OECD: Surge in raw material demand boosts mining investments

Tuesday, 05 June 2012 16:57:02 (GMT+3)   |  
       

The outlook for raw material demand and supply in the steelmaking sector has been discussed in the "Steelmaking raw materials: market and policy developments" report presented at the 72nd Organization for Economic Co-operation and Development (OECD) Steel Committee meeting held recently in Paris. According to the report, the 82 percent increase in global steelmaking capacity from 1.08 billion mt in 2000 to 1.96 billion mt in 2011 has led to strong increases in demand for raw materials in the sector.

The iron ore demand of the global steelmaking industry rose 89 percent from 954 million mt in 2000 to 1.8 billion mt in 2010, while coking coal demand went up 85 percent from 475 million mt in 2000 to 880 million mt in 2010. On the other hand, a more limited 52 percent increase was seen in ferrous scrap demand from 367 million mt in 2000 to 560 million mt in 2010, as capacity expansions are centered in the iron ore and coking coal intensive BF and BOF production process.

This unexpected surge in demand caused a tougher raw materials competition, even though mining investments are now increasing rapidly. Global capital expenditures in mining have been near record highs in the last 10 years. New supplies of iron ore will emerge in Oceania, Latin America and Africa as well as coal projects in North America and Australia, according to the OECD report.

Meanwhile, some resource-rich economies, focusing on maintaining their own stocks of raw materials, have initiated policy measures to restrict the export of raw materials and significant increases have been seen in raw material prices due to concerns about supply availability.

The report indicates that raw materials are not scarce globally in the physical sense. Reserves of most steelmaking raw materials are sufficient to ensure tens of years of supply at current production rates; however, market factors and restrictive policies can cause significant supply disturbances for steelmakers in the short term, the OECD forecasts.


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