Rio Tinto PLC told investors it expects world-wide demand for iron ore to keep growing despite China’s economic slowdown, as the company projected a rising appetite for steel in the years to come.

On Thursday, Rio Tinto forecast 2.5% average annual growth in global steel demand for the next 15 years. Emerging-markets are expected to take on an expanded role, with the miner predicting non-Chinese steel demand will rise 65% by 2030.

While Chinese steel output has waned recently, Rio Tinto said it remained confident in the country’s steel market. It stuck with an earlier projection that Chinese crude steel production will reach about 1 billion metric tons by the end of next decade. China produces roughly half the world’s steel, and its annual production is currently at about 800 million tons.

A global glut of steel and concerns over China’s economic prospects, have hurt prices for iron ore, the biggest ingredient in steelmaking. Last month, BHP Billiton lowered its long-run forecast for peak China steel demand to between 935 million and 985 million tons, from 1 billion to 1.1 billion tons. “We have taken a realistic view,” Chief Executive Andrew Mackenzie said at the time.

BHP is the world’s third-largest exporter of iron ore, behind Rio Tinto and Brazil’s Vale SA, the top supplier.

Rio Tinto argues that although there is a steel glut now, China will need more of the material in the future, as old homes are demolished and replaced with buildings that are taller and more steel intensive. The miner—which outlined its forecasts at a Sydney investor presentation—said it also projects higher exports of steel products and machinery from China to underpin that country’s output of the alloy.

Rio Tinto has been aggressively expanding its iron-ore production in Australia’s Pilbara mining region, drawing ire from smaller rivals and politicians who say the miner and some of its peers are hurting the industry by flooding the market.

The price of iron ore fell to a decade low in July of about $44 a ton, compared with a peak above $190 in 2011, and some analysts think it will tumble to a fresh nadir as Australian shipments of the commodity continue to rise. Goldman Sachs forecast prices to fall a further 30% over the coming 18 months.

Rio Tinto said that despite “ongoing volatility in global commodity markets,” it expects “growing global demand for high-quality iron ore.” On Thursday, the miner forecast world iron-ore demand to rise to 3 billion tons in 2030, an average 2% annual rise between now and then.

Rio should produce roughly 335 million tons of ore from its Pilbara operations next year, and roughly 350 million tons in 2017, it said.

The miner also said it would ramp up its cost-cutting efforts and expects to reduce maintenance costs by about $200 million a year over the next three years.

http://www.wsj.com/articles/rio-tinto-sees-solid-demand-for-iron-ore-and-steel-1441264212

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Coal mines under construction but lack of official approval in coal-rich Shanxi province have a combined capacity of 77 million tonnes per annum, according to a document released by provincial Development and Reform Commission on August 31.

A total of 14 unapproved coal mines, owned by major producers including Datong Coal Mine and Shanxi Coking Coal Group, were found in construction during a province-wide inspection, the commission said.

The move was carried out in response to twelve ministries’ call for joint crackdown on coal mines in illegal construction and production.

To regulate mines construction and ease oversupply, China’s National Development and Reform Commission and another 11 ministries jointly released a circular on July 27, asking local authorities to punish those mines under construction or expansion without official approval, or in production beyond approved capacity or with serious safety issues.

Of these mines unapproved, three belonged to Datong Coal Mine Group with combined capacity at 20 million tonnes per annum, and four owned by Shanxi Coking Coal Group, with annual capacity of 22 million tonnes.

Four illegal coal mines under Jincheng Coal Group, with combined capacity at 19 million tonnes per annum, and three under Yangquan Coal Group, with annual capacity at 16 million tonnes.

http://en.sxcoal.com/0/130803/DataShow.html

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LiveMint reported that miners in Goa, where mining activities have begun after a gap of nearly three years, are set to incur losses as higher taxes and poor infrastructure have made mining operations in the state uncompetitive. According to officials at mining companies, every tonne of iron ore mined in Goa now costs a total of USD 40-45 per tonne, inclusive of taxes. This is nearly double the USD 20 per tonne cost incurred by global miners.

Mr Kishore Kumar, head of iron ore, Vedanta Ltd said “While global companies selling in China have a cost structure of about USD 18 per tonne, we are in the third quartile of the cost curve. Unless the cost structure is brought down to below USD 25 per tonne range through streamlining of logistics, selling the un auctioned stocks and a reduction of taxes, mining in Goa will not be viable for the industry.”

While Kumar did not give details about the company’s cost of production, analysts say it ranges between USD 40 and USD 45 per tonne.

A large part of this is because of the taxes imposed on ore mined in Goa, along with the high cost of logistics and transportation. According to data shared by the Goa Mineral Ore Exporters’ Association “Mining in Goa attracts a 30% export duty on 58% Fe grade iron ore (the grade refers to the quality of iron ore; anything below 60% is low grade), a 15% royalty paid to the state, a 5-15% levy in the form of a district mineral foundation tax and a 10% levy on the export price of iron ore which goes to the Goa Mineral Ore Permanent Fund Scheme.”

Mining in Goa stalled in September 2012 when the state government imposed a ban on all mining activities in response to a report by the Justice MB Shah commission, which found rampant illegal mining in the state. In October 2012, the Supreme Court upheld the ban imposed by the state. In April 2014, the Supreme Court lifted the ban on the condition that all mining leases have to be renewed and fresh approvals have to be sought from the ministry of environment and forest and the state pollution control board. However, final permissions to mine came through only in July 2015.

http://steelguru.com/mining/iron-ore-mining-in-goa-unviable-report/433608#tag

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