■ TN295 No. 9128 HI I ■ I ■■"> uili »> S ■■■■ ■ •' hII ■ I ■H .A'X m "by o* .••-.if* V i v^>* \-- T \/ %/™y \"o<^/ %-^/ x V 9 V *4 ' OK .0 ^ V,/ /»A e o ^ A^ ^, a^ ^v»:- ^ a* .ystonr. ^ a^ /.a^a.% ^ ^ A ^C ^ V \-^v v^-/ V^*/ v^- ^f *• %/' X/ A *^» <.. ■» O 'bV ^0 X -0 > .^ « r\ :* -^ Bureau of Mines Information Circular/1987 Iron Ore Availability— Market Economy Countries A Minerals Availability Appraisal By Judith L. Bolis and James A. Bekkala UNITED STATES DEPARTMENT OF THE INTERIOR Information Circular 9128 Iron Ore Availability— Market Economy Countries A Minerals Availability Appraisal By Judith L. Bolis and James A. Bekkala ■ s UNITED STATES DEPARTMENT OF THE INTERIOR Donald Paul Hodel, Secretary BUREAU OF MINES Robert C. Horton, Director As the Nation's principal conservation agency, the Department of the Interior has responsibility for most of our nationally owned public lands and natural resources. This includes fostering the wisest use of our land and water resources, protecting our fish and wildlife, preserving the environment and cultural values of our national parks and historical places, and providing for the enjoyment of life through outdoor recreation. The Department assesses our energy and mineral resources and works to assure that their development is in the best interests of all our people. The Department also has a major responsibility for American Indian reservation communities and for people who live in island territories under U.S. administration. $ Library of Congress Cataloging-in-Publication Data Bolis, Judith L. Iron ore availability— market economy countries. (Information circular ; 9128) Bibliography: p. 56 Supt. of Docs, no.: I 28.27: 9128 1. Iron ores. I. Bekkala, James A. II. Title. III. Series: Information circular (United States. Bureau of Mines) ; 9128. 'P Na O O .' U ' l [TN401] 622 s [338.273] 86-600224 Ill PREFACE The Bureau of Mines is assessing the worldwide availability of selected minerals of economic significance, most of which are also critical minerals. The Bureau iden- tifies, collects, compiles, and evaluates information on producing, developing, and ex- plored deposits, and mineral processing plants worldwide. Objectives are to classify both domestic and foreign resources, to identify by cost evaluation those demonstrated resources that are reserves, and to prepare analyses of mineral availability. This report is one of a continuing series of reports that analyze the availability of minerals from domestic and foreign sources. Questions about, or comments on these reports, should be addressed to Chief, Division of Minerals Availability, Bureau of Mines, 2401 E St., NW, Washington, DC 20241. CONTENTS Preface iii Abstract 1 Introduction 2 Acknowledgments 2 Commodity overview 2 State of the industry 2 Economic impact of Government-controlled operations 4 International trade 4 International transportation 6 Inland shipping 8 Price structure 8 Iron ore resources and processing 9 Geology 9 Iron ore mining 10 Beneficiation methods 10 Agglomeration methods 11 Methodology 12 Evaluated iron ore resources 13 Costs 17 Capital costs 17 Operating costs 17 Shipping costs and rates 18 Availability of iron ore in market economy countries 19 Annual availability 19 Total availability 21 Sinter fines 21 Page Lump ore 22 Pellets 22 Pellet feed 24 Summary of total availability 24 Regional availability of iron ore 25 North America 25 United States 25 Canada 29 Mexico 29 South America 31 Brazil 35 Venezuela 35 Chile 37 Peru 39 Australia and New Zealand 39 Europe 42 Sweden and Norway 42 Spain and Portugal 44 Africa 46 Liberia 46 Republic of South Africa 49 Other African countries 49 India 52 Regional availability summary 53 Conclusions 54 References 55 Bibliography 56 ILLUSTRATIONS 1. Major exporters and importers of iron ore in the international market in 1985 5 2. World iron trade pattern, early 1980's 5 3. Ocean freight rate fluctuations, early 1980's 7 4. Minerals Availability Program evaluation procedure 12 5. Mineral resource classification categories 16 6. Freight operating cost curves 18 7. Annual availability of sinter fines for producers and nonproducers at various total costs 20 Total potential availability at a 15-pct DCFROR for producers and nonproducers in market economy countries: 8. Sinter fines 21 9. Lump ore 22 10. Pellets 23 11. Pellet feed ■ 24 12. Location map, U.S. deposits and ranges 26 13. Location map, Mesabi range deposits 26 14. Location map, Wisconsin and Michigan range deposits 27 15. Total potential availability at a 15-pct DCFROR for selected domestic producers and operations permanently closed since 1981 28 16. Location map, Canadian deposits 30 17. Location map, Mexican deposits 31 Comparison of total potential availability at a 15-pct DCFROR: 18. Sinter fines, Brazil and other South American countries 32 19. Sinter fines, Africa, Australia, and Brazil 33 20. Lump ore, Brazil and other South American countries 34 21. Total potential availability of pellets and pellet feed at a 15-pct DCFROR for South American countries . . 34 22. Location map, Brazilian deposits 36 VI Page 23. Location map, Venezuelan deposits 37 24. Location map, Chilean and Peruvian deposits 38 25. Location map, western Australian deposits 40 26. Location map, southern Australian deposits 41 27. Location map, New Zealand deposit 43 28. Location map, Swedish and Norwegian deposits 44 29. Location map, Spanish and Portuguese deposits 45 30. Location map, western African deposits 47 31. Location map, South African deposits 48 32. Location map, northern African deposits 50 33. Location map, central African deposits 51 34. Location map, Indian deposits 52 TABLES 1. World iron ore production 3 2. Utilization of mine capacity in the 10 largest MEC iron ore producing nations, 1982 3 3. Location and capacities of iron ore exporting ports 6 4. Domestic iron ore prices 8 5. International iron ore prices, 1984 8 6. Iron ore products, sizes, and commodity prices 13 7. MEC iron ore deposit information and demonstrated resources used for analysis 14 8. Capital cost estimates for a large Australian and a large Brazilian iron ore mine 17 9. Operating cost ranges for selected MEC iron ore mines and deposits 17 10. Pelletizing operating costs for selected MEC iron ore mines and deposits 18 11. Estimates of rail transportation costs 18 12. Ranges of spot iron ore ocean freight rates, 1984 19 13. Summary of annual availability of iron ore products 19 14. Summary of total availability of iron ore products 25 15. Comparison of prices and freight rates for Brazilian and Australian sinter fines in European and Japanese markets 33 16. Summary of availability of iron ore products, for selected regions 54 UNIT OF MEASURE ABBREVIATIONS USED IN THIS REPORT DWT deadweight ton 1 MMlt/yr million long tons per year ft foot MMst million short tons in inch Mmt million metric tons kg kilogram Mmt/yr million metric tons per year km kilometer mt metric ton 2 lb pound mt/d metric ton per day L liter mt/h metric ton per hour L/mt liter per metric ton pet percent It long ton 2 pct/yr percent per year ltu long ton iron unit st short ton 2 lt/yr long ton per year wt pet weight percent m meter yr year mm millimeter

— ..'. V/7 /J7 1 v ■• '■- "S .-■- ■■'•■■'-■■— A \ ) &, is jlL../»\ W- •. _)b / \ Wl / / /, ^J^^ / ^^^^^ \ \ \ LJ^7 1 \ \ 7 V LEGI - 10 Mi :nd Tit fc£I0( XDMmt ) Mmt Scow, km Figure 2.— World iron trade pattern, early 1980s. Taken as a group, the developing countries constitute only 9 pet of the world raw steel capacity yet make up 40 pet of the total global iron ore production capacity (5). One of the policy aims for a number of developing countries is to try to establish or expand their steel industries. This is based on the premise that the development of a steelmak- ing industry will have a profound impact on the entire in- dustrial and social development of the country. This trend is reflected in the rapid increase in iron ore consumption in the developing countries, which averaged 5.7 pct/yr in the 1970's. In contrast, the consumption of iron ore in the developed countries decreased at a rate of 0.7 pct/yr (6). Contracts covering a relatively long period of time con- stitute the major share of all iron ore transactions between the steel mills and their supplying mines. The Japanese and European (EEC and Eastern European countries) steel in- dustries meet about 90 pet of their import requirements under this type of arrangement. The balance represents sales on the spot market or under relatively short term contracts. The steel producers have established very close relation- ships with most iron ore mines that assure the steel pro- ducers of a stable source for their ore. In the past, large con- sumers have reduced their supply risk through direct in- vestment in additional mines and/or long-term contracts with other mines, resulting in a diversification of sources for iron ore. In addition, buyers have assured themselves of a more than adequate supply of iron ore by offering long- term contracts or establishing partial ownership with the mines. Such guaranteed markets have been necessary for the mine owners and their financial backers to justify the large investments needed to develop the mines. In the past, under the long-term supply contracts, the iron ore industry was able to achieve and develop a healthy growth based upon anticipated demand. However, in recent years, a gradual reduction of the stability provided by these long-term arrangements has been witnessed. In many cases the steel mills accept only 60 to 70 pet of basic contractual tonnages, making the usual 10-pct quantity variation clauses appear meaningless. This has increased the ten- dency to achieve wider quantity margins and shorter con- tract durations. The persistence of this trend, coupled with the apparent latitude in approach to the quantity margins, can result in the diminishing value of these contracts with adverse effects on the mining operations and the shipping industry. INTERNATIONAL TRANSPORTATION The iron ore mines in many countries export much, if not all, of their product, and most of this is traded via ocean routes. In the world seaborne trade, iron ore is one of the most important dry cargo commodities and has grown rap- idly since the mid-1960's. Shipments rose from 152 Mmt in 1965 to 330 Mmt in 1974— equivalent to an average growth of about 9 pct/yr (7). During those years many mines were developed with the export market in mind, and the resulting world iron ore trade patterns changed con- siderably. Accompanying this change in trade patterns was an increase in the size of ships used to haul iron ore, the necessity to develop port facilities that would accommodate the large ships, and an increase in the average length of ocean shipping distances. Most of the iron ore mines that export ore are located in different continents than the steel mills to which they sell their ore. Many of the mines that sell in the export market produce very large quantities of iron ore products that have a relatively low unit value. Hence, it is necessary to have a transportation system capable of handling the large tonnages and vast distances in a very inexpensive manner. Table 3 shows locations and capacities of iron ore exporting ports that were used in this study. Table 3.— Location and capacities of iron ore exporting ports Continent and country Port name Capacity, DWT Africa: Algeria Cameroon . Gabon Ivory Coast Liberia Mauritania Annaba Tarfoya Kribi Santa Clara San Pedro . Buchanan . Monrovia . . Nouadhibou Senegal Sedar Sierra Leone South Africa Asia: India Europe: Norway . Portugal Spain Sweden North America: Canada Oceania: Australia South America: Brazil Pepel Saldanha Bay . . Mangalore Mormugao Vishakhapatnam Narvik Kirkenes Seixal Almeria Lulea Port Cartier .... Pointe Noire . . . Sept-lles Dampier Port Latta Port Hedland . . . Port Walcott Whyalla Chile Peru Venezuela Ponta do Ubu . Rio de Janeiro. Sepetiba Tubarao Guacolda Guayacan Huasco San Nicolas . . . Palua Puerto Ordaz . . e 100 e 90 e 100 e 150 e 200 85 85 110. e 200. 100. 300. 60, 1 50. 1 50, 350. 125. e 100, 90, 60, 125, 75, 230, 200, 95, 225, 265, 70, 200, 40, 250, 300, 160, 170, 160, 170, 70, 100, ,000 000 000 ,000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 000 e Estimate for proposed port. 1 Up to 150,000 DWT can be loaded in deeper water. Source: Cargo Systems Research, Ports of the World. Transportation, as an element of ore price, constitutes a large part of the cost of iron ore. Rates for ocean shipments of iron ore are dependent upon a number of variables. Among these variables are the size of the vessel, the design of the vessel to handle joint cargos with the ore or to backhaul or crosshaul some other cargo (such as oil or grain) during some segment of its journey, the nature and capacity of loading and unloading facilities at different ports, the ownership of the vessel, competition for cargo space at any given time, and terms of the contract. In general, a "spot" shipment (short-term contract) in a fairly small vessel can cost several times more on a per-ton basis than shipment in a large vessel under a spot or long-term contract. Around 90 pet of international iron ore trade is under long-term con- tracts. Figure 3 shows the wide range and variability of ocean freight rates for various routes in the early 1980's. The use of larger vessels has become more and more common in the international shipment of iron ore because of large volumes of ore and the need to reduce unit cost. Routine loading of vessels in the 100,000- to 200,000-DWT classes is common in Brazil and Australia, with some cargos even larger. Deadweight tonnage (DWT) is the carrying capacity of a vessel in long tons and is measured as the dif- ference between the ship's weight and its displacement 18 16 14 12 +- E "** 10 KEY Australia to Europe Brazil to Asia Brazil to Europe Australia to Asia Canada to Europe 1980 1981 1982 1984 1983 YEAR Figure 3.— Ocean freight rate fluctuations, early 1980s. I985 1 986 when loaded. The development and use of large ships has enabled iron ore to be transported at very low costs. It is not unusual for large users and large shippers of iron ore to both own and operate their own vessels. For larger vessels the cost per ton of iron ore transported will decrease because the added expenses due to size are small relative to the ex- tra capacity. The cost decreases are due to lower capital costs, per ton of capacity, less required horsepower per DWT, and fewer required crew members per DWT. Many ships are of the combined carrier configuration, and about 60 pet of them are at least 100,000 DWT. In fact, most major volume long-haul trade routes are open to the 150,000- to 200,000-DWT size ships. These ships are either oil-bulk-oil (OBO) or ore-oil (O/O) carriers. This facilitates backhauling of cargos more effectively, resulting in higher use rates and more competitive pricing structures. More shipments of bulk cargos, such as oil, ore, coal, and grain, are moved from the Atlantic Basin to the Pacific Basin than the reverse. As a result, there is a tremendous competitive pressure on many dry bulk carriers to secure backhaul cargos from Austrialia and the Far East. Thus, it is possi- ble for countries like Australia to ship iron ore and baux- ite to Europe at much cheaper rates than generally accepted for the distance involved. Ocean transport costs for iron ore are a function not only of the size and type of vessels used but also of the time taken to load and discharge, as well as of the distance over which the product is transported. The type and efficiency of the port facilities available at either end of an ocean transport leg affect all other factors except the shipping distance. Generally, it is not feasible to develop large iron ore loading facilities at existing ports because of such factors as mine location, limited available water depth, unsuitable or in- adequate infrastructure, and congestion. The construction costs of port facilities are high and include the costs of dredg- ing to obtain and maintain the necessary water depths. Japan and Western Europe have the great majority of the existing large carrier ports receiving iron ore imports. Since the mid-1960's, many steel mills have been built in locations adjacent to iron ore discharging terminals on the coasts. Most of the large carrier ports are controlled by the steel companies, and incoming raw materials are usually discharged directly to adjacent coastal steelworks. However, in the Federal Republic of Germany, for example, imports are barged up the Rhine River to the steel mills. There are also transshipment terminals (which transfer cargo from large, deep-draft, ocean vessels to rail cars or to smaller, shallower vessels capable of river navigation) for iron ore cargos, the majority of which are located in Western Europe. Facilities of this type are owned either by inland steel manufacturers or by stevedoring companies specializing in iron ore. The iron ore ocean freight industry is not a fully com- petitive market. Iron ore is generally transported under un- published long-term charter arrangements. In addition, major steel companies have ownership