RETURN TOREPORTS DESK Report No. TO-433

WITHINONE WEEK

This report may not be published nor may it be quoted as representing the view ofthe Bank and its affiliated organizations. They do not accept responsibility for itsaccuracy or completeness.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

THE WORLD MARKET

FOR

IRON ORE

July 9, 1964

Department of Technical Operations

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THE WORLD MALRIKT FOR IRON ORE

TABLE OF CONTENITS

Pages

I. SUIVR4ARY i - ii

II. TRENDS IN REQUDUZNTS FOR IRON ORE 1 -3

III. TRENDS IN IRON ORE SUPPLY 4 - 81

IV. THE TREND CF IRON ORE PRICES AND IREIGHTS 9 - 10

V. THIE CURRENT SITUATION ON THIE WORLD IRON ORE KARKET 11 - 12

VI. FUTURE DEM1AND AND SUPPLY PROSPECTS 13

VII. PROSPECTS FOR IRON ORE PRICES AND FREIGHES 14 - 16

VIII. PROSPECTS FOR INDIVIDUAL EXPORTING OOUNTRIES 17 - 18

ANN,1EXES

1. Steel Production by Processes and Pig Iron Production

2. Iron Ore Production, Exports and Imports of Iron Ore

3. The Trend of Iron Ore Prices and Freights

4. The Current Situation on the World Iron Ore Market

5. The Iron Ore- I n--.ng Industry in Major Exporting Countries

6. Future Demarid-and-Supply Prospects

Note: All -re expressed in metric tons.Figu for-A63 are provisional in several cases.

THE WJORLD MARIu FOR TRON ORE

I. SUlzmY

i. Free World production 1/ of iron ore increased from 188 milliontons in 1929 to 200 million tons in 1950 and 345 million tons in 1960OSince then it has declined to about 327 million tons in 1963. In termsof iron content the overall increase has been somewhat larger since theaverage Fe-content moved from 43.1% to 48.5% between 1929 to 1962.

ii. Up to World War II most major steel producers were more or lessself-sufficient in iron ore with the exception of Germany and the UnitedLingdom. These two countries imported about two-thirds and one-third re-spectively of their requirements (measured in iron content) from Swieden,Spain and North Africa.

iii. After the war a radical shift in supply patterns developed asa result of the gradual depletion of high-grade ore deposits in the UnitedStates and of the ample availability of high-grade ores following the dis-covery and development of numerous high-grade deposits in Canada, LatinAmerica and West Africa. Western European steel producers started to im-port high-grade ores from overseas on a large scale while domestic productionof low-grade iron ores increased only up to 1960 and has declined since.The rapid development of its steel industry has made Japan the third largestmarket for iron ores. In 1963 over 90% of Free World ironore exports wasdirected towards the United States, the Common NIarket (ECSC). the UnitedKingdom and Japan.

iv. Today, the United States' main supplier of imported ores areCanada and Venezuela. The ECSC and the United Kingdom draw the major partof their foreign supplies from Sweden, Latin America and West Africa. Japanimports most from lalaya, India/Goa and Latin America.

v. Iron ore prices rose steeply from 1950 to 1957 because of tightsupply. From then on they have declined on account of ample supply, but in1963 had not yet fallen back to the 1954/55 level and were still far abovethe 1950 level. Freight rates also increased considerably from 1950 to1957 but have fallen drastically since then because of a weak freight marketand the introduction of large, specialized ore carriers. A shift from spotto long-term charter in ore shipping also contributed to the decline.

vi. Import requirements of the three main markets are likely to in-crease by 35 million tons iron content by 1967. Scheduled expansions ofcapacity in Canada, Swieden, Latin America and Australia to export iron oresare 36 raillion tons iron content and further additions of 5-8 million inVenezuela and India are possible by 1967. Although a moderate excess ofsupply can be expected there is little chance of a catastrophic over-supply.

vii. By 1970 a further increase of import demand by 17 million tonsiron content is expected. Planned expansions of iron ore output and ex-ports in Australia, Brazil, Canada, Chile, India and Liberia appear to belarge enough to meet this demand.

1/ The Soviet Bloc has been excluded since it is by and largea self-contained market.

