(Minews) - Reuters reported that Australian miners are racing ahead with plans to expand iron ore production to capture more of the Chinese market for the steelmaking ingredient, amid strong competition from the world's biggest supplier Vale of Brazil.
Efforts to beat already ambitious output targets comes as a crackdown in China on using commodities as collateral to raise cash risks unleashing iron ore sales from tens of millions of tonnes sitting in Chinese port warehouses, pressuring prices.
Fortescue Metals Group Limited which is raising production 57% this year said that its needs iron ore prices to stay between USD 110 per tonne to USD 120 per tonne for the next 12 to 18 months in order to pay off a targeted USD 2.5 billion in debt.
The Australian Bureau of Resources and Energy Economics forecast an average price of USD 110 per tonne this year but only USD 103 per tonne in 2015. By 2016.
BHP, the world's biggest diversified mining company, lifted full year iron ore production guidance by 5 million tonnes to 217 million as it pushes ahead with new mine work in Australia. That's still behind Australian rival, Rio Tinto , which is close to mining 300 million tonnes a year and Vale, which is targeting annual output of more than 360 million tonnes with longer term plans to exceed 400 million.
China imports more than a half-billion tonnes of iron ore annually to supplement domestic production of mostly lower grade ore. China's crude steel production rate of some 2 million tonne a day makes it by far the world's biggest consumer of iron ore.
According to Macquarie Bank, output from BHP's most profitable division rose 1pct to 49.6 million tonnes in the three months ended March 31 versus the previous quarter above forecasts.
Mr Andrew Mackenzie CEO of BHP Billiton said that “The lift in output was helped by a limited impact from heavy rains in Australia's Pilbara iron ore belt in January and expansion work underway at the company's new Jimblebar mine.”