or control in many of the companies that ship iron ore, and some quoted freight rates are simply intercompany book entries. Buyers of ship- ping services, normally the steel producers, can influence freight market developments without resorting to direct in- vestment in shipping. They can promote investments by in- dependent operators or subsidiaries by entering into charter arrangements of sufficient duration to allow capital amor- tization of the vessels within the contract period. They can also discriminately award contracts with freight rates that are initially favorable to the shipping company even before a ship is constructed. This way they can avoid direct invest- ment and insure an adequate supply of ships and estab- lished shipping costs. Because some of the ships are so large and are also specialized, they can be accommodated at com- paratively few ports. This severely restricts their ability to be used to carry other cargo when iron ore is not available. Depressed iron ore market conditions continue to affect the ocean freight industry, especially the large bulk car- riers. Due to the present weak demand for iron ore and an oversupply of ships, major changes will have to take place in order to restore the steel or shipping industry market equilibrium. However, some additional large bulk carriers are still being built, making it more difficult to reach satisfactory trading conditions for shipowners. INLAND SHIPPING About two-thirds of the iron ore products imported into the United States are from Canadian mines and are re- ceived at the Great Lakes ports. The remainder are off- loaded at a few ports on the east coast and gulf coast. The major problems with the importation of iron ore into the United States are the berth and channel draft limitations that limit access to lake ports almost exclusively to vessels of 65,000 DWT or less. An extremely large volume of material is moved over the Great Lakes, including 80 pet of the raw materials needed for steelmaking. The lakes and connecting water- ways between the railheads and mills form one of the coun- try's most effective transportation systems. Due to the im- pact of transportation charges and different markets, iron ore from the Great Lakes area is not cost-competitive with overseas ores unloaded on the gulf coast or the east coast of the United States. Ships used in the Great Lakes trade (Lakers) are dif- ferent from those used in ocean trade. They are long and narrow with a comparatively shallow draft, have a max- imum size of about 60,000 DWT, and are designed to pass through the locks on the waterways between the lakes. The new iron ore carriers on the Great Lakes are exclusively self-unloading. The ships unload via self-contained conveyor systems and are able to do so quickly, inexpensively, and at offloading points where facilities are minimal. They can also unload directly into waiting rail cars or river vessels, thereby reducing turnaround time and saving on additional handling costs. PRICE STRUCTURE Japanese and European steelmakers dominate the market for iron ore, and, to a great extent, control the iron ore prices. Individual steelmakers normally do not negotiate their own contracts; most negotiations are done through industry-oriented buying organizations. Steel mills, however, have their own individual iron ore specifications that govern the negotiations for various ore products. Iron ore accounts for only 10 to 15 pet of the total cost of steelmaking, and iron ore prices have little correlation with the price of iron and steel and the fluctuations of the iron and steel industry. Because of geographic locations and volume of sales, quality of ore, and type of product, Australia and Brazil are the price leaders for the iron ore exporting countries. Most of the iron ore is bought by multiyear contracts on a tonnage basis, with renegotiation of prices normally done annually. Iron ore is not a homogenous commodity with respect to chemical composition or physical form. Consequently, pricing methods are complex to reflect these characteristics. An ore with a specific quality (includes grade, deleterious substances, size, etc.) will have a small price range. Prices are established on an iron unit basis. This price is derived through an agreement between the seller and the consumer on a unit price per iron unit basis and is not officially fixed (8). On the international market the price for iron ore is usually a negotiated free on board (f.o.b.) price. However, there are some exceptions to this, such as Venezuelan, Brazilian, and Australian ore being sold cost and freight (c&f). The delivered price, or cost, insurance, and freight (c.i.f.) price, is usually the price from which the f.o.b. price is derived, and is the price with which the steel producers are basically concerned. The prices for c.i.f. and c&f tend to be equal in a given market for similar products (9). Iron ore buyers will generally negotiate contract prices for iron ore to be equal to other ores of a similar quality to their consumers. The f.o.b. price is then artificially determined by subtracting the estimated ocean freight cost from the c.i.f. price; it is used as a basis for reimbursement to the producer. Hence, transportation costs are actually borne by the producer. Differences in c.i.f. prices between various iron ores delivered to a particular steel mill are, therefore, due to differences either in quality of type of ore or in the type of contract and date of negotiation, or in shipping cost. The prices on the international market do not govern the domestic prices for ore that is sold internally. Mexico, Venezuela, and other countries sell iron ore for use inter- nally, especially to Government-owned mills. This is somewhat true for the United States. The domestic ore prices are based on the Great Lakes price schedule as a reference point that governs both merchant and captive transactions. These prices, however, are only for the Lake Superior ores and do not necessarily govern prices of ore produced elsewhere in the United States. The pricing Table 4.— Domestic iron ore prices (Per gross ton of 51.50-pct-Fe natural ore, delivered at rail of vessel Lower Lake port) Mesabi non-Bessemer Coarse Fine Old Range non-Bessemer . . . Manganiferous Pellets, per natural long ton iron unit .555 NA Not available. Source: Skillings' Mining Review. Table 5. — International iron ore prices, 1984 December December December 1977 1980 1984 $21.18 $28.50 $30.03-31 .58 21.98 NA NA 20.73 NA NA 21.43 28.75 NA 21.43 24.55 32.78 .805 .66-.869 Market and supplier Product Price, $/Fe unit European market: 1 Australia 2 Fines Lump Fines 0.33 Brazil .36 .26 Canada South Africa, Republic of . . . Sweden and Norway Pellets Concentrates . . . Fines 0.34-36 .27 .21 Lump Pellets Fines .24 .37-39 .27-.29 Venezuela 2 West Africa Fines Fines . . .33 .24-.28 Japanese market: 3 Australia Fines .26 Brazil Lump Fines .31 24-.25 Canada Chile Pellets Lump Fines Fines .20 .24 .23 .21 India Liberia Lump Pellets Fines Lump Fines Iron sand Fines .23 ".35 .20-.26 .26-.30 .22 New Zealand 4 .19 Peru .20 South Africa, Republic of . . . Pellet-fines Fines .20 .24 Lump .27-.28 1 Price is dollars per It Fe unit, f.o.b. unless otherwise noted. 2 c&f. 3 Price is dollars per mt Fe unit, f.o.b. unless otherwise noted. 4 1983 price. Source: TEX Report, Bulk Shipping Costs and Commodity Markets. schedule used on the Great Lakes is based on the price of ore delivered at "Lower Lake port," or "Upper Lake port," or "delivered rail of vessel, Lower Lake port." The published prices are set at the given receiving port regardless of the distance between the shipping and receiving port. Even though the Lower Lake pricing system was developed when the United States imported very little iron ore, it has a strong bearing on current prices paid for South American and African ores. Table 4 gives some domestic prices in 1984 for various iron ore products. International iron ore prices are given in table 5 and are shown for the two major markets of iron ore products, Europe and Japan. Note that some of the prices are based f.o.b., while others are on a c&f basis. IRON ORE RESOURCES AND PROCESSING GEOLOGY The major forms of iron worldwide, as classified by their chemical composition, are hematite, magnetite, goethite or limonite, siderite, and, rarely, pyrite. Hematite, magnetite, and goethite, all iron oxides, are the three most common iron ore minerals. Some deposits of siderite (iron carbonate), pyrite and pyrrhotite (iron sufides), and chamosite (an iron silicate) are mined but are of minor economic importance at the present time. Mineral impurities exist in any iron ore and are relevant to the discussion of the nature of iron ore. Typical gangue minerals are quartz, iron silicates, calcium-magnesium iron carbonates, clay minerals, apatite, and manganese oxides. There are many different types of iron ore deposits, but the vast majority of them can be classified as either bedded sedimentary deposits or massive deposits. Bedded deposits in Precambrian rocks, called banded iron formations (BIF's), are by far the most important sources of iron ore. Occur- rences of these deposits are predominantly in the Precam- brian Shield areas of the world. BIF's are thinly bedded chemical sediments containing at least 15 pet Fe and nor- mally containing chert layers. The BIF's are usually fold- ed and have low to steep dips. Thicknesses normally average a few hundred feet but may range from less than 25 ft to more than 2,000 ft. The beds are exposed in belts ranging from a few miles to several hundred miles in length, although distances of a few tens of miles are more common. The term "taconite" is a local term used in the iron- bearing district of the Mesabi range in the Lake Superior Region of the United States. Generally, taconites are bedded ferruginous charts of extremely hard ore in which the iron is in either banded or well-disseminated form containing hematite, magnetite, carbonate, or silicates, or a combina- tion of these. Since World War II it has been considered a low-grade iron formation suitable for concentration of magnetite and hematite, from which pellets containing 62 to 65 pet Fe can be made. Deposits in BIF's with iron con- tents about 25 pet that are amenable to beneficiation are considred taconite-type deposits. The taconite ores are low- grade deposits containing 15 to 35 pet Fe and 40 to 55 pet Si0 2 . Most North American iron formations contain 30 pet or more total iron, 60 to 80 pet of which is economically recoverable. South American itabirites are usually richer in iron content than those in North America, grading about 40 pet Fe. Itabirite is a laminated, metamorphosed iron for- mation in which the iron is present as thin layers of hematite, magnetite, or martite. The term was originally applied in Itabira, Brazil, to a high-grade massive specular- hematite ore (66 pet Fe). Metamorphism has sometimes caused a coarsening of the grain size, which has improved the beneficiation qualities of the deposits. Billions of tons of ore containing more than 64 pet Fe are in the Brazilian itabirite formations, with some deposits containing almost pure hematite. Oolitic ironstones of Paleozoic to Cretaceous age com- prise another class of bedded iron deposits of regional im- portance in the Southeastern United States, Western Europe, and North Africa. They differ from the BIF's in that, although they are laterally extensive, they are usually less than 50 ft thick and usually average only 25 to 35 pet Fe. The ore consists of very fine grained hematite, quartz, chamosite, and siderite in varying proportions and is usually high in phosphorus. On a global basis, the relative significance of these ores is small. Iron occurs in several types of massive deposits found mainly in tectonically deformed belts of the earth and associated with igneous intrusions. The most important types appear to be magmatic segregations, and injection, sedimentary, and extrusive deposits. Grades of iron ore range from about 30 pet to 65 pet Fe. Some of these deposits contain minerals of copper, titanium, phosphorus, vana- dium, or other metals that may be produced as byproducts. Most of the apatite presently produced in Sweden is recovered from iron ore tailings. In the past, gold has been produced from iron ore operations in Minas Gerais in Brazil. Copper, cobalt, minor amounts of nickel, and unspecified amounts of gold and silver occur in the ore at Hierro, Peru. Manganese, cobalt, phosphate, copper, gold, and silver have all been recovered from domestic iron ore operations. Clastic accumulations of magnetite in beach sands are a minor source of ore and usually contain titanium. Another minor source of ore is river bed deposits containing titanium. Another minor source of ore is river bed deposits containing goethite, such as the Robe River deposit in Australia. Iron ore also occurs as laterites formed in tropical areas. The use of laterites as a iron ore is limited because of major impurities such as clay, chromium, cobalt, and nickel. In addition to laterites, other residual deposits are also formed by weathering of iron-rich rocks that formed the Mesabi range direct shipping ores and the ore at Schef- ferville in Canada. Manganese and titanium occur along with iron in deposits in many countries around the world. The pellets at Wabush in Canada are produced from an ore that has a high manganese content. Concentrates from titanomagnetite beach sands are produced to provide the basis for the iron and steel industry in New Zealand. India produces a substantial amount of manganiferous iron ore used for blast furnaces. These types of deposits were in- cluded in the study if the iron ore was of sufficient quality and the magnetite or titanium was of a relatively low grade. Manganiferous and titaniferous iron ores are more impor- tant to the manganese or titanium industries and therefore were not evaluated in this study. 10 IRON ORE MINING Iron ore mining systems for mines evaluated in this study are generally all open pit; the most notable excep- tions are the underground mines of northern and central Sweden. Mining methods are essentially the same for foreign and domestic iron ore. Computer technology has been incorporated into many of the mining and beneficia- tion processes to increase efficiency and reduce personnel requirements. While conventional ore breakage, employing drilling and blasting variations, is most universally used, several other unique systems are being utilized in some of the mines. In New Zealand, water-jet drilling is used to loosen the iron sands of the Waipipi deposit. After the 130-ft-thick deposit is loosened by the high-pressure water jets, the ac- tual mining is then carried out by dredging or scraping along an 800-ft face. Marampa in Sierra Leone (west Africa) is yet another mine using unique systems of ore recovery. The mine has been brought on line again after a 7-yr closure. Conven- tional bench mining is practiced, while the "tailings pond ore" is mined with a dredge. The dredge digs to a depth of 33 ft with a 14-in-diam suction head. This secondary ore, produced at a rate of 1.35 Mmt/yr, is then pumped to the concentrator. The "tailings pond ore" contains 40 Mmt of 28.6 pet Fe. The Savage River Mine in Tasmania employs mining practices, some of which are normally confined to underground operations. Due to the complex geology of the ore body, very stringent pit control is required, including rockbolting, special terminal blast conditions, and pit dewatering. Heavy rainfall in the area of 2,000 mm (79 in) annually requires that the pit be designed with a 2-pct grade to assure proper drainage into the Savage River. Pumping of the pit will be required for the final four benches as the pit will be below the level of the river. The Sishen Mine in the Republic of South Africa is one of the largest open pit mines in the world, with a future potential of expanding into underground production as well. Due to rising fuel costs, a trolley-assisted truck operation was tested and installed for full operation in 1984. A 20-pct decrease in diesel fuel consumption has occurred with this computer-controlled trolley system. The Swedish mining industry has been long recognized as a leader in new methods, new equipment, and innovative mining practices throughout the world. The underground rail haulage system at the Kiruna Mine is operated from one central underground control room. The operator has complete control over all the ore chutes, loading points, and unloading of a completely automated rail system. Monitor- ing of the system is done by strategically placed television cameras with the television screens located in the control room. Kiruna employs a sublevel caving method, as does the Malmberget Mine, which is one of the largest underground mines in the world, and the second largest mine in Sweden. Prior to converting to sublevel caving, the mine also employed room-and-pillar and shrinkage stoping mining systems. A major problem associated with the sublevel caving mining method is the resultant subsidence effects on the surface environment. In the case of the Malmberget operation, the town of