The price of iron ore rose in the March quarter on optimism related to an economic rebound in China after the country lifted its zero-Covid policy and stepped-up efforts to support its struggling property sector.
Benchmark 62% iron fines imported into Northern China rose to US$127.70 per tonne in early March, hitting an eight-month high.
Focus on green steel
In line with global commitments to eliminate carbon emissions by 2050, the iron and steelmaking industry’s shift towards decarbonisation continues to gain momentum.
Direct Reduced Iron (DRI) technologies and the associated requirement to source high-grade feed sources such as high-grade magnetite concentrates have caught the attention of established and emerging players in the industry.
Jeong-woo Choi, the CEO of South Korea’s largest steelmaker POSCO, recently said that POSCO intends to spend A$60 billion in Australia across the green steel supply chain by 2040 in support of the country’s decarbonising steel industry.
Overall, the iron ore market is expected to continue to be driven by strong demand from China, the world's largest steel producer and consumer.
“Recent engagements with customers in China and India have reaffirmed our positive outlook for commodity demand,” said BHP (ASX:BHP) chief executive officer Mike Henry.
“China’s economic rebound and solid momentum in India’s steelmaking growth (is) helping to offset the impact of slowing growth in the US, Japan and Europe,” Henry added.
However, Rio Tinto (ASX:RIO) - the world’s biggest iron ore producer, has warned of “persistently high” inflation in the US and a tightening of credit conditions, which it expects to weigh on economic activity across the board.
In the spotlight: ASX iron ore stocks
Magnetite Mines
Magnetite Mines Ltd (ASX:MGT) completed a robust optimisation study on the Razorback Iron Ore Project in South Australia during the quarter that highlighted the Iron Peak high-grade deposit’s potential to service the green steel market.
Providing further confidence for MGT is a vastly increased project scale with the company boosting the ore reserve by 340% or 1.1 billion tonnes of iron ore to 1.6 billion tonnes.
The optimisation work is particularly relevant as Iron Peak was not included in this latest ore reserve, offering the potential for a high-value market opportunity and further material growth for the project’s resource.
Akora Resources
The direct shipping ore (DSO) potential of the Southern Zone at Bekisopa Iron Ore Project in Madagascar was enhanced during the quarter by Akora Resources Ltd (ASX:AKO) with infill drilling results described as “outstanding”.
The company completed an 86-hole drill program for 1,166.4 metres with all holes intersecting iron mineralisation and 72 of these holes intercepted high-grade DSO iron, thus confirming significant areas of mineralisation with commercial potential.
Akora believes that the results will increase the size and confidence of the Southern Zone mineral resource estimate (MRE) with an updated MRE targeted for the middle of this year.
Fenix Resources
Fenix Resources Ltd (ASX:FEX) has taken full advantage of improved iron ore market conditions with ‘excellent’ ongoing production performance generating $20 million of free cash in the March quarter.
Six shipments totalling 350,923 wet metric tonnes (wmt) of iron ore from Fenix’s 100% owned Iron Ridge Mine in Western Australia were sold during the quarter, consisting of 151,693 wmt of lump and 199,230 wmt of fines.
Fenix’s iron ore being loaded at berth 5 Geraldton Port, March 2023.
The company’s operating margin increased by 85% to A$71 per dry metric tonne (dmt) for the March quarter.
CuFe Ltd (ASX:CUF) completed an operational ramp-up at its JWD Iron Ore Project in Western Australia in the quarter, with the project now operating at its intended capacity.
The company also delivered a ‘significant’ maiden inferred MRE of 12.7 million tonnes at 55.4% iron at its 50%-owned Yarram Iron Ore Project, just 110 kilometres from Darwin Port in Northern Territory.
CuFe executive director Mark Hancock commented on the quarter: “It was pleasing to see the operations at JWD ramp back up over the quarter and at full capacity by quarter end.
“We continue to make good progress at both of our Northern Territory projects, with the release of our initial JORC resource at the Yarram Iron Ore Project and an upgraded JORC resource at the Orlando Copper Deposit.”
Arrow Minerals
Arrow Minerals Ltd (ASX:AMD) advanced its strategic focus on high-quality opportunities in West Africa, with the potential for economic mineral deposits that will deliver long-term shareholder value.
During the quarter, results of rock chip samples collected from Arrow’s Simandou North Iron Project in Guinea revealed high-grade iron (>64%).
The company’s Guinea team embarked upon a detailed geological mapping and infill geochemical sampling over the highest-ranked target zones in the project area to assist with the placement of initial drill holes to test the depth and extent of the high-grade iron zones within these target areas.
Members of the Arrow geological team in the field at the Simandou North Iron Project undertaking the geological mapping and geochemical rock chip sampling program.
Hawsons Iron
In January 2023, Hawsons Iron Ltd (ASX:HIO) completed a comprehensive strategic review of its Hawsons Iron Project near Broken Hill.
The strategic review recommended an action plan seeking to improve the Net Present Value (NPV) of the project by reducing processing plant capital costs further and accessing higher grade ore earlier to accelerate start-up cash flow.
Work on the recommended value engineering analysis started immediately and continued during the March quarter.