RIO upsells the Pilbara killer


From a Chinese captured RIO yesterday:

The Simandou product of more than 66% iron content will be the caviar of iron ores as the “normal” iron content is only 58%, Gerard Rheinberger told Business Report at the sidelines at Mining Indada in Cape Town.

“The high grade and low impurities make the Simandou product a premium grade product and that will help the world’s steel makers reduce their carbon footprint. It will also be less energy intensive as instead of going the blast furnace route, Simandou can be used in direct reduction iron (DRI) kilns or blended with scrap steel in electric arc furnaces (EAF),” he said.

Rheinberger is RIO’s MD of the Pilbara killer.

That Pilbara killer ore can be used for DRI is an advantage as we shift into decarbonisation, but it is still nonsensical for RIO (even more so Australia) to produce it given:

  • it hands China pricing power over iron ore;
  • it hands China a substantial source of iron ore that can avoid Australian blockades in the event of a Taiwan war;
  • once the infrastructure build-out is complete, expansion of the mine becomes only a matter of time.

But RIO is already a Chinese plaything and has been since Chinalco took a 15% stake in 2008 as BHP sought a merger.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.