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viii. The buyers market resulting from ample supplies will probablylead to further reductions of iron ore prices, varying in degree from onemarket to the other. Imports into the United States will come almostexclusively from captive mines. Therefore, it seems likely that priceswill be set high enough to protect the domestic mining industry, that isat about 20¢ per unit in 1967 and 19¢ in 1970, compared to a Laoer Lakeprice of 210 for Mesabi ore in 1963.

ix. Iron ore prices cif Western Europe can be expected to fall furtheras new large supplies from West Africa become available. On the basis ofestimated production cost and future reductions in freight it can be assumedthat prices cif IWestern Europe will not be below 16¢ per unit by 1967 and14¢ per unit by 1970, compared to the cheapest import unit value of 18.80per unit Fe in 1962 for imports from Sierra Leone and Liberia.

x. The latest offer of large scale iron ore deliveries to Japan hasbeen made by the Australians at 20¢ per unit cif Japan with deliveriesstarting by 1966/67 for deliveries of about 5 mLllion tons per year, but18¢ cif Japan have been quoted for 8 million tons per year. Competition forthe Japanese market being extremely severe, it seems possible that 18¢ perunit Fe cif Japan would be the minimum in 1967 but by 1970 further reductionsto a minimum of 16-170 per unit Fe cif Japan might occur. This compares withthe 21.5¢ per unit for the cheapest import in 1962.

xi. The most important losses of markets during the changes underwayin supply patterns will probably be experienced by low-grade ore producersin the United States and Western Europe as well as by exporters in Spain9North Africa and possibly Goa. In recession years producers for the freemarket in Brazil, Chile and India/Goa as well as captive producers for theUnited States market in Venezuela and Canada are most likely to suffer.

II. TRENDS IN REQUIRE1ENTS FOR IRON ORE

1. Iron ore is used for the production of pig iron and, in smallamounts, as a refining agent in the production of steel. Over 90%o ofthe pig iron produced is used in steel making, the rest being mainlyfoundry pig iron.

2. The ratios of iron ore production to pig iron and steel pro-duction in the Free World 1/ have changed little in recent years althoughin the long run there has been a tendency towards lower raw materialinputs, reflecting improved techniques, higher qualities of iron ores andincreasing inputs of scrap as well as a decrease in the share of pig iron usedfor iron castings:

Production Ratio 1913 1929 1937 1951 1955 1960 1961 1962 1963

Iron ore/pig iron 2.245 2.063 2.140 2.016 1.970 2.064 1.919 1.903 1.790Pig iron/crude stl.1.036 o.814 0.742 0.7C8 0.682 o.6Mg o.696 0.707 0.692Iron ore/crude stl.2.464 1.679 1.589 1.A27 1.344 1.432 1.336 1.345 1.238

3. In most countries pig iron and steel production increased quicklyin the post war era up to 1960, as shown in Tables 1 and 2. Steel productiongrew faster than pig iron almost everywhere, the only exceptions being Italyand Japan, w¢here pig iron production was particularly low compared to that ofsteel at the beginning of the period. In the United States a peak was reachedin 1955 and production subsequently fell back to about 1950 levels. In theECSC 1960 was a peak year. Production of steel remained at the 1960 levelbut pig iron production fell slightly. In the United Kingdom pig iron andsteel production declined more sharply after reacding a peak in 1960. In Japanand the rest of the Free World as a whole production continued to increase,although at a slower pace after 1960.

4. At present, the United States, the ECSC and the United Kingdom aswell as Japan have large deficits in iron ore. All other substantial steel pro-ducing countries are more or less self-sufficient.

1/ The Soviet Bloc has not been included in the analysis sinceits iron ore exports to and imports from the West are comparativelysmall.

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TABLE1

Crude Steel Production in Selected Countriesand Regions, for selected years, 1929 to 1963-- --------- in '000 metric tons -^

Regions or Countries 1929 1937 1950 1955 1960 1962 1963

United States 57-339 53,242 89,959 108,436 90,068 89,183 99,102

Belgium/Luxembourg 6,837 6,394 6,240 9,119 11,263 11,354 11,55)4France 9,711 7,920 8,652 12,592 17,279 17,240 17,557Italy 2,154 2,087 2,362 5,395 8,229 9,148 10,1&1Netherlands - 49 490 581 1,942 2,087 2,307West Germany 18,637 19,817 14019 214.501 20 32 r563 3i597

Total ECSC 37,339 3 6,267 31,763 5 8 72,813 72,'t32 73,211

United Kingdom 9,791 13,192 16t55A 20 108 24, 695 20835 291Total ECSC and U.K. 47T,130 4i9.459 468317 72,696 97,508 93t567 96,152

