The current price for iron ore of $156.27 a tonne is the best since October 2011. We had the chance to speak to Magnus Ericsson, Chairman at Raw Materials Group about long-term iron ore market trends and foreign investments in mining projects.
IMM Events: At the 2012 Global Iron Ore & Steel Forecast conference you predicted that iron-ore demand is set to double to around 3.5-billion tons a year by 2030 and that China and India will be major market players. Considering the current slowdown in the market, do you think this will still be the case?
Magnus Ericsson: “We have revised our forecast slightly to just above 3400 Mt mainly. In our view there is in general too much emphasis on short-term considerations also in long-term forecasts. In the next 20 years it will be the basic demographic parameters and the general global economic development which will be most important for steel demand and hence for necessary iron ore production. The gradual rise of scrap to supplement virgin iron ore will also affect the market balance.”
IMM Events: Chinese investment in foreign resources projects is often perceived as a threat. Do you think these concerns are valid?
Magnus Ericsson: “We are not worried about Chinese overseas investment, we rather see Chinese investors as an additional source of capital for many new projects. The Chinese will need much more iron ore in the future when their domestic supply becomes uneconomic. The huge Chinese import demand for iron ore opens up very interesting business opportunities.”
Magnus Ericsson: “We see iron ore prices turning downwards but we do not expect prices to fall for extended periods of time below 100 USD/t in Chinese ports.”
IMM Events: You will be presenting at the 8th annual EU Iron Ore conference. What insights are you hoping to gain from your participation and from discussions with your industry peers?
Magnus Ericsson: “I have been engaged in this conference as presenter and chair every year from the very start. It has become the most important conference focusing the European market. To see old friends and colleagues and share views on the future of iron ore is my main goal.”