This is an excerpt of a paper to be presented at AusIMM’s 2019 Iron Ore conference. Visit ironore.ausimm.com to view more abstracts and register.
Globally, the major iron ore producers are Vale, Rio Tinto, BHP Billiton and Fortescue Metals. The prevailing low commodity prices ensure that only the largest and lowest cost producers survive and thus mines in China, Canada and South Africa are buckling under the pressure. From a product demand perspective, iron ore fines make up approximately 60 per cent of seaborne export. Thus, the largest iron ore producers in South Africa are investigating -1mm fines processing to reduce its cost of production and increase export capacity by utilising its -1mm tailings material that is easily accessible and high grade (approximately 55-60 per cent Fe).
To compete in the global market the major South African iron ore producers are investigating ways to increase their fines product grade to 66 per cent Fe. Mintek has been researching the beneficiation of fine iron ore over the last three years to fulfil some of the strategic needs outlined in South Africa’s National Development Plan and Beneficiation Strategy, namely the treatment of low-grade ores, tailings treatment and maximising resource utilisation, job retention in the iron ore and chrome industries, and applying novel technologies for the treatment of waste streams.
In our full paper, we will discuss the various gravity circuit configurations that were modelled by Mintek using mineralogical data, bearing in mind cost constraints and operability. These circuits compared spirals, REFLUX™ Classifiers and fine Dense Media Separation to narrow down the circuits that should be explored from a metallurgical performance point of view.
Challenges in the South African iron ore industry
The South African iron ore industry is facing challenges with both low commodity prices and competition from the ‘big four’ iron ore producers.
Low commodity prices
The price of iron ore has fluctuated over the last eleven years, with the highest price achieved for one dry metric ton unit (dmtu) of iron ore being US$168 in 2011. The price dramatically decreased to US$40.50 per dmtu in December 2015 with a gradual increase to US$88.20 per dmtu as of February 2019 (Statista, 2019).
Iron ore is one of the four most important minerals for South Africa’s economy, accounting for 10.4 per cent of total mineral sales in 2017 (Minerals Council South Africa, 2018). In 2017, the mining sector contributed 6.8 per cent to South Africa’s gross domestic product, while iron ore mining contributed 13.5 per cent of the country’s minerals exports (Minerals Council South Africa, 2018). In addition, the price slump has resulted in significant job losses and Kumba Iron Ore – the country’s biggest producer – has drastically cut its output at its flagship mine Sishen located in the Northern Cape. Kumba Iron Ore is second only to government as the largest employer in the Northern Cape Province. Thus the importance of iron ore mining in the South African economy cannot be underestimated, and the sustainability and future of this industry needs to be supported.
Competition from the ‘big four’
Countries like Brazil and Australia possess higher grade ores of simple mineralogy that are easier and cheaper to process. As an example, Vale’s biggest operation is Carajas, located in Brazil, which has high-quality iron ore grading at 67 per cent Fe and is planning on expanding its production to 90 million tons per annum. The average grade of Vale’s iron ore products has increased from 63.8 per cent Fe in June 2017 to 64.3 per cent Fe at the end of 2017 (Ker, 2018) and can be attributed to the completion of the Carajás Serra Sul S11D mine expansion and processing project in 2016 (Verdict Media Limited, 2019).
The ‘big four’ possess high grade iron ore with Rio Tinto and BHP producing 62 per cent Fe products, while Fortescue Metals produces 56-59 per cent Fe products with the aim to produce >60 per cent Fe in the future (Russell, 2019; and Ker, 2018). In addition, the ‘big four’ are the lowest cost producers, with Australian producers dominating followed by Vale (Brazil). South Africa is considerably higher on the cost curve at approximately US$50/dry ton, almost double that of Rio Tinto Pilbara.