Malmberget had to be relocated to insure safety. The Malmberget Mine employs truck haulage rather than rail, and transports the ore in 45-st trucks to the primary crusher underground. Trackless haulage was selected mainly because it offers more flexibil- ity than rail. The Kudremukh Iron Ore Company Limited, a Government-owned enterprise of India, has constructed the largest new iron ore project in the world at Kudremukh in southern India. The mine is scheduled to produce an average of 90,700 mt/d at full capacity. The mining methods to be employed are similar to those at large opencast mines elsewhere in the world. The mine will employ the largest mining equipment in India, utilizing 120- to 150-mt-ore haulage trucks. Haulage roads have been specially con- structed to provide protection against the ravages of the monsoon season. A unique aspect of this project is that manual labor had not yet been replaced by machines dur- ing its construction phase. At the project's peak about 20,000 people were employed by the contractors. The opera- tion will employ about 3,100 people at full production capacity. The entire operation, including crushing, beneficiation, slurry transport of ore concentrate, filtration for production of concentrate cake, and port facilities, will be computerized. Common haulage methods used to transport ore to a beneficiation plant include rail, trucks, and conveyors. Rail and conveyors are most often the least expensive haulage method; however, the geometry of the ore body, depth of the pit, and other factors dictate the methods used at any particular site. Combination haulage methods, utilizing con- veyors, rail, and trucks, are common in many surface operations. Different systems of ore haulage, while not unique, are employed at various operations. The El Encino Mine in Mex- ico employs an aerial tramway to transport crushed ore 22 km to the concentrator and pellet plant. The La Perla Mine and the Las Hercules Mine in Mexico are connected by a 379-km slurry pipeline to carry ore to a new pellet plant at Monclova, Coahuila. The pipeline has a capacity of 4.5 Mmt/yr. The Kudremukh Mine in India operates a slurry pipeline with a capacity of 7.5 Mmt/yr. Another system of ore transportation is employed at the Cerro Bolivar and Altamira Mines in Venezuela, which is similar to haulage at the Reserve Mining Co. deposit in Minnesota. At these mines trucks haul the ore where it is dumped directly into railroad cars. The unit trains then travel 145 km to Puerto Ordaz where they pass through a single rotary dumper to unload the ore. BENEFICIATION METHODS Iron ore is categorized as to its size and type of process- ing. It can be classified as crude ore, which is an unconcen- trated ore as it leaves the mine. If this ore can be used with minimal crushing and screening, it is considered direct- shipping ore. However, almost all iron ore mined is beneficiated in order to obtain uniformly sized products, im- prove the iron content, and eliminate impurities. The prod- ucts (either coarse or fine) of beneficiation plants are called concentrates. Agglomeration of fine concentrates and some natural ores is done to facilitate transportation and smelting. The agglomerates are called pellets, sinter, bri- quets, or nodules, depending upon the nature of the ag- glomeration process. Physical properties of iron ore are important in beneficiation and affect milling costs. Magnetism is impor- tant, for the concentration of both magnetite and hematite (hence the use of high-intensity magnetic separators). Specific gravity differences permit concentration of ores by washing, heavy-medium separation, and the use of Hum- phreys spirals, Reichert cones, cyclones, etc. Some ore can 11 be concentrated merely by screening. Physical-chemical dif- ferences permit concentration by flotation. Chemically com- bined water in hydrous minerals such as goethite (limonite) is hard to drive off; hence, such ore contains less iron and results in a lower price. Crude ore may be of direct shipping quality, which only requires a crushing and screening process followed by direct shipment to the blast furnace. The concentration methods that may be utilized include crushing, screening, heavy- media separation, jigging, and dewatering. Fines are further processed by sintering to produce an acceptable product. Primary crushing is carried out in jaw crushers, gyratory crushers, or rolls. Secondary crushing is normally accomplished in a cone crusher, by rolls, or in a hammer mill. Grinding is mainly carried out in ball mills or rod mills. Commonly used methods for iron ore concentration in- clude heavy-media separation, flotation, Humphreys spiral, and magnetic separation. The method used for iron ore con- centration depends on several factors: magnetic, mineral- ogical, and physical characteristics of ore and gangue as well as availability and cost of power, water, and reagents. The method or combination of methods eventually utilized will entail extensive research and pilot plant testing to develop the optimum cost-effective process. Dewatering, or solid-liquid separation, produces a relatively dry concentrate for shipment. Partial dewater- ing is also performed at various stages in the treatment, so as to prepare the feed for subsequent processes. The dry- ing of concentrates prior to shipping is the las t ope ration that may be performed in the mineral-processing plant for nonagglomerated products. It reduces the cost of transport and is usually aimed at reducing the moisture content to about 5 wt pet. AGGLOMERATION METHODS One of the most important physical characteristics of iron ore is the size of the particles. Iron ore feed that con- tains fine particles causes operational problems in the blast furnace. Hence, most iron ore, of less than 1/4-in-diam size, must be agglomerated before it can be used in the blast fur- nace. Agglomeration is a process in which small particles are combined to produce larger, permanent masses. The two principal methods of agglomeration used for iron ore are sintering and pelletizing. Sinter is made by igniting a mixture of fine ore (1/4 in to 100 mesh), lime or limestone, and coke on a moving horizontal grate. Sinter plants are almost all located adja- cent to steel mills because sinter is brittle and deteriorates easily when handled. Another benefit of locating sinter plants near steel mills is that it enables the recovery and the use of steel plant dust and coke breeze, both generated during steelmaking. Pellets, on the other hand, have excellent handling characteristics and are easily transported. Hence, most pellet plants are located near mines because the fines that comprise pellets are difficult to transport. Pellets are made by combining ore particles less than 100 mesh with a binder, usually bentonite, and then hardening them in furnaces. The pellets produced generally have a very high iron con- tent, rarely less than 60 pet and usually 65 pet or more. Pellets are made by rolling ore with controlled moisture con- tent around in a drum or on a rotating inclined disc. Some small pressure is necessary to consolidate the pellets as they form, but this comes mainly from their own weight applied to each small particle as it is picked up. They are hardened or "indurated" by firing at such a temperature that a good bond is produced either by recrystallization of the minerals present or by the formation of glasses. Initially, magnetite concentrates were pelletized because the heat of reaction constituted a large portion of the necessary process fuel. Now, however, hematite, mix- tures of hematite and magnetite, and mixtures of hematite and limonite can also be pelletized. The exothermic reac- tion from pelletizing magnetite ore reduces the amount of fuel required and can have a very favorable effect on the economics of an operation. Pellets made from hematite and hematite-limonite ores may require as much as 30 L fuel per long ton of ore, while fuel requirements for magnetite ores are considerably lower. Plants run by LKAB in Sweden use as little as 8 L/lt fuel. Fuels normally used to fire pellet plants are natural gas and/or No. 6 fuel oil. In recent years, pelletizing has been increasingly adopted by some developing countries. The reasons for this are (1) a desire for increased foreign exchange earnings, (2) a need to utilize a higher proportion of fines, and (3) the production of feed for growing domestic steel industries. Until the mid-1970's, pellets were a competitive substitute for sinter as a blast furnace feed, but in some cases rapidly rising oil prices caused pellet production costs to rise to levels that eroded any competitive advantage that pellets had over sinter. While overall pellet production has stagnated since 1974, capacity outside North America and the U.S.S.R. continued to increase from about 63 MMlt to over 115 MMlt. Much of this capacity was added in Latin America, particularly Brazil, in an attempt to utilize and add value to iron ore production. North American capacity utilization of pellet plants has fallen from the levels achieved early in the 1970's. However, owing to the lack of competitive substitutes for pellets in North America, the fall was not as pronounced as expected, at least through 1981. A main reason for the declining trend is related to fuel price. In 1976-81, OPEC oil prices increased approximately 300 pet. In countries that produce some of their own oil, the fuel price increases were not as extreme; e.g., Canadian fuel price increases were around 200 pet. But in either case, plants were closed either because of high fuel costs or because prices that producers needed to receive for pellets became so high that there was no market for them. Hamersley Iron and Robe River (Australia), the Iron Ore Company of Canada (Spet-Iles, Canada), and LAMCO (Liberia) all closed their pelletizing plants owing to ex- cessive oil prices, for example. Hierro Peru (Peru) closed its oldest pelletizing circuit owing to high fuel costs and low pellet prices. In 1981, the two export-oriented pellet plants in the Goa region of India were closed owing to high fuel oil costs and the inability to pass those costs on to their Japanese customers. Both plants are likely to undergo major modifications to attempt to reduce operating costs. With respect to the world market, however, the reduc- tion in the production of pellets has not led to a correspond- ing fall in ore supplies, since the reduced volume of pellets has partly been compensated for by increased quantities of concentrate and fine ore. While some pellet projects have come on line, others have been tabled because of high fuel prices. It is not known at this time if and when their future development will be reconsidered even though fuel prices have fallen. 12 METHODOLOGY The Bureau of Mines is developing a continuously evolv- ing methodology for the analysis of long-run mineral resource availability. The flow of the Bureau's Minerals Availability program (MAP) evaluation process from deposit evaluation to analysis of availability information is illus- trated in figure 4. In order to determine potential avail- ability of iron ore, the Bureau selected 129 deposits located in 25 MEC's for evaluation, of which 43 are domestic mines or deposits. For each deposit, geologic, mining, and beneficiation data were collected. Data included resource estimates, actual and estimat- i mine and mill operating capacities, estimated life, and capital and operating costs. Costs used in this study were actual where available or were estimated by various costing techniques. In addi- tion, data were also collected from other sources such as professional journals, industry publications, and individual companies. Costs for U.S. deposits were developed by the Bureau's Field Operations Centers. The Bureau's cost estimating system (CES) (10) was utilized in generating costs for domestic properties. Data for properties in MEC's were collected or developed under contract. For each iron ore operation included in this study, capital expenditures were calculated for exploration, ac- quisition, and development; for mine and plant equipment; and for constructing and equipping the mill. The capital expenditures for the different mining and processing facilities include the costs of mobile and stationary equip- ment, construction, engineering, infrastructure, and work- ing capital. Infrastructure is a broad category that includes costs for access and haulage facilities, ports, water facilities, power supply, and personnel accommodations. Working capital is a revolving cash fund required for operating ex- penses such as labor, supplies, insurance, and taxes. The total operating cost of a mining project is a com- bination of direct and indirect costs. Direct operating costs include operating and maintenance labor and supplies, supervision, payroll overhead, insurance, local taxation, and utilities. The indirect operating costs include technical and clerical labor, administrative costs, maintenance of facilities, and research. All capital investments incurred prior to January 1969 (15 yr or more prior to the data of the analysis) are treated as sunk costs and ignored. The undepreciated balances of investments incurred since January 1969 are carried for- ward and entered as an expenditure in January 1984, the first year of the evaluation. All subsequent investments, reinvestments, operating costs, and transportation costs are expressed in constant January 1984 U.S. dollars. Reinvestments will vary according to capacity, length of pro- duction life, and age of the facilities. After production parameters and costs for the develop- ment of the iron ore deposits were established, the Bureau's supply analysis model (SAM) (11) was used to perform various economic evaluations pertaining to the availability of iron ore. The SAM system is an economic evaluation simulator that is used to determine the constant-dollar long- run price at which the primary commodity must be sold to recover all costs of production, including a prespecified DCFROR on investment; in other words, the price deter- mined is the average long-run total cost of production for each operation over its entire producing life. The DCFROR is defined as the rate that makes the present value of all current and future revenues equal to the present value of all current and future costs of production. For this study a constant 15-pct DCFROR on investment was specified. The SAM system contains a separate tax records file for each State and foreign country that includes all the rele- vant tax parameters under which a mining firm would operate. These tax parameters are applied to each mineral deposit under evaluation with the implicit assumption that each deposit represents a separate corporate entity, with negative cash flows in the developmental stages carried for- Identlfi an cation d Mineral Industries 1 Location 1 System 1 1 (MILS) | data j i MAP com pu ter data base selection of deposits Tonnage and grade determination p 1 Engineering and cost evaluation p w i t 1 Deposit report preparation MAP permanent de posit files ' 1 f Ta xes, royalties, cost indices, prices, etc. . Data selection and validation War lable and parameter adjustments Economic analysis Data Availability curves Analytical reports Sensitivity analysis Data Availability curves Analytical reports Figure 4.— Minerals Availability program evaluation procedure. 13 ward over time as tax losses (where allowed) rather than being applied against other possible corporate revenues in the year they occur. Other costs in the analyses include stan- dard deductibles such as depreciation, depletion, deferred expenses, and investment tax credits. The SAM system also contains a separate file of economic indexes to allow for up- dating of all cost estimates for producing, developing, and nonproducing deposits. Detailed cash-flow analyses are generated with the SAM system for each preproduction and production year of a mine or deposit, beginning with the initial year of analysis (1984). Upon completion of the individual analyses for each deposit, all properties were simultaneously analyzed and aggregated into availability curves. The potential availability of the iron ore products recoverable from a deposit is presented graphically as a function of the total cost of production (defined as the constant-dollar long-run price necessary to recover all pro- duction costs and the specified rate of return) associated with that deposit. Availability curves are constructed as ag- gregations of the total amount of product potentially avail- able from each of the evaluated operations, arranged in order from the deposits having the lowest average total cost per unit of production to those having the highest. The potential available quantity of the iron ore product at a par- ticular market price can be seen by comparing that price with the derived average total cost values shown on the availability curves. The total recoverable tonnage poten- tially available at or below a particular market price can be read directly from the curve. For this study, all iron ore products were assigned to one of four general categories: lump ore, sinter fines, pellet feed, and pellets. Shown in table 6 are the products with sizes and commodity prices assumed for each. When there is more than one product available from each mine, the total Table 6.