Iron ore exports to hit 1.7bn by 2015

Australian and Brazilian port capacity to rapidly expand to cater for boost in mining production IRON ore seaborne exports are forecast to double over the next five years to 1.7 bn tonnes, with dominant miners BHP Billiton, Rio Tinto and Vale delivering most of the new capacity.

Based on fresh analysis from DnB NOR Markets, Australia will retain its position as the world’s largest iron ore exporter, rising from 381m tonnes in 2009 to 779m tonnes in 2015. Brazil exports were forecast to grow a little slower in the next two years, from 295m tonnes in 2010 to 324m by 2012, but then jump sharply to 560m tonnes by 2015.

The insight into iron ore volumes, and the ports from where these trades will emerge, was covered in DnB’s Dry Bulk Outlook: Iron Ore and Coal, released this month. It is based on interviews and research with executives at more than 75 ports.

Developments could see a new port of Anketell Point, now at the planning stage in the Western Australia Pilbara region, eventually surpass the port of Dampier as the country’s largest within the next five years.

Anketell Point — a joint development with Fortescue Metals Group, Aquila Resources and the Metallurgical Corp of China — has the capacity to export 130m tonnes by 2015 and 350m tonnes beyond this timeframe.

But even though approvals have been given, the entire port development is very expensive at A$4.1bn ($3.7bn), including A$1.7bn for a dedicated 282 km railway. As a result the DnB report said there was much uncertainty surrounding the project.

Expansion projects at Port Hedland, where existing terminals were owned by BHP Billiton and Fortescue, would see capacity increase from an estimated 184.5m tonnes in 2010 to 407m tonnes by 2015.

There are also significant expansion plans at nearby ports of Dampier and Cape Lambert, where terminals are owned by Rio Tinto. At Dampier, exports were forecast by DnB to rise from 140m tonnes in 2010 to 150m tonnes by 2015. At Cape Lambert, Rio Tinto plans to add an additional 100m tonnes of capacity. Some 50m tonnes will be added by 2014 and a further 50m by 2016. In 2009, exports totalled 72m tonnes. Expansion plans include a 1.8km four-berth jetty that will eventually take capacity at the port to 180m tonnes beyond 2015, and Rio’s total exports to 330m tonnes.

“Rio Tinto representatives have informed us the company is confident that the mines will be able to deliver these volumes, and that ramp-up of the capacity will happen quite suddenly, once the capacity is increased,” the report said.

In Brazil, Vale is developing the $11bn-plus Carajas Serra Sul project, its largest greenfield project ever, which would add 90m tonnes per year to production volumes by 2014. However, the project has experienced permitting delays.

This increased capacity would be shipped through the port of Ponta da Maderia, where terminals are owned by Vale, shipping ore mined from the northern system, north of Brazil. Exports are forecast to rise from 87.8m tonnes in 2010 to 92m tonnes in 2013, before ramping up to 182m tonnes by 2015 when the expansion is fully operational.

Marginal increases are expected from other Vale-owned terminals in Tubarao — from 94m tonnes to 118m tonnes in 2015 — with most additional capacity coming from new mining players in Brazil.

This includes miner CSN, which owns the TECAR terminal at Itaguai. Capacity is rising from 30m tonnes in 2009 to 45m tonnes in 2010, but to 130m tonnes by 2016 as new mines ramp up.

Two new terminals from another miner, MMX, will see four iron ore berths at Acu Superport each with annual capacity of 26m tonnes. The first two are planned to be operating by 2014. MMX’s Sudeste Port is scheduled to begin exporting 40m tonnes of iron ore from 2013.

Ferrous Resources also has plans for a 25m tonnes-per-year capacity port at Espirito Santos port by late 2013, rising to 50m tonnes by 2016.

Permitting delays meant Adriana Resources’ Brazilian mining subsidiary Brazore has rescheduled timelines for its iron ore terminal at Sepetiba Bay. Stage one could be completed by mid-2013 with 20m tonnes a year capacity and stage two, at 45m tonnes, completed by mid-2015.

