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The world’s largest miner may have sent a chill through global markets with a warning that growth in China’s steel output is slowing, but Canadian suppliers of iron ore have no plans to slow their expansion plans.
Rio Tinto Group, which controls Canada’s biggest producer of iron ore, a key ingredient in steel, said in a presentation that it’s continuing to build mines in Quebec and Newfoundland and Labrador. ArcelorMittal, the world’s biggest steel maker and the No. 4 producer of iron ore, is pursuing a $2.1-billion expansion in Quebec.
China is the world’s fastest-growing major economy and the biggest consumer of materials such as iron ore, coal, copper and gold – and prices for those products react to changes in the outlook for demand. That’s particularly important to Canada since companies that produce or process those commodities account for many of the listings on the Toronto Stock Exchange, the country’s main bourse.
Labrador Iron Ore Royalty Corp., a partner of Rio Tinto in Iron Ore Co. of Canada, the country’s largest producer of the ore, fell 4 per cent in Toronto on Tuesday. Teck Resources Inc., a Vancouver-based producer of coal, copper and zinc, dropped 2.3 per cent. Canada’s benchmark stock index also fell sharply two weeks ago, after China cuts its forecast for economic growth.
China consumes more than half the world’s iron ore and, while demand is rising and will continue to climb through 2020, the rate of increase is slowing, according to a presentation by Ian Ashby, president of iron ore at BHP Billiton Ltd. Mr. Ashby spooked financial markets on Tuesday after he told a conference in Perth, Australia, that steel growth rates in China “have flattened.”
David Joyce, managing director for expansion projects at Rio Tinto, said at the same conference that the world will need 100 million tons of additional iron ore every year for the next seven years to meet rising demand and offset shrinking supplies, and that the company is expanding mines, railways and ports.
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