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Mining Companies Look to Benefit
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Since the decline of the global economy, politicians around the world have been flooding the airwaves with promises and proposals of job creation. Many of these leaders have developed plans to create job growth by increasing their respective nation's budget with a focus on infrastructure projects. The recently passed U.S. stimulus bill allocates close to $100 billion for infrastructure projects throughout the country. As buildings are built and bridges are repaired, steel will become a highly valued product and that will in turn open the door for mining companies.
China is another major world player that has jumped on the infrastructure equals job growth bandwagon and has set aside approximately 1.5 trillion Yuan, or about $220 billion USD, for various construction proposals. While these proposed plans will be diverse in nature, they will inevitably require iron and steel made from iron ore. Although construction numbers are down throughout the world, the implementation of these stimulus funds has the potential to rekindle the smelting forges of the mining industry globally.
An example of the global scope of the mining industry is the Asia-Pacific Region. This region is now living in an interesting era: the process of change from the "old economy" to the "global new economy" brings a tremendous development growth and mobility of capital, and liberalization to the region. Since the new global economy brings new economics, new market structures, new industry structures, and new company structures, the profile of the Asia Pacific Steel Industry has also changed.
The stabilization of the iron mineral import to China began to take shape in year 2007, with import pricing holding in the high 50's to low 60's USD per dry metric ton of iron ore fines. The long term contract (12 months or more) pricing maintained stable in relationship to the Spot Market Prices; whereas in the past few years there was a large gap between Long Term and one off Spot Prices. Industry leaders believe that the supply and demand for raw steel making products will hold at current demands and prices for the next few years.
There are many iron mining companies around the world, but the majority of them focus on large-scale mining operations located on extensive deposits. This method of mining is important for the low-to-medium grade ore that is used for the bulk of steel manufacturing, but it omits some of the smaller, high-quality ore deposits. These locations have become the focus of companies like Cotton & Western Mining, Inc. of Nevada. In an effort to locate these low-cost, high profit deposits, they have investigated over 60 locations ranging from Mexico to the Philippines and Indonesia over the last five years.
Larger mining companies typically establish a large and costly processing facility which is immobile and they choose their sites correspondingly to take advantage of the larger iron deposits. Companies keen on lower cost focus on smaller, high quality sites allows them to mine, process and then transport its valuable cargo much faster, which will benefit the company and its clients.
Chinese steel makers will soon begin to churn out tons of steel and companies keen on lower cost plan to take full advantage of the impending industry growth. Their ability to quickly and efficiently bring the ore to market is an attribute in an industry that will soon begin competing to supply the iron for hundreds of billions of dollars in global infrastructure projects.
In summary, forecasters believe that within the first half of 2009, some upward movement of spot market supplies will improve. Industry officials believe high grade magnetite iron ore is still viable to the market and that market conditions for high grade magnetite iron ore will significantly improve.
China is another major world player that has jumped on the infrastructure equals job growth bandwagon and has set aside approximately 1.5 trillion Yuan, or about $220 billion USD, for various construction proposals. While these proposed plans will be diverse in nature, they will inevitably require iron and steel made from iron ore. Although construction numbers are down throughout the world, the implementation of these stimulus funds has the potential to rekindle the smelting forges of the mining industry globally.
An example of the global scope of the mining industry is the Asia-Pacific Region. This region is now living in an interesting era: the process of change from the "old economy" to the "global new economy" brings a tremendous development growth and mobility of capital, and liberalization to the region. Since the new global economy brings new economics, new market structures, new industry structures, and new company structures, the profile of the Asia Pacific Steel Industry has also changed.
The stabilization of the iron mineral import to China began to take shape in year 2007, with import pricing holding in the high 50's to low 60's USD per dry metric ton of iron ore fines. The long term contract (12 months or more) pricing maintained stable in relationship to the Spot Market Prices; whereas in the past few years there was a large gap between Long Term and one off Spot Prices. Industry leaders believe that the supply and demand for raw steel making products will hold at current demands and prices for the next few years.
There are many iron mining companies around the world, but the majority of them focus on large-scale mining operations located on extensive deposits. This method of mining is important for the low-to-medium grade ore that is used for the bulk of steel manufacturing, but it omits some of the smaller, high-quality ore deposits. These locations have become the focus of companies like Cotton & Western Mining, Inc. of Nevada. In an effort to locate these low-cost, high profit deposits, they have investigated over 60 locations ranging from Mexico to the Philippines and Indonesia over the last five years.
Larger mining companies typically establish a large and costly processing facility which is immobile and they choose their sites correspondingly to take advantage of the larger iron deposits. Companies keen on lower cost focus on smaller, high quality sites allows them to mine, process and then transport its valuable cargo much faster, which will benefit the company and its clients.
Chinese steel makers will soon begin to churn out tons of steel and companies keen on lower cost plan to take full advantage of the impending industry growth. Their ability to quickly and efficiently bring the ore to market is an attribute in an industry that will soon begin competing to supply the iron for hundreds of billions of dollars in global infrastructure projects.
In summary, forecasters believe that within the first half of 2009, some upward movement of spot market supplies will improve. Industry officials believe high grade magnetite iron ore is still viable to the market and that market conditions for high grade magnetite iron ore will significantly improve.
Author Resource:
Rodney Marvel is currently the Director of Operations for e-media Direct (http://www.e-mediadirect.com), a full-service investor relations firm located in Winter Park, FL. You can contact him at rmarvel@e-mediadirect.com or 866.284.2835.
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