BHP, Rio Tinto and Fortescue to drive WA iron ore exports

Western Australia mining has been given a shot in the arm with news of increased iron ore exports going out of Port Hedland, which accounts for about two-thirds of the world’s seabourne iron ore exports. The port released September shipment data showing a 46% increase in the past 12 months.

China had been running its stock down earlier in the year, and in June a low of US$114/tonne was hit. Since then, the spot price has risen 18.4% to $135/tonne currently. With both volumes and price heading up, this is turning on the miners to get their ore to port as soon as possible.

More will be coming because Rio Tinto (ASX: RIO) is planning to upgrade its Cape Lambert port facilities, which will take its export capacity up to 290 million tonnes from 220 million tonnes. Further development plans may push that up to 360 million tonnes.

BHP Billiton (ASX: BHP) achieved 187 million tonnes for the 12 months to 30 June, and it is estimating that this financial year may see 207 million tonnes.

The third major iron ore producer in WA, Fortescue Metals Group (ASX: FMG), shipped 40 million tonnes during the same year, and will boost its annual capacity up to 155 tonnes through its $2.4 billion port facilities expansion project, which was recently completed. From three of its mines, it is forecasting around 120 tonnes per annum.

Mount Gibson Iron (ASX: MGX) increased its sales for the 2013 year to 8.8 million tonnes, and has projected that this financial year it will rise to 9-9.5 million tonnes.

West Australian Premier Colin Barnett spoke this month on the outlook of mining in the resource-rich state: “In my view (China’s steel production) will continue to grow and start to level off around 2020, so this is the decade in which Australia needs to grasp the opportunity to expand its iron ore capacity, and also in other areas like natural gas.”

Foolish takeway

Other major mining projects, like Hancock Prospecting’s Roy Hill, are being developed, and in several years may be producing, so as the big miners are trying to get more out of the port, the supply will be increasing from all different directions, and this will put downward pressure on ore prices unless there is a proportionate amount of increased demand to offset supply. Right now, the focus is to get as much ore out as possible, and take advantage of recovering prices.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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