— Iron ore products, sizes, and commodity prices Product Size Lump ore Plus 1/4-in Sinter fines Minus 1/4-in plus 100 mesh Pellet feed Minus 100 mesh Pellets Minus 20 plus 10 mm Commodity price, $/Fe unit 032 .28 .30 .42 cost reflects the required prices for each product. "Price pro- portioning" is utilized to allow for the total cost of produc- tion to be allocated among all products rather than one, especially in operations for which there is not a clearly defined primary product. Each product at each operation is assigned a commodity price, shown in table 6. The ratio of the price or the price proportion of one product to another, e.g., of lump ore to sinter fines, has been approximately the same over the last few years and was assumed to remain constant in the future. For example, prices for sinter fines have been approximately 88 pet of the price of lump ore and are assumed to remain at this level. The total necessary revenues for each property were determined, and then allocated to each product of that operation. For example, a property producing 5 Mmt/yr of lump ore grading 66 pet Fe and 3 Mmt/yr of sinter fines grading 64 pet Fe per year would receive 66 pet of its revenues from the lump ore and 34 pet from the sinter fines. 4 Hence, the availability curves show the price required or total cost for each product from each mine, because many of the mines produce more than one product. Certain assumptions are inherent in the availability curves. First, all undeveloped deposits will produce at full design capacity throughout their proposed productive lives. Second, each operation will be able to sell all of its output at the determined total cost and obtain at least the minimim specified rate of return. Third, all preproduction develop- ment of all undeveloped deposits began in January 1984. EVALUATED IRON ORE RESOURCES According to Bureau statistics, world iron ore resources are estimated to exceed 800 billion It of crude ore and contain more than 260 billion st Fe (1). Evaluated in this study are demonstrated iron ore resources of 75.3 billion It containing 29.8 billion It recoverable Fe. Forty-three domestic deposits containing 9.5 billion It of iron ore and 86 foreign deposits containing 20.3 billion It of iron ore were evaluated in this study. Table 7 shows the properties eval- uated in this study with resource and other pertinent deposit information. The selection criterion used for the domestic iron ore deposits for inclusion in this study was a minimum of 2 MMlt of m situ contained iron. Because of the magnitude of the number of other known deposits in the MEC's no single criterion was used for deciding whether or not a par- ticular mine or deposit was to be included in this study. Con- sideration was given to large mines currently in produc- tion, particularly in the export market, deposits for which production plans have been announced, and deposits impor- tant to an individual country's economy, including those that have a chance of being developed in the foreseeable future. The selection criterion is admittedly subjective for the United States as well as for foreign properties. A strict adherence to selection criteria based on contained iron data would have omitted some of the mines presently important to the world market while including deposits that have no potential development based on political considerations and good business sense. The resource data for the deposits evaluated for this study have been collected from many sources, both pub- lished and unpublished. It is the intention of the Bureau to evaluate individual deposit resources at the demonstrated level according to the definition established by the Bureau of Mines and the U.S. Geological Survey, as shown in figure 5. This corresponds roughly to the proven plus probable levels normally used by industry. Some sources, however, have used the term "reserves" in a general sense and have included either proven reserves only or have also included material in their reserve figures that is more accurately described as a part of potential ore. Some companies publish the same reserve figure continuously or for the entire com- pany holdings and not on an individual deposit basis. At- tempting to adjust these reserves for subsequent produc- tion introduces a degree of unce rtainty because many of the 4 Lump ore: 5 Mint x 66 Fe units x $0.32/Fe unit = $105,600,000 Sinter fines: 3 Mmt x 64 Fe units x $0.28/Fe unit = $ 53,760,000 Total revenues $159,360,000 Portion of revenues: Lump ore: $105,600,000/$159,360,000 = 66 pet Sinter fines: $53,760,000/$159,360,000 = 34 pet 14 Table 7. — MEC iron ore deposit information and demonstrated resources used for analysis Country, State, Status , Mining Milling ProductS 4 iron grade, tonnage. Cont ?i"* d Fe ' and property method 2 method 3 p^j MM j( MMIt Algeria: Gara Djebilet E S M S 51.8 969.4 502.1 Ouenza P S S PF,S 53.0 40.3 21 .4 Total or wtd av 5T9 1,009.7 523.5 A I IStf*r3 1 13 ' Deepdale E S S S 57.2 984.2 563.0 Giles Mountain E S S S 63.6 295.3 187.8 Koodaideri E S S S 61 .7 71 1 .6 439.1 Marandoo E S S L,S 62.1 339.2 210.6 Marillana E S S S 59.7 738.1 440.6 McCamey's Monster E S S S,L 62.4 246.4 153.8 Middleback Range P S S L,P,S 63.7 75.5 48.1 Mining Area C E S S S 62.2 440.0 273.7 Mount Brockman E S S S 62.2 393.7 244.9 Mount Tom Price P S M L,P,S 61.9 640.2 396.3 Mount Whaleback P S S S,L 61.4 1,653.0 1,014.9 Nammuldi E S S S 62.5 206.7 129.2 Paraburdoo P S S S,L 63.4 444.3 281 .7 Rhodes Ridge E S S S 61.8 984.2 608.2 Robe River P S S P,S 57.0 138.4 78.9 Savage River P S M P 35.0 85.6 30.0 TR5585 E S S S 62.2 206.7 128.6 West Angelas E S S S 62.2 314.2 195.4 Wittenoom E S S S 54.9 984.2 540.3 Yandicoogina E S S S 58.5 1,223.4 715.7 Total or wtd av 601 11,104.9 6,680.8 Brazil: Aguas Claras P S S PF,L,S 62.2 254.6 158.4 Alegria P S S L,S 63.5 171.1 108.6 Andrade P S S L,S 65.2 85.1 55.5 Capanema P S S L,S,P 61.2 176.4 108.0 Carajas E S S PF,L,S 66.1 1,319.8 872.4 CasadePedra P S S L,S 63.7 237.9 151.5 Caue P S M L,P,S 56.1 611.6 343.1 Conceicao-Dos Corregos P S HMS S,P,L 66.6 1,033.5 688.3 Corregos do Feijao P S S S,PF,L 64.7 102.5 66.3 Fabrika-Joao Pereira P S M S,L,P 62.5 256.7 160.4 Mutuca P S S S,L 63.7 59.0 37.6 Periquito P S S L,S 66.6 151.1 100.6 Samarco P S F PF,P 53.2 351.7 187.1 Tamandua E S S PF,L,S 63.8 274.6 175.2 Timbopeba P S S S,L 66.6 167.3 111.4 Total or wtd av 6373 5,252.9 3,324.4 Cameroon: Les Mamelles E S F P 30.1 196.8 59.2 Canada: Carol Lake P S S S,P 37.6 1,733.3 651.7 Fire Lake P S S P 38.0 352.3 133.9 Mount Wright P S S S 31.4 2,471.6 776.1 Wabush P S M P 36.0 1,691.9 609.1 Total or wtd av Chile: El Algarrobo P S M S,L,P El Romeral P S M S,L Total or wtd av Gabon: Belinga E S S S Guinea: Mount Nimba E S S S Simandou E S S PF,L,S Total or wtd av India: Bailadila # 5 P S S S,L 64.4 206.2 137.8 Bailadila #14 P S S S,L 66.9 76.3 51 .0 Bolani P S S S,L 58.9 471.8 277.9 Kudremukh P S F PF,P 38.1 636.6 242.5 Zone D P S S S,L 60.8 199.7 121.4 Total or wtd av 5T2 1 ,590.6 830.6 Ivory Coast: Mount Klahoyo E S M P 35.7 659.4 235.4 Liberia: Bea Mountain E SMS 41.8 120.9 50.5 Bong P S M S,P 37.1 262.4 97.4 Mano River PP S S S 51.5 79.6 41.0 Nimba P S F PF,P,S 59.1 61 .1 36.1 Western Area P S M S 52.2 405.0 21 1 .4 Wologisi E SMS 32.7 812.0 265.5 Total or wtd av Libya: Wadi Shatti E S S S Mauritania: F'Derik P S S S Guelbs E S M S,PF Total or wtd av Recoverable contained Fe, MMIt 421.6 15.8 437.4 550.9 183.7 429.8 197.0 431.2 150.4 47.0 201.5 235.7 278.6 960.8 126.4 275.4 587.8 78.9 22.1 125.8 187.6 529.0 671.3 6,270.9 148.4 103.8 54.3 105.7 815.9 92.1 317.5 637.9 61.6 94.7 36.7 98.5 168.5 164.5 109.6 3,009.7 49.8 275.0 107.1 645.3 233.1 34.7 6,249.1 2,170.8 1,260.5 54.0 55.0 63.0 78.0 34.0 42.9 27.8 38.4 54.5 63.9 141.0 506.9 76.9 323.9 66.2 237./ 66.7 63.1 344.5 590.5 229.8 372.6 206.8 363.0 64.4 935.0 602.4 569.8 112.5 42.8 66.0 144.8 111.4 477.5 208.7 18.4 84.9 25.5 21.8 160.5 199.7 40.3 51.4 1,741.0 782.4 701.9 402.2 510.8 393.5 64.5 36.8 130.7 380.0 84.3 139.8 76.3 104.3 43.9 510.7 224.1 180.6 15 Table 7. — MEC iron ore deposit information and demonstrated resources used for analysis — Continued Country, State, and property Status 1 Mining method 2 Milling method 3 Products" In situ iron grade, pet In situ tonnage, MMIt Contained Fe, MMIt Recoverable contained Fe, MMIt Mexico: El Encino-Aquila P S M L,P La Perla P S M P,L Las Hercules P S F P Las Truchas-Ferrotepec P S M P Pena Colorado P S M P Total or wtd av New Zealand: Waipipi P D G S Norway: Sydvaranger P S P P Peru: Marcona P S M PF,P,S Portugal: Moncorvo E S M P Senegal: Faleme Area E S S S,L Sierra Leone: Marampa P S G S Sourth Africa, Republic of: Sishen P S HMS S,L Spain: Marquesado P S S S,L Sweden: Kiruna P U M P,S,L Malmberget P U M P,S Svappavaara P S S P,L Total or wtd av United States: Alabama: Big Sandy Area PC U H P Birmingham District PC 1971 U H P Southeast Alabama District PC S H P Total or wtd av Alaska: Klukwan E S M P Port Snettisham E S M S Total or wtd av California: Eagle Mountain PC 1982 S H P Michigan: Cascade Reserves PC S H P Empire Mine PT S M P Groveland Mine PC 1982 S M P Republic Mines TC 1981 S F P Tilden Mine PT S F P Total or wtd av Minnesota: Butler Taconite PC 1985 S M P Erie Mine PT S M P Hibbing Taconite PT S M P Magnetic Taconites 5 E S M P Minntac Mine PT S H P Minorca Mine PT S M P National Steel PT S M P Peter Mitchell PT S M P Thunderbird north and South PT S MP P Total or wtd av Missouri: Bourbon Deposit PP U M P Camels Hump PP U M P Pea Ridge PT U M PF Total or wtd av Montana: Black Butte E S M P Carter Creek Iron E S M P Copper Mountain E S M P Total or wtd av Nevada: Buena Vista E S M P Dayton Iron Deposit E S P P Modarelli Mine E S H P Pumpkin Hollow E S M P Total or wtd av New Jersey: Mount Hope Iron Mine ... PC U M S New York: Benson Mines PC 1978 S M P Mineville Mines PC 1971 U M P Total or wtd av Texas: Lone Star Deposits PC 1984 S H S Utah: McCahill Orebody PC S M P Rex Orebody E S M P Total or wtd av See footnotes at end of table. 36.4 88.1 32.1 24.0 50.7 41.0 20.8 13.2 58.3 98.0 57.1 28.4 48.8 106.3 51.9 37.7 37.7 130.7 49.3 43.8 45.5 464.1 211.2 147.1 15.5 271.2 42.0 33.9 32.6 187.3 61.1 51.8 53.5 1,433.3 766.8 644.7 37.0 243.7 90.2 52.2 63.6 334.6 212.8 170.8 32.3 57.1 18.4 15.0 64.0 53.7 1,293.8 33.9 828.0 18.2 656.5 16.7 49.2 40.4 45.0 1,584.3 211.6 233.2 779.5 85.5 104.9 746.7 80.2 84.5 47.8 2,029.1 969.9 911.4 35.2 24.4 8.6 6.7 34.9 1,061.0 370.3 58.2 26.4 258.9 68.3 7.3 33.3 1,344.3 447.2 72.2 10.8 18.9 883.5 530.0 95.4 100.2 72.3 65.1 13.8 33.4 1,413.5 339.5 195.6 113.4 137.4 83.1 34.2 1,377.9 471.2 107.4 31.5 1,233.1 388.4 231.1 35.1 101.8 35.7 26.2 34.2 39.8 13.6 13.6 33.3 854.1 284.4 190.6 33.1 3,606.7 1,193.3 568.9 32.0 99.5 31.8 17.7 31.7 1,464.1 464.1 345.4 30.7 1,038.1 318.7 197.2 621.6 17,319.5 3,741.0 3,366.9 622.0 1,700.7 389.6 331.6 621.0 264.0 55.4 52.6 31.0 965.9 299.4 172.0 6 23.5 1,109.4 260.7 233.6 32.3 1,205.0 389.2 261.4 6 23.6 25,166.2 5,949.9 4,978.4 30.4 36.6 57.0 178.6 22.3 129.3 54.3 8.2 73.7 35.0 5.8 66.5 41.3 330.2 136.2 107.3 22.2 30.0 27.8 137.9 74.6 27.3 30.6 22.4 7.6 25.4 17.9 6.1 25.3 239.8 60.6 49.4 19.0 140.7 26.7 23.4 42.0 40.4 17.0 14.6 51.8 26.1 13.5 12.4 26.7 178.1 47.6 42.3 27.2 38.4 385.3 4.5 104.8 1.7 92.7 3.0 23.5 42.0 181.0 90.0 42.5 37.8 29.8 25.5 29.6 27.0 271.0 76.9 80.3 20.8 55.3 12.4 52.5 52.5 49.2 150.0 25.8 78.8 23.3 70.9 52.5 199.2 104.6 94.2 16 Table 7.— MEC iron ore deposit information and demonstrated resources used for analysis— Continued ^ ~, i ..- ..-„. In situ In situ „ , . ,- Recoverable Country, State, Ste , , Mining M hng ProductS 4 iron grade, tonnage, Con, fJ n ^ d Fe ' contained Fe, and property method 2 method 3 p u ct MM j^ MMIt MM| , United States — Con. Wisconsin: Agenda Deposit E S M P 625.5 157.5 40.2 29.2 Black River Falls PC 1983 S M P 30.0 14.5 4.4 3.2 Gogebic Deposit E S M P 31.0 778.5 233.6 149.1 Penokee Deposits* 1 and #2 E S M P 33.4 2,257.7 754.1 476.8 Pine Lake Taconite E S M P 623.0 202.7 46.6 36.4 South Butternut E S M P «25.9 52.2 13.5 9.8 Total or wtd av 3T5 3,463.1 1,092.4 704.5 Wyoming: Atlantic City PC 1984 S M P 26.1 69.6 18.2 16.0 Total or wtd av, United States 25.6 36,909.8 9,519.0 6,974.8 Venezuela: Altamira P S S P,L,S 63.1 128.6 81.1 68.7 Cerro Arimagua E S S PF,L,S 62.2 133.9 83.3 82.4 Cerro Bolivar P S S PF,L,S 63.1 184.7 116.5 112.8 Cerro Redondo E S S P,L,S 61.1 162.4 99.2 96.2 El Pao P S W S,L 63.1 34.3 21.6 20.6 El Trueno E S S PF,L,S 61.1 108.3 66.2 64.1 Los Barrancos E S S PF,L,S 63.1 228.3 144.1 139.6 San Isidro P S S S,PF,L 64.1 385.8 247.3 217.1 Total or wtd av 6279 1,366.3 859.3 801.5 Grand total NAp 75,304.6 29,753.0 24,149.5 'Status is as of January 1986 unless otherwise indicated. E, explored deposit; P, producer; PC, permanently closed; PP, past producer; PT, producing but with temporary closures; TC, temporarily closed. 2 D, dredge; S, surface; U, underground. 3 G, gravity separation; HMS, heavy medium separation; M, magnetic separation; P, pyrometallurgical processing; S, sizing; W, washing. 4 L, lump ore; P, pellets; PF, pellet feed; S, sinter fines. 5 Magnetic taconites in Minnesota contain subeconomic resources. 6 These deposits are magnetic iron and not total iron, in which the iron content of the silicates and carbonates are not recovered. Cumulative production IDENTIFIED RESOURCES Demonstrated Measured Indicated Inferred UNDISCOVERED RESOURCES Hypothetical Probability range (or) Speculative ECONOMIC MARGINALLY ECONOMIC SUB- ECONOMIC Reserve base Inferred reserve base + + Other occurrences Includes nonconventional and low-grade materials Figure 5.— Mineral resource classification categories. 17 published production data are in terms of finished product and not in terms of crude ore mined. The possibility also exists that additional reserves or resouces have been proven at these properties. Resource numbers for Minnesota's Mesabi range are based on estimates made by Marsden (12). In table 7 the evaluated resources for Minnesota show a total of around 25 billion It of in situ tonnage. Of this total around 8 billion It are actual demonstrated resources, while the remaining 17 billion It are magnetic taconites composed of several deposits in the Mesabi range. These deposits were evaluated on a range by range basis in the Marsden study, which in- cludes subeconomic material. 8 are capital cost estimates for mines in Australia and Brazil. While these mines have capacities greater than 35 Mmt/yr, smaller mines also require high expenditures. For example, a typical 3-Mmt/yr-capacity mine will require an estimated $175 million for initial investments. As il- lustrated in the table, the costs for plant and equipment are small in comparison to the costs of the infrastructure. The infrastructure costs range from 60 to 70 pet of total capital investments for these two large mines, with the railroad and rolling stock being a major component. A capital cost for a pelletizing plant is not included in this table, but an estimated cost for a 10-Mmt/yr plant is ap- proximately $270 million. COSTS CAPITAL COSTS Mining traditionally has been a capital-intensive in- dustry with large investments required for planning and development. This is especially true for the iron ore in- dustry. Iron ore is a bulk commodity of a low unit value that must be mined in large volumes. Factors affecting capital investments for iron ore include the size of the opera- tion, the proposed locality, the necessary beneficiation facilities, and the infrastructure required to support the operation. Infrastructure includes rail lines, rolling stock, port facilities, and townsites. Infrastructure can account for 20 to 70 pet of the total capital investment required in a typical iron ore operation. Two large mines are used as examples to illustrate the capital-intensive nature of iron ore mining. Shown in table Table 8. — Capital cost estimates for a large Australian and a large Brazilian iron ore mine (Million 1984 dollars per metric ton) Type of investment Australia Brazil Capacity mt/yr . . . 46,000,000 35,000,000 Mine plant and equipment 344 208 Mill plant and equipment 36 146 Railroad 819 753 Rolling stock 205 21 1 Port 732 130 Townsite 504 1 02 Miscellaneous 1 766 439 Total 3,406 1 ,989 Miscellaneous costs include engineering, management fees, and administration. OPERATING COSTS The operating costs for the production of iron ore are discussed in this section. Table 9 shows operating cost Table 9. — Operating cost ranges for selected MEC iron ore mines and deposits 1 Number Annual Ore Operating costs, Country of capacity, grade, 1984 $/lt ore Properties ^ P^ Mine Beneficiation Africa: Producers 2 7 2.2-24,6 63-65 1.10-3.40 0.60-2.30 Nonproducers 3 12 4.5-25.2 56-67 1 .80- 3.20 .90-3.80 A iictrgl jo" Producers 5 2.7-45.0 57-65 1 .60- 2.60 .30-1 .60 Nonproducers 14 9.8-28.0 62-64 1.70-3.60 .30- .50 Brazil: Producers 13 1.5-27.0 65-67 .70-2.00 .50-1.70 Canada: Producers 3 17.4-43.8 66 2.00-2.50 3.00-3.50 Europe: Producers 4 5 1.3-17.7 50-70 2.60- 7.20 1 .50-4.50 India: Producers 5 1 .2-20.3 59-67 1 .00- 5.00 .50-1 .50 Mexico: Producers 5 2.0- 5.0 60-69 3.70- 6.50 1.90-3.00 Other South America: Producers 5 7 3.8-14.8 61-67 1.90-2.40 .90-2.70 Nonproducers 6 4 4.5-9.5 62-64 1.90-2.10 W United States: Lake Superior producers 7 9 8.2-61 .7 63-66 2.00- 4.50 3.25-5.00 Lake Superior nonproducers 8 12 2.2-28.7 62-65 2.50-4.50 3.50-9.00 Other nonproducers 9 20 .7-8.9 42-69 3.50-15.50 2.00-6.75 NAp Not applicable. W Withheld. Producers include presently producing mines; nonproducers include past producers, explored or developing deposits. 