Annual iron ore production will increase at an average of 3.6pc between 2021 and 2025, with Brazil and Australia leading this trend, Fitch Solutions predicted in a report published this week.
Fitch indicated that mining output will reverse its trend of the past five years, when it decreased at an average of 2.3pc per year, to boost iron ore output by 571mn mt of iron ore in 2025 compared to 2020.
Companies such as Brazil’s Vale and Australia’s BHP, Rio Tinto, and Fortescue will consolidate their expansion and development plans, which will be the main drivers of increased iron ore production, Fitch noted in its report.
Moreover, Brazilian mines will increase iron ore extraction at a rate of 10.6pc a year, to 542mn mt in 2025 from 397mn mt in 2021. In the case of Australia, growth is estimated at 1.8pc per year until 2025 when this country’s production could reach 1.35bn mt.
Australia is also considered to be a front-runner as an iron ore supplier due to the lower cost for producing the material in this region. Fitch estimates that production prices of Australian iron ore average around $30/mt when compared to $90/mt in China and around $40-50/mt in West Africa.
Still, the rise in production is estimated to reduce iron ore prices over the next four years, which could lower production rates below the current levels beyond 2025.