As our industry overview for dry bulk shipping noted, Australia makes up a large percentage of the world’s iron ore seaborne exports. In 2012, it represented 45% of total export volume. Most of this exported iron ore is delivered to China, which has been a major part of growth over the last few years. Used by companies BHP Billiton, Fortescue Metals Group, and Atlas Iron, the Hedland Port is one of the major exporting ports of iron ore in the world, representing about one-fifth of the global seaborne iron ore trade.
Hedland’s amount of iron ore loaded dropped from 29.5 million tonnes in December to 28.2 million tonnes in January, reflecting seasonal weakness. But that didn’t stop trade activity, as the weight of iron ore loaded onto dry bulk vessels at Hedland Port and destined for China grew 27% in January from a year ago, driven by miners’ increased output.
At the end of January, Fortescue Metals Group, the third largest exporter out of Australia, said that bad weather in January will lower the amount of iron ore it will expect this financial year that ends in June 30. Rio Tinto Group, the world’s second-largest mining company that exports iron ore largely through Port Dampier, noted a disruption in exports due to Cyclone Christine, when the company announced record production for iron ore in year 2013, on January 16, 2014. BHP Billiton also kept production guidance the same for the first half of 2014 due to weather-related risks.
Production set to rise
Despite weather-related issues, Fortescue Metals Group said it’s on track to meet its goal of 155 million tonnes per year of output by the end of the March quarter. Rio Tinto also announced a production expansion increase of 7%, to 55.5 million tonnes, up from 52 million tonnes the year before, due to productivity improvements and ramp-up of recent mine expansions that are expected to be completed by the end of the first half of 2014. Production is expected to rise further, to 330 million tonnes, through low-cost brownfield expansions in 2015, up from an expected 290 million tonnes in the first half of 2014.
© 2013 Market Realist, Inc.
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