Japan 2,294 5,801 4,839 9,408 22,138 27,746 31,501

All Others 5,102 6,279 12,249 19,544 31,180 36,718 40,957

Total Free World 111,865 114,781 155,364 210;084 240,894 247,214 267,7.2

Indices 1929 100

1929 1937 1950 1955 1960 1962 1963

United States 100 93 157 189 157 156 173

Belgium/Luxembourg 100 94 91 133 165 166 169France 100 82 89 130 178 178 181Italy 100 97 110 250 382 440 471Netherlands - - - - - - -

West Germany 100 106 131 183 17 170Total ECSC 100 97 9 5 19$ 9lg

United Kingdom 100 1 169 205 252 213 234Total ECSC and U.K. 100 105 102 154 207 198 TWI

Japan 100 253 211 410 965 1,210 1,373

All Others 100 123 240 383 611 7Q0 800

Total Free World 100 103 139 188 215 221 239

Note: All data relate to countries within the boundaries existing in the yearconcerned. For more detail, see Tables 1-5 of Annex 1.

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TABLE 2

Pig Iron Productionl/in Selected Countriesand Regions, for selected years, 1929 to 1963------------- in 1000 metric tons -----------

Regions or Countries 1929 1937 1950 1955 1960 1961 1962 1963

United States 43,298 37,721 58,596 70,571 61,072 59,235 60,126 652644

Belgium/Luxembourg 6,947 6,316 6,194 8,475 10,266 10,220 10,346 10,502France 10,364 7,855 7,761 10,960 14,144 14k,566 13,959 14J306Italy 734 790 504 1,677 25715 3,092 3,678 3,864Netherlands 254 312 454 670 1,346 1,456 1,571 1,708West Germany 15,506 15,960 U 157 19 361 25,739 25,430 24,251 22,909

Total ECSC 33,805 31,233 26,070 5,210 5,76 53,805 53,289

United Kingdom 7,711 8 629 8,787 12,670 16 016 14 984 13 926 14 849Total ECSC & UK 41,516 339862 353,13 7 ,

Japan 1,112 2:397 2,233 5,217 11,896 152821 17,972 19,936

All others 5,121 5s244 9,100 13,769 23,919 27,278 28,932 31,196

Total Free World 91,047 85,224 104,786 143,370 167,123 172,082 174,761 184,914

Indices 1929 - 100

United States 100 87 135 163 141 137 139 152

Belgium/Luxembourg 100 91 89 122 148 147 149 151France 100 76 75 106 136 141 135 138Italy 100 108 69 228 370 421 501 526Netherlands 100 123 179 264 530 573 619 672West Germany 100 103 72 125 166 164 156 148

Total ECSC 100 92 77 122 T35 162- T17 1

United Kingdom 100 112 114 164 208 194 181 193Total ECSC & UK 100 9 6 E 130 iM7 -1619

Japan 100 216 201 469 1,070 1,423 1,616 1,793

All others 100 102 178 269 467 533 565 609

Total Free World 100 94 115 157 184 189 192 203

1/ Includes blast furnace ferro-alloys but excludes electric furnace ferro-alloys.

Note: All data relate to countries within the boundaries existing in the yearconcerned. For more detail, see Table 6 of Annex 1.

III. TRENDS IN IRON ORE SUPPLY

50 Before World War II production of iron ore was concentrated inthe steel producing countries, except that Swxeden, Spain and North Africa(Algeria, Morocco, Tunisia), together exported between 15 and 20 milliontons annually, mainly to the United Kingdom and Germany.

6. After World War II a number of countries rapidly became new majorproducers for exports. (see Table 3). While production of iron ore in steelproducing countries and in Sweden, Spain and North Africa increased by lessthan 500, output in the newi major producing countries increased from 8.5million tons before the war tolOO 3 million tons in 1963.

7. The importance of the shift towards new major ore producers is furtlierenhanced by the fact that, with the exception of Canada, the iron ore contentof these ores is on the average higher than that of the old producers with theexception of Sweden (column 1, Table 3). If output is measured in Fe-contentthe shares of the different groups of main producers in total Free World pro-duction of iron ores (usable ores) changed as follows (percentage):

Producers 1929 1950 1955 1960 1962

USA 45.9 53.9 40.7 28e5 24.8ECSC - UK 30.5 19.5 21.4 20.9 19M9"Old" Exporters 15.2 12.6 11e8 11.2 11.4"New" Exporters 4.7 8.8 18.6 31.3 33.9All Others 3.7 2.2 7.5 8.1 10.0

Total 100.0 100.0 100.0 100.0 100.0

Total - milliontons Fe 81.0 91.2 131.4 166.2 160.3

Average FeContent - h0 43.13 45.55 46.52 47.92 48.49

8. World trade in iron ore has increased more rapidly than production.Exports represented only 23.64 of production in 1929 but by 1960 the figuirehad reached 40.2% and by 1962 42.7%. Over 90% of iron ore exports were dir-ected toTards the United States, the ECSC, the United Kingdom and Japan(for details see Tables 2 and 3 of Annex 2 .)

