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Summary
- Iron Ore prices grow in the backdrop of burgeoning demand amid infrastructure push
- Shree Minerals’ NBR offer DSO iron ore lumps and fines with low impurities, well accepted in the minerals market
- Nelson Bay River finalising DPEMP, Mining resumption decision in 2021
The coronavirus pandemic which had cataclysmic impacts on almost all commodities actually acted as an accidental catalyst to the Iron ore demand in the recent days. The demand decline struck the iron ore market initially majorly across Asia, America and Europe leading to shutting down or steel production cutbacks while the Chinese market continued to buy Iron ore on replenished port quotes in the early months of 2020.
Strong Iron Ore growth on reinvigorated focus on infrastructure development
The major steel and iron ore producing nations, including China and India, have now relaxed regional quarantine measures and are focusing on rebuilding the infrastructure development.
DCIOC1 Dalian Commodity Exchange Iron ore 1-month Futures Source: Eikon EODHD/Others
Iron ore futures on the Dalian Commodity exchange traded at CNY 863.5 a ton, recovering more than 22% since the beginning of 2020.
Australia gains as Brazil shuts IO facilities amid pandemic: Brazil, the other major exporter of Iron ore has been facing safety concerns ever since the Brumadinho dam disaster in January 2019. Vale’s the largest Brazilian Iron ore miner had recently announced reduction in the production targets to 310-330 mt from earlier 340-355 million tonnes after several mining facilities had suspended operations following the outbreak of coronavirus and increased tailing dam risks.
The surge in iron ore demand is anticipated to continue over the upcoming years in the domestic Australian market as the supply cut and recovery in usage, will lower the chances of price falls.
Currently, Iron ore exports contribute the largest towards Australia export revenues. Contribution of iron ore exports has risen to $103 billion in value by exporting an estimated 852 million tonnes in 2019-20 against $78 billion in 2018-19 as per the Australian resource and energy quarterly for the period ending 30 June 2020.
Australian Iron Ore production and Exports Source: Australia Energy and Resources Quarterly June Edition
Australia focuses on increasing the domestic production to feed the rising export volumes on the back of increased demand and to offset the declining production from iron ore mines approaching depletion.
Shree Minerals gearing up for commencing operations at Nelson Bay Iron River
Shree Minerals Limited (ASX:SHH), an advanced, diversified developer and explorer, is progressing on the commencement of mining operations at the flagship iron ore and dense media magnetite at the flagship Nelson Bay River Iron ore Project in northwestern Tasmania.
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Nelson Bay River Iron Ore project in Tasmania Source: Shree Minerals
Pioneer of the DSO Iron ore operations: Shree Minerals is accoladed to be the pioneer firm to conceptualise and commence direct shipping ore operations for iron ore in entire Tasmania. Soon after the commencement of mining operations in November 2013 at the Nelson Bay River project, the iron ore prices declined by almost 50% severely impacting the economics of the project. The mining operations were put on care and maintenance in June 2014 with only 25% of excavation completed at the SDSO pit. The mining project directly employed over 50 employees through the company or its contractors.
Must Read: Shree Minerals completes placement with $1.2 million committed
Amid the improved iron ore market, Shree minerals plan to resume the mining operations and seek the granting of the environmental permit from Tasmanian EPA. Shree intends to complete the existing DSO pit by excavation, crushing, screening, and shipping the hematite ore. The DSO Lump and Fines from the Nelson Bay River mine is in demand and well received by the customers due to presence of low impurities such as alumina (Al2O3) at 1.3%.
The Nelson Bay River project holds a JORC compliant mineral resource of 11.3 million tonnes including 1.4 Mt of Hematite and 7.8 Mt of magnetite resources.
Progressing towards development of NBR: Shree has already prepared a working Draft DPEMP in 2020 and seeks to further finalise the technical studies and plans during the year. Despite the COVID-19 issues, Shree is committed to finalise the DPEMP in consultation with the Tasmanian EPA. The company targets to finalise the DPEMP this year to expedite the progress of the project to the approval process. SHH expects to finalise the development of the mining project in 2021.
Shree Minerals closed at $0.0060 a share on 14 August 2020 with a market capitalization of $3.65 million.
All financial information pertaining to Australian currency unless stated otherwise.