2 African producers include Algeria, Liberia, Mauritania, Republic of South Africa, and Sierra Leone. 3 African nonproducers include Algeria, Cameroon, Gabon, Libya, Ivory Coast, Liberia, Guinea, and Mauritania. ••European producers include Norway, Spain, and Sweden. 5 Other South American producers include Chile, Peru, and Venezuela. 6 Other South American nonproducers include Venezuela. 7 Lake Superior producers include mines in the Mesabi and Marquette ranges. 8 Lake Superior nonproducers include mines and deposits in the Mesabi, Marquette, and Gogebic ranges. 9 Other nonproducers include California, Missouri, Montana, Nevada, New Jersey, New York, Texas, Utah, and Wyoming. 18 ranges for selected MEC iron ore mines and deposits. Costs are presented by country and by production status on a dollars per long ton of ore basis for mining and milling. In this evaluation, a producer is defined as any mine presently producing, while a nonproducer is defined as any past pro- ducer, explored deposit, or developing deposit. Except in Sweden, iron ore mining is typically done by open pit methods. Mine operating costs per long ton typi- cally range from $1.00 to $5.00 in all countries except in Europe, Mexico, and the domestic nonproducers. The min- ing costs in Europe are higher, because of high labor costs and the fact that Swedish mines are underground opera- tions; high domestic mining costs may be attributed to energy and labor costs. The South American properties, in- cluding Brazil, have the lowest costs, $0.70/lt to $2.50/lt. The mining cost range for India is low, owing to the large Kudremukh project, another example of low labor costs. Specific processing is required for different types of ore, and this impacts beneficiation costs. Some ores, specifically the taconites produced in the Lake Superior region and the hematites in Canada, require intense grinding, which results in higher energy expenses. As seen in table 9, these costs are higher and range between $3.25/lt and $5.00/lt. Beneficiation averages in other regions range from $0.30/lt to $4.50/lt. The ranges and averages for the Brazilian pro- ducer region tend to be low relative to the other regions in both the mining and beneficiation categories. This can be attributed not only to inexpensive labor costs but to the Carajas project, which has vast resources of ore that re- quires minimum beneficiation. Pelletizing operating cost ranges are shown in table 10 for only those countries that have pellet production. Pelletiz- ing is an energy-intensive operation directly related to the type of ore being processed. Magnetite ores are the least expensive to pelletize because an exothermic reaction created during the process minimizes the amount of fuel required. Hematite ores are more expensive, consuming ap- proximately 85 pet more fuel on a per-ton basis than magnetite ores. The pelletizing costs for Canada are about twice those of the other regions because the ores mined are hematite, which results in higher fuel costs. Table 10.— Pelletizing operating costs for selected MEC iron ore mines and deposits Operating costs, Region or country 1984 $/lt product Brazil: Producers 12.30-13.00 Canada: Producers 1 15.00-22.70 Europe: Producers 5.70- 8.90 Mexico: Producers 7.50-10.40 United States: Lake Superior producers 6.00-10.60 Lake Superior nonproducers 7.30-12.90 Other nonproducers 6.50-14.00 ■•Canadian producers include mines processing only hematite ores. SHIPPING COSTS AND RATES Internal iron ore transportation consists of the move- ment of iron ore or iron ore products to a steel plant. Sometimes the iron ore product is transported by truck to a nearby rail spur for shipment to a steel mill. Often the iron ore is transported directly by rail or barge to the steel mill or to a port for exportation. Some estimates of iron ore transportation rates are shown in table 11. Estimates similar to these were used in the study for various routes from the mine to final destination. The table illustrates that Table 1 1 .—Estimates of rail transportation costs Country < -' ost ran 9 e ' Distance y 1984 range, $/mt • km km Australia 0.003-0.004 50-430 Brazil 005- .007 640-730 Canada .008- .009 410-450 India .020 (av) 60-470 Sweden .038- .042 180-220 South Africa, Republic of .005- .016 50-860 United States' .005- .012 50-400 1 Cost range for the United States is in dollars per metric ton-mile and distance is in miles. there is a correlation between length of haul and cost. The greater distance that ore is transported, the lower the cost is per metric ton-kilometer. The availability curves in this report are constructed on an f.o.b. port basis, because once the iron ore product reaches the port it is sold in several markets. Because many prices include the costs of shipping and handling, it is dif- ficult to assess at the port how much of a product will be sold according to any specific price structure. Therefore, all products were taken to the port as a common reference point for the purpose of discussing availability. During the past few years a variety of fluctuations in the shipping industry have caused freight rates to change accordingly. The freight rates do not reflect the actual costs required to operate the ship and recover capital in- vestments. The shippers have had to remain competitive with each other and at times will contract rates that will not necessarily make a profit but will ensure some type of work. Therefore, combining an unstable industry with a 1 1 r A x Ax ■ .\_ i i i :^ i i 1 1 T 1 KEY 100,000 OWT 150,000 OWT 200,000 OWT i i . i i i i 10000 15,000 SHIPPING DISTANCE, km Figure 6.— Freight operating cost curves. 19 complex pricing system, it is difficult to assess the actual operating costs associated with the shipping of iron ore prod- ucts on the international level. As discussed in the International Transportation sec- tion of this report, several factors influence the actual operating costs of shipping. Several correlations with ship- ping costs exist, which involve the variables of distance, ship size, and ore grade. This is shown in figure 6, which il- lustrates freight operating costs at varying distances, deadweight tonnage, and iron content. These curves were developed by a linear regression of data provided under con- tract to the Bureau of Mines. This data set utilized 1981 costs, and because of the decline in the freight industry it does not correlate to present-day shipping operating costs and, therefore, freight rates. However, despite the actual costs, it illustrates that the greater the haulage distance and the larger the vessel, the lower the cost per iron unit. For the availability analysis in this study, ocean freight costs were not used as analysis was made f.o.b. port. Table 12 shows 1984 ocean freight rates for spot charterings. From these rates it can be seen that ocean shipping accounts for a large portion of the final cost of iron. For example, in 1984 Australian producers had operating costs per long ton of ore ranging from $1.90 to $4.20 (table 12), and shipping a long ton of ore to the Republic of Korea would cost $5.00 to $6.00; thus, the shipping rates account for approximately 60 to 70 pet of the total cost. Table 12.— Ranges of spot iron ore ocean freight rates, 1984 Origin Destination Ship size, Rates, 10 3 DWT $/lt Australia Republic of Korea . Western Europe . Brazil Japan Western Europe 100-150 $5.00-$6.00 100-150 6.50- 8.75 130-150 7.00- 9.00 220 5.25- 6.00 50- 65 5.75- 6.50 80-155 4.50- 6.00 Eastern Canada Japan Western Europe 130-150 100-160 7.00- 9.00 3.00- 4.25 Norway Western Europe . . . 90-100 1.75- 2.30 Source: Industrial Minerals. AVAILABILITY OF IRON ORE PRODUCTS IN MARKET ECONOMY COUNTRIES The economic viability of any given deposit is deter- mined by the interrelationship of numerous factors. These factors consist of the inherent physical and chemical characteristics of the deposit such as the grade of ore, total resource, stripping ratio, type of ore, mining method, dilu- tion, geology, and location. The financial aspects related to the operating and capital costs, annual capacity, transpor- tation, tax structure, and numerous other considerations make up the total economic picture. The potential availa- bility of MEC demonstrated resources of iron has been analyzed, considering the above factors, for each of the mines and deposits evaluated in this study. In this study a producer is defined as any mine presently producing, and a nonproducer is any past producing, explored, or develop- ing deposit. The iron ore products evaluated are sinter fines, lump ore, pellets, and pellet feed. ANNUAL AVAILABILITY An annual curve shows the potential availability of total demonstrated resources at various total cost levels on an annual basis. The vertical axis represents total potential tonnage available; on the horizontal axis, time is represented in years for producers, and in the number of years following commencement of production for the nonproducers. For a commodity such as iron ore, annual curves only emphasize the size of the resource. Therefore, they do not illustrate possible depleting resources that could be a detri- ment to a country that relies heavily upon the commodity. Also, annual curves represent potential annual production at full-capacity levels. Only annual curves for sinter fines are shown for illustration purposes. Producer and non- producer annual availability curves for the other products are not shown as they tend to exhibit similar situations, thus illustrating the vast resources of tonnage available for each product. A summary of the potential annual avail- ability of iron ore products analyzed in this study is shown in table 13. Table 13.— Summary of annual availability of iron ore products Tonnage available at total cost less than or equal to reference price, 3 Product Reference price, 2 MMIt and status 1 1984 $/ltu 1988 1992 1996 2000 (N + 4) (N + 8) (N + 12) (N + 16) Total sinter fines: Producers 0.25 165 142 120 85 Nonproducers ... .25 26 38 52 63 Total lump ore: Producers .25 60 60 56 56 Nonproducers ... .25 NAp 5 12 15 Foreign pellets: Producers .40 20 20 20 20 Nonproducers ... .80 NAp 45 45 40 Domestic pellets: Producers .80 44 44 44 44 Nonproducers ... .80 99 9 9 Total pellet feed: Producers .25 4 4 2 1 .8 Nonproducers . . . .25 NAp .7 2.0 2.6 NAp Not applicable. 'Annual availability for nonproducers is given assuming preproduction begins in 1984, or in year N, as illustrated for total sinter fines in figure 7. If preproduc- tion began in a year other than 1984, the year of the annual tonnage would be adjusted accordingly by N+4, N + 8, etc. 2 Reference price is equivalent to various 1 984 market prices in the interna- tional market. 3 Total cost is in 1984 dollars determined at a 15-pct DCFROR. The potential availability of sinter fines on an annual basis is shown in figure 7. This figure illustrates the total tonnage of sinter fines available annually at various cost levels. These curves represent producing and nonproduc- ing mines at 100 pet capacity. The downward trend of the producer curves, beginning in 1990, shows a minor amount of depletion of resource due to annual production. Similarly, annual curves for the nonproducers show an increase in pro- duction for period of several "preproduction" years, attain- ing a level of full production and remaining constant until production begins to deplete the available resources. Preproduction is assumed to begin in year N for the non- producer curves. 20 __AJ 1 1 1 1 1 I 1 1 1 1 1 1 1 1 1 Producers - 175 150 125 100 "^^^ ^^$0.35 ^■\^__$0_25 $0.20 > i i i i i i i 75 1 1 1 1 1 1 1984 N+4 86 88 90 92 94 96 98 2000 _ou ■*- -> _> 1 1 1 1 1 1 1 1 1 1 1 Nonproducers of 300 Z Ll. $0.35 - |_J 250 z CO - ^^ - 200 - 150 / $0.30 - 100 ^^ $0.25 - 50 _ ^ -— ^ — O 1_ _ 1 1 1 1 1 i 1 1 l 1 , N + 6 N+8 N+IO YEAR N + 12 N + 14 N + 16 Figure 7. — Annual sinter fines availability for producers and nonproducers at various total costs, dollars per iron unit. 21 Table 13 shows similar trends over time for the other products. This table shows the availability of the various products on an annual basis at total costs that are less than or equal to a reference price, or market price. In the table, foreign and domestic pellets are shown separately because of differences in market pricing. The potential annual availability for the nonproducers is given assuming that preproduction begins in 1984. Preproduction may be as- sumed to begin in any other year designated as N, and the years that the annual tonnage is available should be ad- justed accordingly. TOTAL AVAILABILITY Total availability curves are the representation of poten- tially recoverable tonnage of a resource that is represented graphically as a function of total cost of production over the life of the operation at a prespecified DCFROR. The curves represent the aggregation of the product that is potentially available from each evaluated deposit in order from the lowest total cost per unit of production to the highest. For this type of curve the tonnage is represented on the horizon- tal axis with the total cost on the vertical axis. From this, the total potential available tonnage of that product at a given market price can be derived by comparing that price with the total cost shown on the availability curves. The iron ore products of sinter fines, lump ore, pellet feed, and pellets are sold on different price bases that vary by country, company, and contract. The availability curves in this study are presented on an f.o.b. basis, in which the total cost includes all costs required to take the iron ore product to the port. When market price is used to determine the potential total availability of an iron ore product, the reader must note that the curves in the study are f.o.b. port while the prices may be f.o.b. port, c.i.f., or c&f. (See Price Structure section of this report.) Therefore, ocean freight rates must be considered when c.i.f. or c&f prices are used. The availability analysis determined that 18.6 billion It of sinter fines, 4.9 billion It of lump ore, 14.7 billion It of pellets, and 820 MMlt of pellet feed are potentially avail- able in MEC's. Sinter Fines There are approximately 18.6 billion It of sinter fines potentially available from 73 of the 129 mines and deposits evaluated in this study. Of this total, approximately 61 pet is found in two countries— Australia and Brazil. Australia has 8.5 billion It (46 pet), and Brazil has 2.7 billion It (15 pet). Seventeen other countries have potentially available resources ranging from 4.5 MMlt in the United States to 970 MMlt in Canada. Total availability of sinter fines from 73 properties at a 15-pct DCFROR, f.o.b. port, is shown in figure 8. In- dividual curves for 40 producers and 33 nonproducers are also shown in this figure. Of the 18.6 billion It potentially available, 6.6 billion It (35 pet) are from producers while 0.90 .80 .t c C o -!= .70 i_ IV Q. « o 00 * .50 o C O O O _J < .30- .20 .10 1 1 1 1 1 KEY — 1 r i 1 1 1 .. To+nl jeers — IOTQI rTOai Nonproducers - r-- J 1 1 - i r^ _ ..--f 1 r -rJ-- _ r ^_ r _ 1 r^ - rJ ~ J ~ "" _f 1 " .—J- 1 ,:j * _i ** I l l i I I I i i 14 16 18 2 4 6 8 10 12 SINTER FINES, billion It Figure 8.