Exports from Africa will rise from 58.3m tonnes in 2010, to 151m tonnes by 2015, DnB estimated. Despite high sovereign risk and political uncertainty, both Vale and Rio Tinto have stakes in the Simandou projects in Guinea. Vale has acquired a 51% stake in BSG Resources (Guinea), which owns two blocks seized by the government from Rio Tinto.

Vale plans to develop the mines and export iron ore as soon as 2012, transporting ore via a corridor through Liberia to a port that it plans to build near Buchanan. Volumes were estimated at 10m-15m tonnes by 2012, rising to 50m tonnes by 2014 if additional resources are found.

Rio Tinto’s Simandou project with Chinalco remains uncertain.

tonnage supply and demand — iron ore and coal 2010-2015

	2010e	2011e	2012e	2013e	2014e	2015e
Capesize
Capesize orderbook (m dwt)	36.2	34.5	27.4	11.6	2.7	0.2
New tonnage required — capesize (m dwt)	15.3	11.4	19.4	24.0	39.0	26.0
Excess supply — capesize (m dwt)	20.8	23.2	8.0	-12.4	-36.3	-25.8
Approximate number of vessels (165,000 dwt)	126	140	49	-75	-220	-156
Panamax
Panamax orderbook (m dwt)	14.5	17.5	16.5	6.3	1.0	0.1
New tonnage required — panamax (m dwt)	7.5	9.1	8.2	5.2	7.4	7.2
Excess supply — panamax (m dwt)	7.0	8.4	8.4	1.1	-6.3	-7.1
Approximate number of vessels (70,000 dwt)	100	120	120	15	-91	-101
Source: Clarksons, DnB NOR Markets

expected export volumes — iron ore and coal 2010-2015

New tonnage required	2010e	2011e	2012e	2013e	2014e	2015e
Capesize (m dwt)	15.3	11.4	19.4	24.0	39.0	26.0
Panamax (m dwt)	7.5	9.1	8.2	5.2	7.4	7.2
Source: DnB NOR Markets

Increased cargoes ‘will not absorb’ new tonnage

RISING iron ore and coal exports will see 15.3m dwt in additional capesize capacity and 7.5m dwt in panamax capacity required in 2010, writes Michelle Wiese Bockmann.

DnB Nor Market has analysed coal and iron ore volumes coming on line over the next five years to anticipate how much additional deadweight capacity would be needed from the dry bulk fleet.

“While cargo volumes are set to rise substantially, new tonnage expected to be delivered seems to be too large to be absorbed by these volumes,” the DnB report said.

The analysis allowed for up to 25% of the existing orderbook to be cancelled and a further 15% of capesizes to be delayed, and 25% of panamaxes to be delayed.

Excess capacity was forecast to affect capesize rates more acutely than panamaxes, where supply could be absorbed by other grain and steel products cargoes.

Already 115 capesize vessels of 20m dwt have been delivered in the first seven months of 2010, already surpassing the capacity that DnB analysis shows will be required to meet extra cargo volumes.

The study showed there would be an excess of 126 capesize vessels in 2010, 140 in 2011 and 49 in 2012. This figure eased back to a deficit in 2013-2015, largely as ships are not ordered that far in advance.

In the panamax sector, there were 100 more panamax vessels than demand for tonnage suggested in 2010, rising to 120 in 2012. Because of projected over-capacity, DnB forecast that average rates would soften, but volatility would persist, reflecting rapid short-term changes in demand.

Substantial scrapping had to occur in the global capesize fleet, which now numbers over 1,060, and rates would remain subdued, the report found.

DnB’s analysis was based on global coal exports of 842m tonnes in 2010, rising to 934m tonnes in 2011 and 1bn tonnes in 2012. Iron ore volumes were forecast at 948m tonnes in 2010, 1bn tonnes in 2011 and 1.2bn in 2012.

Source: http://www.lloydslist.com/ll/sector/dry-cargo/article342847.ece --- by Michelle Wiese Bockmann