Iron ore rally lights a fire under ASX-listed miners

Summary

  • Iron ore prices are on the rise, reaching their highest level since 2010 on 6 May.
  • Australian players are expected to produce 942 million tonnes of iron ore for the year 2021-2022.
  • BHP, FMG and Rio are flying high on higher realised prices of iron ore in the international market.

Iron ore prices are recording highs, primarily on the back of strong demand from Chinese steelmakers. On 6 May 2021, the prices reached US$197.68/tonne, highest since 2010.  

The slower-than-expected recovery of production by Brazilian miner Vale is also contributing to the price rise. The short-term outlook for iron ore looks strong, with the prices expected to climb further.

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Interesting read: FMG, BHP, and RIO Fly High on Soaring Iron Ore Prices

When it comes to the market share, Australia has got the largest piece of the pie. For the year 2019-20, Australia produced 911.8Mt of the base metal and production is forecast to reach ~950Mt by the year 2021-22.

Australian iron ore miners are the biggest beneficiaries of the price rise. Recently, Fortescue Metals crossed its landmark export figure of 1.5 billion tonnes from its Pilbara operations. The Aussie Prime Minister also marked his presence on this auspicious occasion.

Let us walk through the production figures of some of the ASX-listed largest iron ore producers, which are making the most out the current market scenario.

BHP Group (ASX:BHP, NYSE:BHP)

The mining behemoth achieved record production from its projects located in Western Australia. For the March quarter, the Company produced 59.9Mt of iron ore, which was 4% lower than the December 2020 levels.

The production was affected due to weather conditions and scheduled maintenance work at its Ore Handling plant at the Newman Project.

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Read More: BHP Group (ASX:BHP) churns out robust production numbers, ups copper guidance

BHP has kept its FY21 production guidance unchanged in the range of 245-255Mt.

On 7 May 2021, BHP traded higher by 0.582% to A$50.090 with a market cap of A$146.70 billion.

Also Read: BHP Group (ASX:BHP) firing on all cylinders amid booming copper demand 

Rio Tinto Limited (ASX:RIO)

The diversified mineral explorer has announced production of 76.4Mt of iron ore during the March quarter. The production was 11% down from the previous quarter, due to wet weather and unavailability of human resources at the mining sites.

Good read: Rio Tinto’s (ASX:RIO) 2020 Annual Report Marked by Strong Performance

RIO has kept its iron ore production guidance unchanged in the range of 325Mt to 340Mt. The Company is assessing the impact of the Aboriginal Heritage Act 1972 (WA) and is engaging with Traditional Owners regarding the current and future production plans in the region.

RIO is also working on a development project to replace the Pilbara production. Gudai-Dari, Robe River Joint Venture and Western Turner Syncline Phase 2 project are near to completion and will produce the first ore in 2021-22.

The shares of RIO traded at A$127.110 with a gain of 1.073% on 7 May 2021. The Company has a market cap of A$46.68 billion.

Fortescue Metals Group (ASX:FMG)

Fortescue Metals recently crossed the landmark level of 1.5 billion tonnes of iron ore exports from its Pilbara project. The Company took only three years to reach 1.5 billion tonnes from 1 billion tonnes. During the March quarter, FMG produced 44.6Mt of iron ore and shipped around 42.3 million tonnes of the ore.

Good Read: Why are Fortescue Shares on the Move Today?

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The production from the Pilbara region was dampened in the wake of the wet season, however it was compensated by the Eliwana Mine, which became operational in December 2020. The Company reported growth of 15.6% in Chinese steel production during the quarter, driving the demand for iron ore. FMG relies heavily on exports, especially to China, for its revenues.

Fortescue has set iron ore shipment guidance at 178-182Mt for FY21.

Read here: Fortescue Metals (ASX:FMG) Vows To Go Carbon Neutral by 2030, 10 Years Ahead of Target

FMG traded at A$22.970 with a gain of 0.967% on 7 May 2021. The Company has a market cap of A$70.04 billion.

Other ASX players engaged in the mining business to watch out are Newcrest Mining Limited (ASX:NCM), South 32 (ASX:S32), Northern Star Resources (ASX:NST), Mineral Resource Limited (ASX:MIN), BlueScope Steel Limited (ASX:BSL) and OZ Minerals (ASX:OZL).


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