— Total potential sinter fines availability for producers and nonproducers in market economy countries at a 1 5-pct DCFROR 20 22 12.0 billion It (65 pet) are from nonproducers. The curves also show that up to 3.6 billion It are available from pro- ducers for less than a total cost of $0.28 per iron unit. The 1984 price for sinter fines on world markets ranged from $0.22 to $0.33 per iron unit. Therefore, at a total cost range of $0.22 to $0.33 there are approximately 2.9 to 10.4 billion It of sinter fines potentially available at a 15-pct DCFROR, f.o.b. port. Availability of sinter fines for in- dividual countries and regions at specific market prices is discussed in the Regional Availability of Iron Ore Products section of this report. Lump Ore There are approximately 4.9 billion It of lump ore poten- tially available from 41 of the 129 mines and deposits evaluated in this study. Approximately 1.4 billion It (29 pet) are available from Australia and 1.2 billion It (25 pet) from Brazil. The remaining resources are from properties in eight countries with resources ranging from 10 to 500 MMlt. Figure 9 shows the total potential availability of lump ore for 41 properties at a 15-pct DCFROR, f.o.b. port. Also illustrated are the individual curves for 30 producers and 11 nonproducers of lump ore. From the producers, a total of 3.7 billion It (76 pet) are potentially available, and 1.2 billion It (24 pet) are potentially available from the non- producers. There are nearly 2.0 billion It of lump ore poten- tially available from the producers at less than a total cost of $0.24 per iron unit, while at the same total cost there is 11 pet, or nearly 230 MMlt, potentially available from the nonproducers. The market price for lump ore ranged from $0.26 to $0.32 per iron unit in 1984. At a 15-pct DCFROR there are approximately 2.2 billion to 3.0 billion It of lump ore poten- tially available within a total cost range of $0.26 to $0.32 per iron unit, f.o.b. port. Lump ore availability for individual countries at specific market prices is discussed under Regional Availability of Iron Ore Products. Pellets Approximately 14.7 billion It of pellets are potentially available from 71 of the 129 evaluated deposits. There are approximately 5.9 billion It of pellets potentially available from 35 producers and 8.8 billion It from 36 nonproducers. Availability curves for the producers and nonproducers as a total are not shown because the foreign and domestic markets differ in pricing and the availability must be analyzed separately for each. Therefore, total curves with producer and nonproducer curves are shown for both domestic deposits and foreign deposits. Figure 10A shows the total potential availability of pellets from foreign deposits only at a 15-pct DCFROR, f.o.b. port. The figure also shows the individual availability 0.6O 1,000 2,000 3,000 LUMP ORE, MMlt 4,000 5,000 Figure 9.— Total potential lump ore availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 23 1.40 _ A, Foreign .20 1.00 .80 -f ± .60H c c o Q. V> 1 .40 -j 1 -20H 00 T ^J / J*' i * KEY Total Producers Nonproducers 0.5 1.5 2.0 2.5 3.0 D ■3 C O ~3 00 o o _l 1.30- < I- o PELLETS, billion It 3.5 Figure 10.— Total potential pellet availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 24 curves for producers and nonproducers. From 25 producers there are 2.7 billion It of pellets available, and from 6 non- producers there are 588 MMlt available at a 15-pct DCFROR, f.o.b. port. Market prices for pellets on the foreign market in 1984 ranged from $0.34 to $0.38 per iron unit, f.o.b. port. At these prices, approximately 350 to 440 MMlt of pellets are poten- tially available. The availability of pellets for individual foreign countries is discussed further under Regional Availability of Iron Ore Products. The total potential availability of pellets from domestic deposits at a 15-pct DCFROR, f.o.b. port, is shown in figure lOfi. Individual availability curves for producers and non- producers are also shown. There are potentially 11.4 billion It of pellets available, with 11 producers accounting for 3.2 billion It (28 pet) and 30 nonproducers accounting for 8.2 billion It (72 pet). The 1984 domestic market price ranged from $0.80 to $0.86 per iron unit, f.o.b. port. At these prices, there are approximately 2.1 to 2.2 billion It of pellets potentially available. The availability of domestic pellets is discussed further in Regional Availability of Iron Ore Products. Pellet Feed There are approximately 820 MMlt of pellet feed available from 17 evaluated mines and deposits. Of this total, approximately 312 MMlt (38 pet) are in Brazil and Venezuela, with another 168 MMlt (21 pet) in Peru and 133 MMlt (16 pet) in India. Figure 11 illustrates the total potential availability of pellet feed along with individual availability of the pro- ducers and non-producers at a 15-pct DCFROR, f.o.b. port. The curves show that approximately 500 MMlt (61 pet) are potentially available from nine producers and 320 MMlt (39 pet) from eight nonproducers. The curves show that at a total cost less than $0.25 per iron unit 75 MMlt of pellet feed are potentially available from producers and nearly 100 MMlt from nonproducers. Approximately 208 MMlt of pellet feed are potentially available from seven deposits in South America (three of which are producers) at a total cost less than $0.28 per iron unit, a typical 1984 market price for pellet feed, f.o.b. port. Summary of Total Availability A summary of the total availability of the four iron ore products analyzed in this study is shown in table 14. The table shows total potential availability with producer and nonproducer availability. Also, the potential tonnage available at total costs that are less than or equal to a reference price, or market price is given. 0.85 I , -I — .75 £ .65 CO o .55 o -o CD | .45 o ~3 I- (/) O 35 O < O .25 .15 I J =PT _L JL _L KEY Total Producers Nonproducers -L -L JL ± 100 200 300 400 500 PELLET FEED, MMlt 600 700 800 850 Figure 1 1 .—Total potential pellet feed availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 25 Table 14.— Summary of total availability of iron ore products T . Potential tonnage ' otai . , D . available at Product Number of Potential Heterence tota , cost [ess and status properties tonna 9 e P"ce. than or equal to available, $/ltu reference Drice 2 MMIt MMit Sinter fines: Producers 40 6.6 0.28 3.6 Nonproducers ... 33 12.0 .28 3.9 Total (fig. 8) 73 18.6 0.22- .33 2.9 -10.4 Lump ore: Producers 30 3.7 .24 2.0 Nonproducers ... 11 1.2 .24 .230 Total (fig. 9) 41 4.9 .26- .32 2.2 - 3.0 Foreign pellets: Producers 25 2.70 .34 .390 Nonproducers ... 6 .588 .34 .050 Total (fig. 10A). . . 31 3.3 .34- .38 .350- .440 Domestic pellets: Producers 11 3.2 .80 1 .90 Nonproducers ... 30 8.2 .80 .260 Total (fig. 1 0B). .. 41 11.4 .80- .86 2.1 -2.2 Pellet feed: Producers 9 0.500 .28 .070 Nonproducers ... 8 .320 .28 .140 Total (fig. 11) 17 .820 .28 .210 NAp Not applicable. 1 Reference price is equivalent to various 1984 market prices in the interna- tional market. 2 Total cost is in 1984 dollars determined at a 15-pct DCFROR. REGIONAL AVAILABILITY OF IRON ORE PRODUCTS* North America United States The iron resources of the United States are vast, whether measured in terms of tonnage of ore or in years of supply as compared with current annual consumption. The United States has an estimated resource of 108 billion It of crude ore containing 30 billion st of Fe (1). U.S. resources are primarily low-grade taconite-type ores of the Lake Superior district that require beneficiation and ag- glomeration to make them suitable for commercial use. The Lake Superior iron ore producing region is the most productive in the United States and includes parts of Min- nesota, Michigan, and Wisconsin. This region is one of the world's major sources of iron ore and contains most of the known iron ore resources of the United States. Between 1891 and 1966 a total of 4.4 billon It of iron ore was pro- duced and shipped in the United States, with about 3.1 billion It or 71 pet from the Lake Superior district. This has increased to over 95 pet in recent years. Table 7 shows that a total of 36.9 billion It of demonstrated resources in the United States were evaluated in this analysis. It should be noted that, of this total, the magnetic taconites in Minnesota contain subeconomic resources of 17.3 billion It. Other iron ore resources of the United States are widely distributed in several geographical regions. These are the Northeastern, Southeastern, Central-Gulf, Central- Western, and Western Regions, plus Alaska and Hawaii. Many of these areas no longer have producing mines and are considered as a resource only. Locations of some of the 5 Reserves and resources information that appears in this text but is not referenced was supplied by F.L. Klinger, Division of Ferrous Minerals, and other Bureau of Mines sources. domestic deposits evaluated in this study are shown in figure 12. The Lake Superior region includes the Mesabi, Cuyuna, Vermillion, and Fillmore "ranges" in Minnesota, the Black River Falls and Baraboo districts in Wisconsin, the Gogebic Range in Wisconsin and Michigan, and the Marquette and Menominee districts in Michigan. These districts contain the principal iron ore deposits in the region. It should be noted, however, that most of these districts are no longer producing iron ore owing to the depletion of direct shipping natural ore and the advent of the pelletization of the lower grade taconite ores. Many properties in these districts are considered exhausted and do not contain any marketable ore under current economic conditions. As of January 1986, 11 properties are producing pellets in the United States, including the underground Pea Ridge Mine in Missouri. (See table 7 for the operating status of the domestic mines evaluated in this study.) Locations of the Mesabi Range deposits evaluated in this study are shown in figure 13, and the deposits evaluated in Michigan and Wisconsin are shown in figure 14. Minnesota and Michigan have installed pellet produc- tion capacities of 62.7 and 18.7 MMlt/yr, respectively. The global recession and lack of demand for U.S. steel products has forced temporary closures of pellet producers for periods ranging from 5 weeks to 4 yr. During the period 1979-83 the United States produced an average of 56.7 MMlt/yr pellets. Since this period included severe reductions in pro- duction, particularly in 1982 and 1983, it is not construed as being indicative of future levels of production. Other iron ore products— e.g., run-of-mine ore, coarse ore, fine ore, and sinter fines— amounted to only 7.6 pet of all U.S. shipments during the past 5 yr and have diminished steadily to 5.2 pet of all shipments and 3.3 pet of produc- tion in 1983. Since the late 1960's, pellets have been the primary blast furnace feed in the United States and Canada owing to the depletion of high-grade natural ores and construc- tion of pellet plants at the mines. The dominant role of pellets in this region is one of the major factors that distinguishes this market from most other iron ore markets. The production of iron ore pellets, an excellent blast fur- nace feed, has made the low-grade taconite ore reserves of the Lake Superior district a major source of iron for the Nation's steel mills. In 1984, pellets made up 95.9 pet of all iron ore products produced in the United States (2). Products from the iron ore mines in Minnesota and Michigan, and from most of the imports from Canada, are railed to docks on Lake Michigan, Lake Superior, or the Saint Lawrence River. Most of the loading docks are owned by the rail companies, which in turn are owned by the min- ing companies. As the shipping season generally runs from about April through December, because the lakes freeze in winter, there are large stockpiling and handling facilities at the docks where the pellets are stored during winter. From there, the pellets are shipped to docks on the lower Great Lakes nearest to the steel mills in Chicago, Cleveland, Detroit, and Pittsburgh. At the Lower Lake ports, the pellets are reloaded either into rail cars or into smaller boats capable of river navigation for the journey to the steel mills. This mode of water transportation for raw materials has enabled the heartland steel producers to re- tain a minor competitive edge over the other areas in the United States. Primarily due to the impact of transporta- tion charges, iron ore from the Great Lakes area is not cost- competitive with overseas ores unloaded on the Gulf coast or the East Coast of the United States. These markets do not compete much with each other any 26 Mountain'/- A. Buena V ^Modarelli ■ Y" Day ton Pumpkin Ho/fowl Black Butte McCahill Eagle* Mountain \ f *x' PP* ^ -\% »v \ Klukwon ^A? Porf\/X- Snettisham ^*" Atlantic $$City PP 500 1,000 I -VERMILLION RANGE MESABI , RANGE 1 ,MARQUETTE ..RANGEv. GOGEBIC I 'RANGE [MENOMINEE^ RANGE Pea pp\ Ridge, - 1 Camels \Hump Bourbon! District? Lone Star Mount Hopt) <> Big Sandy * \ Birmingham. \S,E Alabomoj y^Wistrict x D PP LEGEND Producing mine Post producer Undeveloped deposit Range area Pellet plant Scale, km Figure 12.— Location map, United States deposits 'brand Ropids Bobbin \ Peter MitchellytsTJ, Ene.~-/h£ > \ £ * * 6 ' Minn toe / Minorca ^rrTTTT/lr/ \ Nibbing National Steel J. JS-t Butter .fuZ-$y^*fob\ ng i^^ Eveletty 1 — *~~*. PP V Thunderbtrd \ North and South Superior MINNESOTA | WISCONSIN Silver Boy PPyV Two Harbor J Taconite Harbor m LEGEND • City or town sfc Port X Producing mine PP Pellet plant H — i — I- Railroad Scale, km 50 _l Figure 13.— Location map, Mesabi range deposits. 27 SUPERIOR ?^^y/yy?yy^^y?/y. ien ^Cascade ^-> LEGEND • City or town it Port ft Producing mine ft Past producer mine X Undeveloped deposit pp 1 1 1 Pellet plant • Railroad 50 J I I L Scale, km 100 _J Figure 14.— Location map, Wisconsin and Michigan deposits. 28 Pellets are potentially available from 41 mines and deposits located in the United States, 30 of which are non- producers. There are 11.4 billion It of domestic pellets poten- tially available at a 15-pct DCFROR, f.o.b. port. As discussed previously, the potential pellet availability of domestic producers and nonproducers is shown in figure 106. Of the 11.4 billion It potentially available, 11 producers account for 3.2 billion It (28 pet) and 30 nonproducers for 8.2 billion It (72 pet). The flat-lying portion of the non- producer and total curves is mostly composed of the vast tonnages from the magnetic taconite resources in Min- nesota. The 1984 domestic market price ranged from $0.80 to $0.86 per iron unit. Approximately 1.9 billion It are poten- tially available from the producers and 260 MMlt from the nonproducers at a total cost less than or equal to $0.80 per iron unit. The producer curve shows that 1.3 billion It are available at a total cost less than or equal to $0.72 per iron unit, hence less than the total costs of any of the nonproducers. Figure 15 shows the potential availability of pellets from domestic iron ore surface mines presently in operation and mines permanently closed since 1981. Note that these curves represent operation at full production levels, while presently and in the recent past these iron ore mines have operated at much lower capacity levels. The producers con- sist of nine surface operations, seven in the Mesabi Iron Range and two in the Marquette Iron Range. There are ap- proximately 3.0 billion It of pellets available from the pro- ducers at a total cost less than $0.96 per iron unit. With 1984 market prices at $0.80 per iron unit, there are approx- imately 2.0 billion It of pellets available at less than or equal to $0.80 per iron unit from producers and past producers. The mines that have permanently closed since 1981 in- clude one Menominee range mine (Groveland), one Mesabi range mine (Butler Taconite in Minnesota), one Wisconsin mine (Black River Falls in Wisconsin), and two Western U.S. mines (Eagle Mountain in California and Atlantic City in Wyoming). Also included in this category of permanently closed is one Marquette range mine (Republic in Michigan) that has been temporarily closed since 1981. These mines have approximately 320 MMlt available at total costs rang- ing between $0.75 and $1.06 per iron unit. With the past producers representing a small amount of available ton- nage, an 11-pct reduction in the availability of pellet ton- nage has occurred with the closures of these mines. The availability of sinter fines in the United States is not shown graphically, because only three of the mines evaluated in this study have potential production. With the potential for nearly 120 MMlt, the total cost range for sinter fines is between $0.84 and $1.20 per iron unit, f.o.b. port, and accounts for less than 1 pet of the total potential sinter fines availability in MEC's. The availability of domestic iron ore, as estimated in this report, is affected by several factors currently influenc- ing the iron and steel industries in general. Demand for iron and steel has been depressed on a global basis for the last several years and in turn, the low demand for iron ore has been particularly harmful to the domestic iron ore in- dustry. The U.S. iron ore industry continued to operate at less than 50 pet capacity in 1983, with most major mines being closed for part of the year. Despite low levels of pro- duction in 1982 and 1983, production of iron ore increased to 51 MMlt in 1984, or about 55 pet of capacity. Increased housing starts and an upturn in the auto industry have led to small gains in the demand for iron ore. In 1984, the U.S. iron ore industry had a total mine pro- duction of 51 MMlt, of which about 98 pet was pelletized before shipment. The iron ore was produced by 17 companies operating 21 mines, 17 concentrating plants, and 11 pelletiz- ing plants. The operations included 20 surface mines and 1 underground mine. The effects of the recent recession on the domestic iron ore industry may be further compounded by the recent startup of the Carajas project in Brazil. Should port restric- I.IO T 1.00 o 00 CD D C D —> .90 .80 CO 8 .70 O t- .60 KEY U.S. producers U.S. operations permanently closed since 1981 .__T _, r 0.5 1.0 1.5 2.0 PELLETS, billion It 2.5 3.0 3.5 Figure 15.— Total potential pellet availability for selected domestic producers and operations permanently closed since 1981 at a 15-pct DCFROR. 