Alien Metals Ltd (LON:UFO) is a global minerals exploration and development company that will shortly make the transition to iron ore producer. The company was formed from Arian Silver in late 2018, retaining some of the companies more valuable Mexican projects before embarking on an acquisition led strategy, headed up by an excellent geological team and targeted entirely on Western Australia.
