Daily iron ore price update (future pain)

Iron ore prices for April 22, 2019:

Spot firm. 12 month futures sagged as supply is responding. Steel OK.

Here’s the problem a year and more out, via Bloomie:

Mining dealmaker Mick Davis has won permission to export iron-ore from a planned mine in West Africa, adding momentum to the industry veteran’s comeback.

Davis, through his new Niron Metals vehicle, has signed an agreement with Liberia that will allow him to use a rail and port to export iron-ore from the mine that he’s seeking to build in neighbouring Guinea, according to a statement. The Zogota project, where mining giant Vale has already spent hundreds of millions of dollars, could be brought on quickly and relatively cheaply.

“This memorandum of understanding is an important milestone in our plans to develop the Zogota project,” Davis said. “We intend to complete our feasibility study within six months and continue to work with relevant stakeholders to bring Zogota rapidly into production for the benefit of all.”

20mt coming plus a possible new and much cheaper route for Simandou, though that is wild speculation at this point.

More, via Reuters:

Congo Republic shipped its first iron ore exports on Friday ahead of an expected boom in production from mines owned by Congolese billionaire Paul Obambi’s Sapro SA and Swiss commodities giant Glencore.

Sapro mined the oil-dependent Central African country’s first iron ore in 2017 from its Mayoko project in the southwest and plans to reach output of 12 million tonnes per year by 2022.

Glencore’s joint venture with British Virgin Islands-incorporated Zanaga Iron Ore Co plans to ship 2 million tonnes of iron ore per year over the next two years, and 30 million tonnes by 2024.

Combine this FMG’s recent new mine plus the Minas Rio ramp up and we get a new supply surge in 2022 around 60-80mt just as Chinese demand is falling and Vale returns with full volumes.

We’ve seen this all before. The cure for high prices in iron ore is high prices.

Enjoy it while it lasts!

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