IRON ORE1/ (Data in million metric tons of usable ore,2/ unless noted) Domestic Production and Use: Value of usable ore shipped from mines in Minnesota, Michigan, and six other States in 1995 was estimated at $1.6 billion. Iron ore was produced by 16 companies operating 16 mines, 10 concentration plants, and 10 pelletizing plants. The mines included 15 open pits and 1 underground operation. Virtually all ore was concentrated before shipment. Nine mines operated by six companies accounted for 98.8% of production. Salient Statistics--United States: 1991 1992 1993 1994 1995e/ Production, usable 56.8 55.6 55.7 58.4 62.0 Shipments 56.8 55.6 56.3 57.6 62.0 Imports for consumption 13.3 12.5 14.1 17.5 18.0 Exports 4.0 5.1 5.1 5.0 5.0 Consumption: Reported (ore and total agglomerate)3/ 66.4 75.1 76.8 77.7 78.0 Apparent 63.4 65.6 66.2 70.9 75.3 Price (Oct.), Lake Superior pellets, cents per ltu of Fe4 72.5-74.0 72.5-74.0 72.5-74.0 72.5-74.0 72.5-74.0 Stocks, mine, dock, and consuming plant, yearend, excluding byproduct ore 25.4 22.9 21.3 21.3 21.0 Employment, mine, concentrating and pelletizing plant, quarterly average 7,800 8,000 7,800 7,200 7,000 Net import reliance5/ as a percent of apparent consumption (iron in ore) 11 12 14 18 18 Recycling: Insignificant. Import Sources (1991-94): Canada, 55%; Brazil, 20%; Venezuela, 20%; Australia, 2%; and other, 3%. Tariff: Item Number Most favored nation (MFN) Non-MFN6/ 12/31/95 12/31/95 Concentrates 2601.11.0030 Free Free. Coarse ores 2601.11.0060 Free Free. Fine ores 2601.11.0090 Free Free. Pellets 2601.12.0030 Free Free. Briquettes 2601.12.0060 Free Free. Sinter 2601.12.0090 Free Free. Depletion Allowance: 12.0% (Domestic), 11.2% (Foreign). Government Stockpile: None. Events, Trends, and Issues: Domestic iron ore production, driven by demand from the U.S. steel industry, increased in 1995 for the third consecutive year. Imports increased slightly and exports, which go primarily to regular customers in Canada, were little changed. The U.S. steel industry was undergoing structural changes potentially negative to the iron ore sector. Flat-rolled minimills under construction or proposed could add 17 million tons of capacity to the flat-rolled market by the end of the decade. Also, tougher environmental regulations, especially those restricting coke oven gas emissions, was expected to force the closure of some older integrated facilities. However, those changes also provided potential benefits to those companies providing alternatives to scrap. Because of concern over the availability of low residue scrap, investment in alternative ironmaking technologies has become more attractive and a number of companies have moved in that direction. One alternative to scrap is direct-reduced iron (DRI). Four projects were under consideration that, if completed, would increase U.S. DRI capacity from 0.5 to 4.2 million metric tons per year. Prepared by William S. Kirk, (703) 648-4962. IRON ORE Internationally, iron ore consumption increased and prices increased after declining for the previous 3 years. There was a trend in the international market away from sintering of iron ore toward pelletization. This was driven, in large part, by environmental considerations. Australia and Brazil continued to be the leading exporters of iron ore with a combined total of close to 60% of the world total. The United States continued to be a net importer of iron ore. Since 1983, five areas or countries--China, Europe, the Former Soviet Union (FSU), Japan and North America--have accounted for more than 80% of the world's pig iron production. In three of these areas (Europe, Japan, and North America) pig iron production has remained virtually constant. In recent years, production has fallen considerably in the FSU and risen dramatically in China. Production has also increased substantially in other parts of Asia, particularly India, South Korea, and Taiwan. Even including the mature Japanese market, Asia's share of world pig iron production has increased in recent years. This trend is expected to continue. The increase in consumption in Asia is expected to benefit Australia primarily. Australia and Brazil each account for about 30% of the world total of exports, while the next closest exporter accounts for less than 10% of the world total. Of the two, Australia appears to be better positioned to take advantage of growth of iron ore consumption in Asia because of Australia's proximity and the consequent lower freight rates. World Mine Production, Reserves, and Reserve Base:7/ Crude ore Iron content Mine production Reserve Reserve 1994 1995e/ Reserves base Reserves base United States 58 60 16,000 25,000 3,800 6,000 Australia 129 130 16,000 28,000 10,000 18,000 Brazil 166 170 11,000 17,000 6,500 10,000 Canada 37 37 12,000 26,000 4,600 10,000 Chinae 240 250 9,000 9,000 3,500 3,500 France 3 3 2,200 2,200 900 900 India 57 58 5,400 12,000 3,300 6,300 Liberia -- -- 900 1,600 500 800 Mauritania 9 10 400 700 200 300 Russia 135 135 64,000 78,000 24,000 29,000 South Africa 32 33 4,000 9,300 2,500 5,900 Sweden 20 20 3,000 4,600 1,600 2,400 Other countries 115 120 7,400 16,000 2,300 6,300 World total (rounded) 1,000 1,000 150,000 230,000 65,000 100,000 World Resources: World resources are estimated to exceed 800 billion tons of crude ore containing more than 230 billion tons of iron. U.S. resources are estimated to be about 110 billion tons of ore containing about 27 billion tons of iron. U.S. resources are mainly low-grade taconite-type ores from the Lake Superior district that require beneficiation and agglomeration for commercial use. Substitutes: Iron ore is the only source of primary iron. In some operations, ferrous scrap constitutes up to 7% of the blast furnace burden. Scrap is extensively used in steelmaking and in iron and steel foundries. e/Estimated. 1/See also Iron and Steel Scrap. 2/Agglomerates, concentrates, direct-shipping ore, and byproduct ore for consumption. 3/Includes weight of lime, flue dust, and other additives used in producing sinter for blast furnaces. Consumption data are not entirely comparable to those of 1987 and earlier years owing to changes in data collection. 4/Delivered rail of vessel at lower lake ports. 5/Defined as imports - exports + adjustments for Government and industry stock changes. 6/See Appendix B. 7/See Appendix C for definitions. Mineral Commodity Summaries, January 1996