29 tions be met, this development could lead to increased penetration of cheap foreign iron and steel into the domestic market, thus further lessening demand for U.S. iron ore, pig iron, and steel. The recession affected the United States most severely in 1982. While U.S. resources of iron ore are theoretically sufficient to supply all domestic demand for the foreseeable future, it is unlikely that they will be developed beyond a self-sufficiency level of about 75 pet. The current plight of the domestic steel industry has been blamed in part on cheaper foreign steel entering the United States; as a result, import quotas have been sought by the domestic industry to stem the flow of foreign steel into the country. However, other factors may have also played a role in the present economic conditions of the in- dustry, including (1) higher domestic wage structure ver- sus foreign competition, (2) the use of substitute materials such as plastics and aluminum, (3) a lag in modernization of facilities, (4) lower productivity levels of domestic plants versus foreign competition, and (5) long-range planning defi- ciencies. In view of the foregoing, further reductions in domestic iron ore production capacity are likely during the next few years. Canada The Canadian iron ore industry is characterized by a vertical integration of iron ore mines with parent mining and steel companies. A number of mines in Canada are predominantly controlled by U.S. mining and steel com- panies with minority ownership held by Canadian and European steel companies. The large open-pit operation of Sidbec-Nonmines Inc. in Quebec-Labrador was permanently closed in December 1984, and the Griffith Mine at Red Lake, Ontario, was per- manently closed in April 1986. These latest shutdowns reduce the number of iron ore producers remaining in Canada to six, which is less than half the number of 10 yr ago. The primary cause of the cutbacks in the Canadian iron ore industry in recent years has been attributed mainly to the decline in demand of iron ore. In spite of relatively high production costs, productivity in Canadian mines is high with utilization of the best available technology. The vast Canadian resources of iron ore are capable of supporting Canadian and US. requirements for many years into the future. They are of special interest to the United States because of the present and continuing high degree of U.S. dependence upon Canadian iron ore. In 1984, Cana- dian shipments of iron ore to the United States totaled over 12.6 Mmt, of which 62 pet went to the Great Lakes area and the rest to coastal ports. Overall production in 1984 was 40.6 Mmt, of which 30.7 Mmt was exported. The other major export area is the European market, which accounted for 13.6 Mmt. Canada's production of iron ore in the past 5 yr has consisted mainly of pellets and sinter fines. These two products have accounted for 50.1 pet and 40.8 pet of total shipments of Canadian iron ore. Reserves of iron ore in Canada are estimated at 25.3 billion It containing 9.7 billion st Fe, with an average iron content of about 34 pet. Because of the low grades of the ore, most Canadian ore is beneficiated to a higher grade and is delivered to the steel mills either as oxide pellets made from concentrates or as a concentrate. In addition to reserves of 25.3 billion It, there are approximately another 100 billion It of prospective resources of iron ore in Canada. The greatest proportion of the economic reserves are in northeast and central Canada. Iron deposits in western Canada are generally higher grade and smaller, require underground mining, lack transportation, or pose beneficia- tion problems. The four Canadian iron ore mines evaluated in this study have 6.2 billion It of demonstrated iron ore resources at an average grade of 34.7 pet. From these mines nearly 933 MMlt of pellets are potentially available at total costs ranging from $0.86 to $1.03 per iron unit at a 15-pct DCFROR, f.o.b. port. An individual Canadian pellet avail- ability curve is not shown to prevent disclosing proprietary information. However, these properties were included previously in the total pellet availability curve. Figure 16 shows the Canadian deposits evaluated in this study. Most iron ore transportation in Canada involves relatively long rail shipments plus long distances on the St. Lawrence Seaway from mines to mills. Railways con- nect Canada's iron ore mines in the Labrador Trough to terminal ports on the Gulf of St. Lawrence and use unit trains owned by iron ore producing companies. Most shipments in Ontario are carried on the rail networks of the Canadian National and the Canadian Pacific. Freight rates are lowest on company-owned railways, which ship the largest annual tonnage of iron ore. Large quantities of iron ore are carried on the Great Lakes-Gulf of St. Lawrence portion of the Seaway for ship- ment to both domestic and foreign markets. The most im- portant Canadian loading ports are located at Pointe Noire, Port Cartier, and Sept-Iles on the Gulf of St. Lawrence. These three ports account for all of Canada's shipments to Europe and nearly all of the exports to the United States and Japan. Most of the iron ore shipments from these ports to the United States are shipped through the St. Lawrence Seaway, with the remainder being shipped to U.S. east coast and gulf coast ports. Mexico Production of iron ore, iron ore concentrates, and iron ore agglomerates amounted to 8.0 Mmt in 1983, with estimates of 8.4 Mmt in 1984. Although down from a high of 8.7 Mmt in 1981, this level of production in 1983 was achieved in spite of the economic recession in Mexico, which was characterized by a large foreign debt, several drastic devaluations of the peso, an inflation rate approaching 100 pet, severe unemployment, and a sharp reduction in new private sector investment. Mexico consumes all of its iron ore production internally and has, until recent years, been an importer of steel products to meet shortfalls in domestic production. In 1982 and 1983, however, reduced domestic demand for steel forced the steel companies to seek overseas markets for their products. Mexico's resources of iron ore are modest in comparison to those of most producing countries, but so far they have been adequate to satisfy domestic requirements. The total resources are estimated at more than 600 Mmt at an average grade of 57 pet Fe. The Consejo de Recursos Minerales (CRM) has been involved in a program of ex- ploration for iron ore and has identified 453 MMlt of iron ore reserves and 405 MMlt of additional resources at an average grade of 54 pet Fe. This represents less than 1 pet of total North American resources of iron ore. The five prop- erties in Mexico evaluated for this study contain over 460 MMlt of demonstrated resources at an average grade of 46 pet Fe. Iron deposits occur in many places in Mexico. About 35 individual deposits or closely spaced groups of deposits con- taining more than 1 Mmt each are known. One group is 30 LEGEND • City or town X Port X Producing mine H Past producer PP Pellet plant -r— l — »- Railroad MAP LOCATION NORTH AMERICA I L 500 J I L Scale, km Figure 16.— Location map, Canadian deposits. 31 estimated to contain more than 130 Mmt. Most iron deposits in Mexico are massive deposits of the Kiruna and Magnit- naya types. Figure 17 shows the location of the Mexican deposits evaluated in this study. Mexico has continued to expand its iron ore concen- trating and pelletizing plants and by 1985 is expected to have a production capacity of about 17 Mmt/yr of iron ore products. Pellets will account for 14 Mmt/yr of this capa- city. Ore requirements for meeting this new capacity will be provided in part by the development of mines in Coahuila, Colima, and Michoacan. Continued growth of the iron ore industry will exert further pressure to find and develop new resources to supplement the present known resources; however, future importing of iron ore is still a distinct possibility after a 10- to 15-yr period, when resources are projected to be inadequate. The use of slurry pipelines to connect pelletizing and concentrating plants is rapidly becoming one of the major modes of iron ore transportation within the country. A 379-km pipeline with an annual capacity of 4.5 Mmt con- nects the La Perla and Las Hercules Mines to a new pellet plant at Monclova in Coahuila, northeast Mexico. Of the four deposits evaluated in the study from which pellets are produced, 173 MMlt of pellets are potentially available within a total cost range of $0.49 to $0.97 per iron unit, f.o.b. port, at a 15-pct DCFROR. An individual availability curve for Mexico is omitted, but these deposits are included in the total pellet availability curve. South America The availability of the various iron ore products in South America was evaluated from a number of mines and deposits in Brazil, Venezuela, Chile, and Peru. Because of its importance in production and international trade of iron ore, Brazil is analyzed separately for sinter fines. The LEGEND • City or town ^ Producing mine PP Pellet plant » » Slurry pipeline i i I Railroad 500 J I -N- Scale, km Figure 17.— Location map, Mexican deposits. 32 availability of the various iron ore products, as portrayed in the South American availability curves, consists of a com- bination of data from mines and deposits in Chile, Peru, and Venezuela. The availability curves for Brazil and other South American countries, shown in figure 18, indicate that sinter fines are available at a much lower cost than that of any of the other iron ore products. As of 1984, there are poten- tially 1.7 billion It (64 pet) of sinter fines available in Brazil from 13 producers. However, with the addition of the Cara- jas deposit production in 1985, this increased to approx- imately 2.7 billion It of sinter fines available at a total cost less than $0.35 per iron unit, f.o.b. port. This accounts for nearly 15 pet of the analyzed 18.6 billion It of potential sinter fines available in MEC's. The 1984 market price for Brazilian sinter fines was ap- proximately $0.26 per iron unit to Europe and $0.24 per iron unit to Japan, both f.o.b. port. Approximately 1.6 billion It of sinter fines are potentially available from 12 producers for less than $0.24 per iron unit. Similarly, approximately 1.7 billion It of sinter fines are potentially available at less than $0.26 per iron unit. Five producers and five nonproducers in Chile, Peru, and Venezuela account for 7 pet of the total potential available sinter fines in MEC's. In these countries a total of 1.3 billion It of sinter fines are potentially available at a total cost range of $0.17 to $0.54 per iron unit. Four pro- ducers account for 178 MMlt (13 pet) at less than $0.25 per iron unit, f.o.b. port, at a 15-pct DCFROR. The Venezuelan sinter fines market price to Europe in 1984 was approximately $0.33 per iron unit, c&f. Assum- ing that the freight rate to Europe is similar to that for Brazil in the 50,000- to 65,000-DWT class, the shipping rate would be $0.09 to $0.10 per iron unit. Therefore, the f.o.b. price would be $0.24 per iron unit. Below this price 225 MMlt of sinter fines are potentially available from four pro- perties, three of which are Venezuelan. The market price for sinter fines from Chile and Peru to Japan in 1984 was around $0.21 per iron unit, f.o.b. port. At this price 225 MMlt of sinter fines are potentially available from four properties. There is approximately twice the amount of sinter fines in Brazil as in Chile, Peru, and Venezuela. Also, comparison of the potential availability of sinter fines in Brazil with that in the other South American countries shows that there are 1,600 MMlt of sinter fines potentially available in Brazil compared with 220 MMlt in the other South American coun- tries at less than $0.24 per iron unit, f.o.b. port, at a 15-pct DCFROR. Figure 19 compares the availability of sinter fines from Africa, Australia, and Brazil. The curves show the poten- tial available sinter fines up to 5.0 billion It. The vast amount of potentially available Brazilian ore, 2.7 billion It, at less than $0.35 per iron unit, f.o.b. port, further em- phasizes Brazil's position as a major supplier of iron ore in international trade in the future. Australia has a total of 8.5 billion It of sinter fines potentially available with 5.0 billion It available at less than $0.38 per iron unit, f.o.b. port. Africa has approximately 3.9 billion It of sinter fines potentially available; only 1.4 billion It is available at less than $0.38 per iron unit, f.o.b. port. Assuming an equal 1984 market price of $0.26 per iron unit for all three regions, there are potentially 1.7 billion It, 2.8 billion It, and 186 MMlt available, f.o.b. port, at a 15-pct DCFROR, for Brazil, Australia, and Africa, respectively. 0.55 .50 2 .45 Q. O oo o C O ~3 CO O o < o .40 .35 .30 .20 .15 .10 KEY Other South American countries Brazil A I _,__] I i I I |_J J. _L J. 500 2,500 3,000 Figure 18.— Comparison of total potential sinter fines availability for Brazil and other South American countries at a 15-pct DCFROR. 1,000 1,500 2,000 SINTER FINES, MMlt 33 0.80 t .70 c c o Q. if) _o o X) oo CD o 3 C o "3 en o o .60 .50 .40 .30 KEY — Australia ■■■ Brazil •— Africa .20 - I _J 10. _r JT^ x x x X X X X 1,000 2,000 3,000 4,000 5,000 SINTER FINES, MMIt Figure 19.— Comparison of total potential sinter fines availability for Australia, Africa, and Brazil at a 15-pct DCFROR. There is a close competitiveness between Brazilian and Australian sinter fines markets. As figure 19 shows, approx- imately 1.65 billion It of both Brazilian and Australian sinter fines are potentially available at less than $0.24 per iron unit. Brazil has the competitive advantage in the European market, while Australia has the competitive advantage in the Japanese market due to distances and shipping costs. This is illustrated in table 15 by comparing the 1984 market price and freight rates (per long ton) with the two major markets of Europe and Japan. In 1984 spot ocean shipping rates per long ton Fe for 64-pct-Fe ore from Brazil to Europe were $4.50 to $6.00 ($0.07 to $0.09 per iron unit) while Australian rates to Europe were $6.50 to $8.65 ($0.10 to $0.14 per iron unit). The rates per long ton Fe from Brazil to Japan were $7.00 to $9.00 ($0.11 to $0.14 per iron unit), compared with $5.00 to $6.00 ($0.08 to $0.09 per iron unit) from Australia to Japan. These are for bulk carriers in the 100,000- to 150,000-DWT class. Potential availability of lump ore from Brazilian and other South American properties is compared in figure 20. Brazil has approximately 1.2 billion It of lump ore available at a 15-pct DCFROR, f.o.b. port, which comprise 25 pet of the total evaluated MEC available resources of lump ore. From the 14 Brazilian mines and deposits evaluated, the 12 producing operations account for around 932 MMIt (78 pet) of the available tonnage at less than $0.30 per iron unit. Because this study is based on 1984 production, the Cara- jas Mine in Brazil is not included as a producer. A total of 520 MMit of lump ore are potentially available from eight Venezuelan and one Chilean iron ore mines, at a 15-pct DCFROR, f.o.b. port. Approximately 167 MMIt (32 Table 15.— Comparison of prices and freight rates for Brazilian and Australian sinter fines in European and Japanese markets (1984 dollars per iron unit, 64 pet Fe) To E .urope To Japan Supplier Price f.o.b. Freight rate Price f.o.b. Freight rate Brazil Australia 0.26 '.33 0.07-0.09 .10- .14 0.24 .26 0.11-0.14 .08- .09 1 c&f rate. Source: The TEX Report Ltd; Industrial Minerals. pet) of lump ore are potentially available from four pro- ducers at less than $0.28 per iron unit. Again, it should be noted that the data of this study is 1984, at which time the Venezuelan San Isidro deposit was not in production. The market price for lump ore in Brazil and Chile for the Japanese market was approximately $0.24 per iron unit, f.o.b. port. Therefore, given this market price, approxi- mately 825 MMIt of lump ore are potentially available from eight producers and one nonproducer in Brazil at less than $0.24 per iron unit. In the other South American countries, approximately 280 MMIt of lump ore are potentially available at less than $0.24 per iron unit. Figure 21 illustrates the potential total availability of pellets and pellet feed in South America at a 15-pct DCFROR, f.o.b. port. The pellet curve shows that 1.0 billion It are potentially available from nine properties in Brazil, Chile, Peru, and Venezuela. Seven of these nine properties are producing and account for 955 MMIt of the potential available pellets. The 1984 market price for Brazilian 34 040 CL o co en C o .36- .32 - .28 CO O .20 (_> < O 16- .12 - n — "i r "T - i i 1 i 1 r 1 1 - - r~ - - i i ' - — 1 1 — - , ■ r- 1 I - 1 1 , 1 1 --■"" 1 KEY - [ 1 - Brazil — - Other South American countries - - 1 1 1 1 1 1 1 1 i i i i 200 400 1,000 1,200 1,300 600 800 LUMP ORE, MMIt Figure 20.— Comparison of total potential lump ore availability for Brazil and other South American countries at a 1 5-pct DCFROR. 0.85 .75- .b .65 "o .55 ao cn 45 co O o < 35 .25 .I5 1 J KEY Pellets Pellet feed r I x x _L _L 200 400 600 AVAILABILItY , MMIt _L 800 1,000 1,100 Figure 21.— Total potential pellet and pellet feed availability for South American countries at a 1 5-pct DCFROR. 