Notícias

30/06/2021 - Lump ore shortage impacts the Minas Gerais pig iron industry

Some
pig iron producers in Minas Gerais may have to shut down their blast
furnaces in the coming days due to the lack of lump iron ore. As a
solution, certain producers have bought iron ore from the state of
Mato Grosso do Sul, with the resulting cost increase impacting the
entire production chain.

This
information was released by Fausto Varela Cançado, president of
Sindifer-MG (Minas Gerais Pig Iron Industry Association). Small- and
medium-size mining companies, which usually supply to the industry,
say the shortage stems from the lower ore quality and growing demand.

“It’s
unbelievable that we need to source iron ore from Mato Grosso do Sul,
1,800 km away, when we’re located in the so-called Iron Quadrangle,
in the state that is the largest iron ore producer in the world,”
Varela Cançado added. Shortages are always accompanied by rising
prices. “There has been a 130% jump in lump iron ore prices over
the past 12 months. On top of that, the rise in charcoal prices,
which also exceeded 100%, has taken our cost to a very high level and
we have to pass it on.”

The
president of Sindifer-MG pointed out another issue: the iron ore
quality. “We need lump hematite ore, with an iron content above
62%. This content has been falling over time. Current offers range
from 55% to 60%. As a result, the furnace productivity drops and more
coal and more ore have to be used.” Another hurdle is silica
contamination. “It generates a lot of slag. When using the regular,
good-quality iron ore we need, slag generation amounts to
approximately 150 kg per ton of pig iron. Today, with iron ore
containing more contaminants, such generation is above 400 kg per
ton.”

Iron
ore demand by the pig iron industry has been climbing. Based on 2020
figures, the output reached 3.7 million tons, the highest in 12
years, according to Varela Cançado, up 11% from the 2019 level.
Exports answered for 72% of shipments.

“The
trend for this year is to keep growing, but growth rate may be
affected by high lump iron ore prices and shortage.” Varela Cançado
adds that the forty-five pig iron companies in Minas Gerais generate
around 9,000 jobs.

According
to Cristiano Parreiras, special advisor to Sindiextra (Minas Gerais
Mineral Industry Association), all these issues, including quality,
scarcity, and price, can be explained by the escalating demand in
recent years.

“In
times of rising demand, many miners have been offering lower quality
ore, while taking steps to open new mining areas. The issue of
quality, which affects blast furnace productivity rather than the
lack of ore, is what may be behind consumers’ decision to source
iron ore from other Brazilian states, Parreiras said. According to
Varela Cançado, the material purchased in Mato Grosso do Sul has
indeed shown a lower mixing rate, around 60%.

“A
new mine can’t be opened overnight. It involves many processes and
requires many works to be carried out. Given today’s scenario, with
many new mining projects underway, I believe supply and demand will
tend to balance out this year,” Parreiras pointed out. He added
that applications for environmental licenses for new mines are being
submitted within applicable legal deadlines, without delays.

Parreiras
also explained that iron ore prices in the international market have
little impact on local figures. “Small- and medium-sized miners
only supply to the domestic market and, therefore, all their output
stays here. The rise in the commodity's prices plays a part, but
demand is the key factor when it comes to pricing”.

Source: Diário
do Comércio
/ Foundry
Gate