The iron ore market is global and the trade in iron ore is of very great value. Only trade in oil and coal is valued to more than the trade in iron ore. Nearly 98 percent of the mined iron ore is used in steel production. The long-term trend of global steel production is rising and global demand remains strong, driven primarily by growth in developing countries such as China.

Products and pricing
There are basically four types of iron ore products; dressed ore, sinter, pellets and lump ore. Dressed ore is used in the production of sinter and pellets which then goes into the blast furnace process. Lump can be used directly in the blast furnace process without further processing. The company will primarily produce finely dressed ore, which is a fine-grain dressed ore product of about 69 percent iron content, for delivery to the steel industry in Europe, Middle East and China.

The price of iron ore in the long-term was determined by 2010 in the traditional and annual price negotiations between the main ore and steel producers. These published prices then became a guide for other contracts. A spot market has in recent years emerged in China. Today, contract prices are set mainly quarterly in relation to the spot price for deliveries of 62 percent ore concentrates to China. Products with a higher iron content traded at a premium.

The global trade in iron ore
The most important parameters for steel producers around the world in the selection of iron ore suppliers are price and quality. To respond to these parameter successfully and simultaneously maintain good economic performance high iron levels in the mine and in the finished product, good logistic conditions and proximity to customers are among the more important aspects of mining companies that drive the production of iron ore.

World production of iron ore has increased by 95.7 percent, or 893.6 million tons since 2001. This is despite the steel industry’s sharp decline during the financial crisis of 2008 when, inter alia, construction, automotive and engineering industries were affected by the global economic recession. 2010 was a strong year of growth for the global mining and steel industries. Global consumption of steel reached record levels and the strong demand for steel resulted in soaring iron ore prices.

Emerging economies with large investments in infrastructure projects, such as China and India, drive the market. As a group, developing countries accounted for nearly 66 percent of total imports of iron ore in 2010. China is the world’s largest importer of iron ore. In Europe, Germany, France, Italy and the UK are the largest importers of iron ore.

The three largest companies operating in the iron ore industry, Brazilian Vale and the Australian companies Rio Tinto and BHP Billiton, together controlled 35 percent of world production of iron ore in 2010. In the Nordic countries there are a few players where Swedish LKAB, with three operating mines in Kirunavaara, Malmberget and Gruvberget, is the only iron ore mining company of any significance the world market. In addition to LKAB there are a number of other Scandinavian iron ore projects that are in various stages of development, including Nordic Iron Ore.