35 pellets in the European market was $0.34 to $0.36 per iron unit, f.o.b. port. There are 442 MMlt of pellets potentially available at less than $0.38 per iron unit. The pellet feed curve illustrates that approximately 480 MMlt are potentially available at a 15-pct DCFROR, f.o.b. port, from 11 properties in Brazil, Peru, and Venezuela. This constitutes approximately 59 pet of the 810 MMlt of poten- tial pellet feed available in MEC's. In this analysis five producers of pellet feed in South America accounted for 310 MMlt (65 pet) of the total poten- tial available pellet feed in MEC's, with 23 pet available for less than a total cost of $0.25 per iron unit. The Carajas Mine in Brazil and the San Isidro Mine in Venezuela began production in 1985, increasing the potential available pellet feed. With this addition there will be approximately 410 MMlt (51 pet) of pellet feed available from producers, 42 pet at less than $0.27 per iron unit, f.o.b. port. A 1984 market price for pellet feed was $0.28 per iron unit for pellet feed from Kudremukh, India, f.o.b. port. For comparison, approximately 208 MMlt of pellet feed from seven South American deposits are potentially available below this price, at a 15-pct DCFROR, f.o.b. port. Brazil Iron ore continues to be one of the most important minerals mined and exported from Brazil, making it a leading MEC exporter of iron ore. Until 1983, when gold surpassed iron ore as Brazil's number one source of min- ing revenue, iron ore led the country in the value of its min- ing or mineral production. It still accounts for over 90 pet of the value of its mineral exports. Along with Australia, Brazil is a leader in price negotiations, which have a signifi- cant impact on mines located in other parts of the world. Brazilian resources are located primarily in two States— Minas Gerais in the southern, more developed part of the country, and Para, in the northern, more remote and less developed Amazon region. The southern resources are found mainly in the Quadrilatero Ferrifero (Iron Ore Quadrangle), while those in the north are mostly found near the municipality of Maraba in the Carajas Range. Brazilian iron ore resources are estimated to be 40 billion mt, of which 10 billion mt are contained iron in the measured category. Demonstrated resources of 5.3 billion It of iron ore (at 63 pet Fe) were evaluated. The mines of the Iron Ore Quadrangle have provided virtually all of Brazil's production; they have been more easily exploited owing to their location and existing in- frastructure, while the Carajas deposits have been developed only recently. Figure 22 shows the location of deposits evaluated in Brazil for this study. The Carajas resources have been termed the "discovery of the century." The region contains not only vast resources of iron ore but many other mineral deposits primarily located within a 60-km radius. The potential resources of iron ore are estimated at 18 billion mt, grading 66 pet Fe, of which 1.3 billion It of demonstrated resources are evaluated. The State mining company, Cia. Vale do Rio Doce (CVRD), is the operator of the Carajas project. CVRD is one of the largest producers and exporters of iron ore in the world and, in 1981 accounted for 62.5 pet of the total Brazilian iron ore production of 98 Mmt. The Carajas proj- ect, at full capacity, is scheduled to produce 35 Mmt/yr of iron ore with the potential to eventually produce 50 Mmt/yr. Some 26.5 Mmt/yr have already been contracted for, primarily by Japan and European countries. In the 1970's, Brazil's steel industry made rapid growth, and as of 1981 the domestic steel industry was consuming about 20 pet of its iron ore production. Brazil's steel industry has continued to grow to meet increasing domestic demand; Brazil plans to become a major world steel producer and currently is the largest in South America. Brazil's major objective is to improve its balance of payments through, among other things, continued rapid ex- pansion of exports. The Carajas project forms a major part of the Government's strategy for achieving this end. The project, through the establishment of a basic transport system, may have a major impact in the future development of other minerals as well, such as manganese, copper, baux- ite, nickel, tin, and gold. Major infrastructure requirements for the huge Cara- jas project have been undertaken by the Government. An 890-km railroad from the iron ore deposits to the port at Sao Luis on the Atlantic Ocean is nearing completion. The railroad has been designed to transport 35 Mmt/yr. The shiploading port will handle vessels up to 280,000 DWT and will be equipped to load ships at the rate of 16,000 mt/h. The combined cost of the railroad and port facilities amounts to about 60 pet of the total estimated project cost of $4.9 billion. The project is being financed through resources of CVRD and the Brazilian Government and loan ar- rangements with various financial institutions including the World Bank and European, Japanese, and U.S. banks. The iron ore from the Carajas deposit is considered some of the world's best in terms of iron content, low silica, and metallurgical properties. It is predominantly high-grade sinter feed, which is in demand as an export product. Because of its high natural iron content, Carajas ore re- quires no beneficiation other than crushing and screening to produce sinter feed and pellet size lump ore. The second largest exporter of iron ore in Brazil is Mineracoes Brasilieras Reunidas S.A. (MBR), a private sec- tor company. MBR exported 10.6 Mmt and shipped 0.9 Mmt for domestic consumption in 1981 and planned to increase its production capacity to 25 Mmt/yr by 1986. Samarco Mineracao S.A. (SAMARCO) is a Brazilian cor- poration jointly owned by S.A. Mineracao da Trindade (SAMITRI) (51 pet) and Utah International Inc. (49 pet). SAMARCO owns and operates an open-pit mine capable of producing 10 Mmt/yr of iron ore. The mine, one of Brazil's largest, operates the world's biggest iron ore slurry pipeline. Four companies accounted for about 90 pet of all Brazilian shipments of iron ore, concentrates, and pellets in 1983, totaling 98.1 MMlt. The four major companies are CVRD, Ferteco Mineracao S.A., MBR, and SAMITRI. Venezuela Venezuela has about 2 billion It of crude iron ore reserves, most of which are situated in the Imataca belt. The deposits are of the Lake Superior type and follow the valley of the Orinoco River. The eight mines and deposits evaluated in this study have approximately 1.4 billion It of demonstrated resources at an average grade of 63 pet Fe. Figure 23 shows the locations of deposits evaluated in Venezuela for this study. Venezuela ranks second to Brazil in South America as a major producer and exporter of iron ore. In 1960, Venezuela was the major source of iron ore imported into the United States, surpassing Canada. It has since lost this position back to Canada and in the period 1979-83 furnished about 15 pet of all U.S. imports versus Canada's 67 pet. 36 t Tuboroo :£ LEGEND • City or town t Port ^ Producing mine X Undeveloped deposit I l I Railroad » — » — Slurry pipeline 500 1,000 ' I ■ ' ' I I 2,000 I Scale, km Figure 22. — Location map, Brazilian deposits. Specifically, exports to the United States decreased to 1.4 Mmt in 1983, the lowest in over 30 yr. Production of iron ore overall has shown a steady decline in the past 10 yr, from 26 Mmt in 1974 to 9.6 Mmt in 1983. The iron ore industry is 100 pet nationalized and is under the control of the CVG Ferrominera Orinoco C.A. (FERROMINERA), which is part of Corporacion Venezolana de Guayana (CVG), the state-controlled development cor- poration for the Guayana Province, in which most of the iron ore is located. The iron ore mines of Venezuela were developed as cap- tive mines almost exclusively by two U.S. companies- United States Steel Corp. and Bethlehem Steel Corp. Prior to nationalization of the mines on January 1, 1975, most of the Venezuelan exports of iron ores were to these two companies on a captive basis, with 40 pet sold to Europe. It is unlikely that future exports of iron ore to the United States will be as significant as in the past, owing to Venezuela's increased domestic demand and reduced U.S. consumption. The long-range strategy of CVG is to increase the use of its own production of iron ore within the country for pro- duction of direct-reduced iron and steel. In 1982, total ex- ports of iron ore to all consumers was less than 7 Mmt while domestic consumption increased to 3.7 Mmt. The principal Venezuelan consumer of iron ore is Siderurgica del Orinoco C.A. (Sidor), the steelmaking subsidiary of CVG, at the Matanzas iron and steel plant, near Ciudad Guayana. The Matanzas plant, with a crude steel capacity of 4.8 Mmt/yr, is the world's largest integrated steelworks based mainly on direct reduction technology. FERROMINERA is now developing the high-grade San Isidro deposits, which contain nearly 390 Mmt of iron ore at an average grade of 64 pet Fe. This project is scheduled eventually to have a capacity of 5 Mmt/yr and will replace some of the production from the depleting Cerro Bolivar deposit. This will give Venezuela a potential capacity of about 24 Mmt/yr. Two main ports are used for shipping iron ore products: Puerto Ordaz and Palua. A major expansion of iron ore stockpiling, screening, shiploading, and railroading facilities at Puerto Ordaz has been completed for CVG FER- ROMINERA. Blending capacity has been doubled, and since increasing quantities of ore will ultimately be retained for domestic steelmaking, a high-speed railcar loading facility, capable of loading ore at the rate of 15,000 mt/h, has been constructed for shipment of ore to the Matanzas steel plant. Exports of iron ore from Venezuela are mostly sold under c&f terms as opposed to f.o.b. terms, in which approx- imately 85 pet of all iron ore on the international market is sold. The size of vessels and difficult navigational condi- tions are handicaps to Venezuelan exporters owing to limitations imposed by the Orinoco River, where maximum water depth varies from 9 to 13 m according to the season. 37 Vc''a"'r''/''b"b'"e'a'n\ wrrrrrrrrrr , Trrrrrrrrrrrrfrrr'?Trrrrrrrrrr''! , T LEGEND • City or town 141 W W NAp NAp NAp NAp 27-.30 ,25-.27 "203 213 .38 NAp W NAp NAp NAp NAp NAp 6.36 6.33 .28 12 .80-.86 1,100 1,400 W 13 2,100 .31 .26 NAp NAp 1,300 2,600 NAp NAp Brazil: Lump ore 12 2 1,200 Sinter fines 13 1 2,700 South America: Lump ore 4 4 5 520 Sinter fines 5 5 5 1 ,300 Pellet feed 7 5 6 480 Pellets 8 7 2 1 ,000 Africa: Lump ore 1 2 910 Sinter fines 8 9 3,900 Pellet feed 1 2 160 Pellets 2 3 510 India: Lump ore 4 260 Sinter fines 4 270 Europe: Pellets 4 490 Lump ore 2 540 Australia: Lump ore 3 3 1 ,400 Sinter fines 5 12 8,500 Canada: Pellets 3 930 United States: Pellets 11 30 1 1 ,400 W Withheld. NAp Not applicable. 1 1ndividual properties may produce more than 1 product. 2 Reference price is equivalent to various 1984 market prices for European or Japanese markets 3 Total cost is determined a* a 15-pct DCFROR. "Includes Venezuela and Chile. includes Chile, Peru, and Venezuela. 6 c&f price. includes Brazil, Peru, and Venezuela. includes Brazil. 9 At $0.38/ltu Fe. 10 At $0.24/ltu Fe. "At $0.30/ltu Fe. 12 Market is within United States. ' 3 At $0.80/ltu Fe. CONCLUSIONS The world's iron and steel industry is dependent upon the supply of iron derived from a variety of iron ore deposits. In an effort to appraise the resources of iron ore, the Bureau of Mines evaluated 129 mines and deposits in MEC's. The mines and deposits analyzed included 63 producing mines and 66 nonproducing properties with in situ iron ore ton- nage for all properties combined totaling 75.3 billion It, with 29.8 billion It of contained iron. The study excluded mines and deposits in China, the U.S.S.R., and other CPEC's. The study revealed that demonstrated resources of iron ore are more than adequate to satisfy demand well into the next century and that large quantities of demonstrated iron ore resources, particularly in developing countries, are ready to be developed. In areas where geological mapping is well advanced, as in Europe and North America, new discoveries of iron ore that will significantly alter the order of magnitude of current resource data are unlikely. The possibility exists, however, for significant new discoveries in the developing areas of the world that could expand the reserve base. Four countries— the United States, Australia, Brazil, and Canada— contain 79 pet of the demonstrated resources evaluated in this study. The United States has 49 pet of the total iron ore resources. It should be noted that the high total for the United States is mainly due to the detailed coverage of the deposits, including the magnetic taconites in Minnesota. From the resources evaluated in this study, annual, total and regional availability of iron ore products was determined, as shown in tables 13, 14, and 16, respectively. Availability of resources producing various iron ore products is given as totals and on an annual basis through the year 2000 at total costs less than or equal to recent market price levels. Of all the marketable iron ore products potentially available, sinter fines comprise the greatest share, total- ing 18.6 billion It. Of this total, 8.5 billion It are from Australia, 2.7 billion It are from Brazil, and 3.9 billion It are available from Africa. At total costs less than or equal to 1984 market prices, with a range of $0.22 to $0.33 per iron unit, between 2.9 and 10.4 billion It of sinter fines are potentially available. Iron ore pellets make up the second largest marketable iron ore product. Approximately 14.7 billion It are poten- tially available in the MEC's with 3.3 billion It from foreign properties and 11.4 billion It from domestic operations. At total costs less than or equal to the 1984 foreign market price range of $0.34 to $0.38 per iron unit, approximately 350 to 440 MMIt are potentially available in MEC's, ex- cluding the United States. Of the 11.4 billion It potentially available from domestic deposits, 2.1 to 2.2 billion It are available at total costs less than or equal to the 1984 U.S. market price range of $0.80 to $0.86 per iron unit. The total potential availability of lump ore evaluated in this study is 4.9 billion It. Brazil accounts for 1.2 billion It of the total, and Australia accounts for 1.4 billion It. At less than the 1984 market price of $0.26 to $0.32 per iron unit, 2.2 to 3.0 billion It of lump ore are potentially available. 55 There are approximately 820 MMlt of pellet feed poten- tially available in MEC's. Brazil and Venezuela, with a com- bined 312 MMlt, are the major sources in the MEC's. Ap- proximately 208 MMlt are potentially available at total costs less than a typical 1984 market price of $0.28 per iron unit f.o.b. port. In the past several years many factors have affected the iron ore industry. Changes in the world economy, high in- flation, high labor rates in developed countries, and high energy costs have all affected the costs of beneficiation and transportation, the major components of delivered cost of iron ore products. This analysis showed that capital cost expenditures for an iron ore mine are large. Estimates of investments for large mines with capacities of 35 to 46 MMmt/yr range from $2.0 billion to $3.4 billion. This is due to large volumes of ore mined and processed, the transport required to move the product, and the necessary infrastructure support. Operating costs for surface iron ore mining range from $1.00/lt to $5.00/lt. Beneficiation costs range from $3.25/lt to $5.00/lt, depending on types of ore being processed. Pelletizing costs for magnetite ores range from $6.00/lt to $12.80/lt in various regions; hematite ore processing costs range from $15.00/lt to $22.70At. Pelletizing is very fuel intensive, and costs are heavily influenced by rising or fall- ing fuel prices. Price changes for oil or natural gas will have a corresponding positive or negative effect on the world's pelletizing industry. The possibility of higher fuel prices led to developments within the industry to reduce energy con- sumption in the pelletizing process. Similarly, fuel fluctuations can affect the cost of transporting iron ore. Rail rates vary by distance transported and country, while ocean shipping rates vary by distance shipped and size of vessel. Ocean shipping costs can account for up to 70 pet of the final cost of the iron ore product. Changes in the ocean shipping industry have had a singular impact on the iron ore picture in recent decades. The construction and use of large vessels of up to 280,000 DWT and the construction of ports capable of berthing and loading these vessels have made many areas previously regarded as too far from markets now major economic sources of iron ore. Despite rising fuel prices of the early 1980's, ocean freight rates have declined owing to the fierce competition in shipping commerce and low demand for iron ore. Compounding these problems for the U.S. iron ore in- dustry have been the added effects of the decline in domestic steel demand and continuing imports of large amounts of foreign steel. 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