9. Table 4 shows imports of the main deficit regions by origin forselected years from 1929 to 196.3. The bulk of imports into the United States,the ECSC and the United Kingdom today come from four regions: Sweden, Canada.Latin America and West Africa 1/. Japan still gets two thirds of its supply

1/ Total exports from West Africa (Mauritania, Guinea, Sierra Leone,Liberia, Angola) are still comparatively' small. By 1964, however,over 20 million tons of iron ore will be exported from that region.

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TABLE 3

Production of Iron Ore, Concentrates and Agglomeratesin Selected Countries and Years 1929 to 1963

(Million *ivetric Tons)

Fe Content. 1929 1937 1950 1955 1960 1962 1963

I. Mlajor Producers forOwn Requirements

United States 1/ / 74.2 73.2 99D6 104.7 90.2 72.9 73.5

France 31 50.7 37.8 30.0 50.3 67.0 66.3 58.5Luxembourg 28 7.6 7.8 3.8 7.2 7.0 6.5 7.0Germany 3/ 27 7.1 10.j9 11J 17.1 20.' 17.9 lbe7

Total ECSC 6 5.4 56.5 K 92 77 94.3 9 0_7 5

United Kingdom 28 hJ 13.4 14.4 13,2 16.5 17.4 1505Total ECSC & U.K 7W08 70,9 5804 91.1 111.7 106.2 95.4

II. Major Producers for Export

a. Before World War IISweden 6 0 11.5 15.0 13.6 17.4 21.3 22.1 23.1Spain 49 6.5 1.3 2.1 3.8 5.6 5,9 5.5North Africa 5/ 52 4.3 4 h8 4.5 6.0 6.1 4h0 _2!O

Total 22.3 21.1 20.2 27.2 33.0 32.0 32.2

b. After World War IICanada 1/ 55 1.5 1.6 3.3 1t.7 19.5 24.6 25.4Brazil 6/ - 0.2 2.0 3.4 9.3 11.0 13,2Chile TO 1.8 1.5 2.9 1.5 4.7 8.1 8.0Peru 60 - - - 1.7 5.2 5.4 5.5Venezuela 62 - - 0.2 8.4 19.5 13.4 12.0Liberia 66 - - - 1.9 3.0 3.3 7.8Sierra Leone 60 - 0.6 102 1.3 1.4 1.7 1.8India 61 2.5 2.9 3.0 4.8 10.7 13.1 1h403Goa 56 - - 0.1 2.2 509 600 5.0lalaya 55 0.8 1.7 0.5 1.5 5.7 6.5 7.3

Total . .7 13.2 4h1. W79 93.1 100.3

III. All other Producers 5.9 9.3 8.8 18.0 25.2 28.4 29.6

Total Free WIorld 187.8 182.4 200.2 282.4 345.0 332.6 331b.0

1/ Production and Fe contents refer to usable ore.2/The average Fe-content in the United States varied as follows:

1929 - 50.2; 1950 - 49.4; 1960 - 53.71937 - 49.63 1955 - 51.1; 1962 - 54.9

3/Includes production in Belgium and Italy.I/Pre-war 30% Fe. _/ Algeria, FMorocco, Tunisia. / 1929 - 1950 boat. 68-7Or,Y F

later yc-ars 65-&C/s Fe,For more detailp see table 1 of Amxa, 2.

TABLE L

I)RTS OF IRON ORM CONCENTRATES AND AGGLOMERATES INTO MAIN DEFICIT REGIONS, 1929-1963- thousand metric tons -

-Ma4in-Exporters All Other ExporteroImporting Re 5onii Sweden: Canada Latin West Total Other Europe North India Other Others Total Grand

__ _ WA,__ i" , America Africa Western Africa (incl.Goa) Asia _ Total

1929 ECSC and U.K. 8,804 6- 5 8,805 6,815 4,095 - - 2,248 13,158 21,967U.S.A. 315 82 2,425 - 2,822 64 175 _ 8 123 370 3,192Japan - - - - - - 2,259 - 2,259 2,259