Although the ‘big four’ produce high-grade products, the iron ore from South Africa offers a different trace element mix that is highly sought after for complementing the concentrates from the major producers. South Africa’s iron ore products are sought after by major steel mills and fetch a premium price in the market as compared to most iron ore products from Brazil, China and Australia for the following reasons:
- high iron content, with an average of 64.1 per cent Fe (Creamer Media, 2018)
- contains less deleterious elements
- more competent and less friable, resulting in less product breakdown and fines generation.
Assmang, South Africa’s second major iron ore producer, is aiming to reduce its dependence on sales to China and has implemented a marketing strategy aimed at selling to customers that are best able to use its iron ore’s specific characteristics. In addition, Assmang is also investigating pyrometallurigcal applications for their fine Fe ore concentrates. The company is also investing significantly in reducing its cost of production at Khumani and Beeshoek, while cutting back procurement spend (Creamer Media, 2017). Assmang is investigating reducing its cost of production by utilising its -1mm tailings material that are easily accessible and high grade (approximately 55-60 per cent Fe).
Kumba Iron Ore’s two deposits, Sishen and Kolomela, both located in the Northern Cape, each have a mine life of 13-14 years. According to Creamer Media (2018), Kumba is currently focused on extending the life of the two mines through exploration and new technology, namely Ultra-High Dense Media Separation (UHDMS). Two modular UHDMS plants are currently in operation with a third to be built at Sishen with the aim of treating discard material to produce approximately 1.3 million tonnes a year of saleable product (Creamer Media, 2018).
However, the new environmental regulations in China have required Chinese steel producers to lower carbon emissions, resulting in a higher demand for higher grade ores (Creamer Media, 2018). Higher grade ores, such as 62-65 per cent Fe, results in less coke requirements, thereby reducing emissions. These high grade iron ores are traditionally supplied by Australia, Brazil and South Africa. The shift in China’s iron ore requirements has resulted in BHP and Rio Tinto Group focusing in recent years on maximising profits rather than increasing volumes, despite Vale indicating a supply loss of up to
70 million tons due to the recent dam failure in January 2019 (Bloomberg, 2019). In response, Kumba lifted the average iron content of its products to 64.5 per cent. As a result, its market share of premium lump ore, with more than 65 per cent iron content and fine ore with above 64.5 per cent iron content, more than doubled in 2018 to 30 per cent (Creamer Media, 2019). Thus in the current market, South Africa will need to produce high-grade products in order to be competitive.
Feature image: King Ropes Access/Shutterstock.com.
Creamer Media, 2017. Real Economy Insight: Iron Ore June 2017 [online]. Available at: http://www.researchchannel.co.za/article/rei- 2017-iron-ore-2017-06-23 [accessed: 27 July 2017]
Creamer Media, 2018. Iron-Ore 2018: A review of the iron-ore sector [online]. Available at: http://www.researchchannel.co.za/ login.php?&url=/article/iron-ore-2018-a-review-of-the-iron-ore- sector-2018-05-02/searchString:iron%20ore%20may%202018 [accessed: 15 May 2018]
Ker, P., 2018. Rio Tinto digs in as Vale raises iron ore grades [online]. Available at: https://www.afr.com/business/mining/rio-tinto-digs- in-as-vale-raises-iron-ore-grades-20180218-h0w96g [accessed: 22 March 2019]
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Russell C, 2019. Vale iron ore dam disaster may force China steel mills to change [online]. Available at: https://www.cnbc.com/2019/02/12/ reuters-america-column-vale-iron-ore-dam-disaster-may-force- china-steel-mills-to-change-russell.html [accessed: 22 March 2019]
Statista, 2019. Iron ore prices from 2003 to 2018 (in U.S. dollars per dry metric ton unit) [online]. Available at: https://www.statista.com/ statistics/282830/iron-ore-prices-since-2003/ [accessed: 11 April 2019]
Verdict Media Limited, 2019. Carajas Iron Ore Mine. Available at: https://www.mining-technology.com/projects/carajas/ [accessed: 11 April 2019]