1938 ECSC and U.K. 11,090 45 236 681 12,052 3,485 5,211 - - 2,028 10,724 22,776U.S.A. 217 1 1,766 - 1,984 77 8 - 6 82 173 2,157Japan - - - - - - - 132 3,080 - 3,212 3,212

1950 ECSC and U.K. 9,065 177 99 951 10,292 1,647 3,361 3 175 5,186 15,478U.S.A. 2,054 1,843 3,282 196 7,375 1 623 - 7 266 897 8,272Japan - - - - - - - 96 1,309 9 1,414 1,414

1955 ECSC and U.K. 13,678 2,580 1,724 2,621 20,603 3,863 5,321 1,022 52 825 11,083 31,686U.S.A. 1,223 10,144 11,868 1,040 24,275 2 20 - - 515 537 24,812Japan - 497 - - 497 - - 1,341 3,401 220 4,962 5,459

1960 ECSC and U.K. 18,319 5,555 9,409 4,669 37,952 5,152 5,839 3,755 13 1,740 13,019 50,971U.S.A. 95 10,600 23,095 841 34,631 - - - 59 122 181 34,812Japan - 1,058 1,342 - 2,400 - - 4,530 7,436 841 12,807 15,207

1962 ECSC and U.K. 18,031 3,219 9,573 5,562 36,385 3,765 3,621 2,463 52 328 10,229 46,614U.S.A. 32 17,114 16,001 769 33,916 - - - 49 1 50 33,966

Japan - 1,574 5,970 - 7,544 - - 4,504 8,480 1,917 14,901 22,445

1963 ECSC and U.K. 19,395 3,538 10,989 8,930 42,852 3,207 2,753 1,554 84 348 7,946 50,798U.S.A. 37 19,291 13,304 1,332 33,964 1 - - 22 22 45 34,009Japan - 1,o86 6,567 - 8,453 - - 5,801 9,345 2,412 17,558 26,011

Sources Die Eisernr wirtachaf t der Welt in Zahlen, Dusseldorf, 1961; U.S. Bureau ef Mines: Minerals Yearbook, Countrv StVtistics.

Note: Excludes intra-EC3C trade and UK-ECSC trade (1929 = 16,571; 1938 = 15,042; 1950 = 7,647; 1955 = 21,073; 1960 = 27,153; 1962 - 26,249

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from Asia (particularly India and Malaya) but the share of Canada and LatinAmerica has been increasing rapidly. Among the other exporters of iron oreonly Malaya and India today export more than 2 million tons of ore annually.

10. The increasing importance of imported versus home-produced ironores in the three main markets can be seen from Table 50 Figures are givenin actual tonnages and in Fe-content0 The distinction is particularlysignificant for the ECSC and the United Kingdom where home-produced ores arelow-grade. Note that in the ECSC the substitution of imported high-gradefor low-grade home ore has continued from 1960 to 1962 in spite of the de-crease in total requirements for ore. Also note that in the United Kingdomthe process of substituting imported ores for home ores has gone considerablyfurther than in the ECSC.

11. Combining the data in Tables 4 and 5 the shares of various sourcesin total supplies of iron ore on the three principal markets in 1962 can beestimated as follows (in percent):

Actual Tonnages In Fe-content

Source ECSC + UK USA Japan ECSC + UK USA Japan

Home Ore 68 66 10 52 64 6Sweden 12 - - 19 - -Other West Europe 3 - - 4 - -Canada 2 17 6 3 17 6Latin America 7 16 24 11 17 26West Africa 4 1 - 6 2 -North Africa 2 - 3 - -India & Goa 2 - 18 2 - 19Other Asia - - 34 - - 35Other - - 8 - - 8

100 100 100 100 100 100

12. Latin America is an important supplier to aUl three main markets.Canada is the most important source of iron ore for the United States andalso has a share in the Japanese and Western European market. Sweden servesWestern Europe only and the Asian exporters (mainly India, Goa, Malaya andthe Philippines) are important suppliers only for Japan. West Africa hasbecome an important supplier for Western Europe in recent years.

TABLE 5

Supply of Iron Ore in Selected Regions, 1929 to 1962

------------ Actual Tonnage ---------- ---------- Approximate Fe-Content ---------Thousand Metric Tons Percent Thousand Metric Tons Percent

SupDly of Imports of Home Imported Home Imported Home Imported,Home Ore!/ Iron Ore Ore Ore Ore Ore Ore Ore

1929 ECSC' 65,199 16,253 80 20 20,817 9,482 69 31U.}l,'i.419 " !5,714 71 29 4,056 2,468 62 38

tIl.'.A. , 75l,fi@8Jg7 3,192 96 4 37,872 1,770 96Jivan' . ,' 1f.178 2. 259 7 93 90 1,345 6 94

1938 EC-Sp.' 09;§6 17,592 74 26 15,707 10,213 61 39U.K. 11,903 5,184 70 30 3,526 2,365 60 4oU.S.A. 26,253 2,157 92 8 13,008 1,255 91 9Japan 771 3,212 22 78 385 1,870 17 83

1950 ECSC 44,265 7,380 86 14 13,014 4,178 76 24U.K. 12,468 8,815 58 42 3,605 4,583 44 56U.S.A. 96,113 8,272 92 8 47,480 4,710 91 9Japan 825 1, L4 37 63 Lio 865 32 68

1955 ECSC 71,265 19,320 79 21 20,091 11,173 64 36U.K. 16,622 12,446 57 43 4,484 6,610 40 60U.S.A. 102,336 24,812 80 20 52,294 14,275 79 21Japan 1,512 5,459 22 78 632 3,180 16 8

1960 ECSC 87,562 33,236 73 27 26,495 19,601 58 2U.K. 17,245 15,950 52 48 4,825 8,h72 36 64U.S.A. 78,933 34,812 69 31 41,440 21,500 66 3LJapan 2,809 15,207 16 84 1,045 8,300 11 89

1962 ECSC 82,567 33,495 71 29 24,605 19,829 55 45U.K. 15,521 13,119 54 46 4,191 7,582 36 6LU.S.A. 67,470 33,966 66 34 37,109 20,549 64 36Japan 2,421 22,4L5 10 90 896 13,018 6 9L

Note: Figures exclude intra-ECSC trade. In the UJnited States, home ores represent usable ore only.

1/ In the ECSC and U.S.A. shipments minus exports of home ore. In the U.K. consumption of home oreard of imported ores. In Japan oroductLon of home ore.

Source: '~ee Table 4h, Pa7e 6.

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IV. THE TREND OF IRON ORE PRICES AND FREI¢HTS

13. Since World War II prices mf iron ore have fluctuated widely,paralleling with varying lags the movemer.nts of pig iron and steel productionuntil the late fifties, From 1958 on the rapid increase in supply outrandemand and prices continued to decline from their 1957 peak in spite ofgrowing steel production from 1958 to 1960. Since 1960 a weak steel markethas contributed to further declines of iron ore prices (for more detail seeAnnex 3).

14. The general fall in ore prices reduced the large differences fromcountry to country in fob-export prices for iron ore, and the decline infreights resulted in an even greater reduction of these differences for cif-import prices of iron ore. These developments are the result of increasedcompetition.

15. Decreases in average freight per ton of ore shipped were due togrowing use of larger specialized ore carriers, a shift from spot to long-termchartering and the generally weak state of the freight market.

16. The lowering of ocean transport cost improved the competitiveposition of iron ore exporters furttpr away from the main markets. In parti-cular the positions of Brazil, Chile and Peru improved as suppliers to WasternEuropean and Japanese markets.

17. In spite of the price decline since 1958, fob and cif-prices in 1963 -were well above the 1950 levels, and in a number of cases the 1954/55 level ascan be seen from the following (US$ unit values per ton):

I,Export (fob)Sierra Vene-

Sweden Canada Leone Brazil Chile Peru zuela India Malaya

1950 6.04 6.06 3.21 7.39 2.54 - 5.8 < 5.43 5.761954/55 2/ 9.92 7.34 7.67 11.69 3/ 4.58 4.67 6.27 8.63 6.371962 9.75 9.31 7.28 9 07 3/ 7.76 5.60 8.45 11.14 8.291963 8.76 10.34 7.01 8.50 3/ 8.06 5.50 7.48 10.63 8.48

1/ 1951 - 2/ whichever is lower - 3/ In 1955 the share of more expensive lumpore in the total was considerably higherthan in 1962 and 1963.

I. Import (cif)a) Germany

1950 8.44 - 5.21 - - - - -1954/55 1/ 12.83 10.36 13.04 20.54 2/14.43 17.69 13.32 - -1962 12.96 12.66 11.46 13.93 2/13.61 LZ.80 15.41 - -1963 11.51 12.70 11.26 13.10 2/13.02 11.06 14.15 - -

1/ whichever is lower - 2/ 1954/55 mainly open hearth lump; 1962 and 1963 mainlyblast furnace ore.

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b) Japan

Canada Brazil Chile Peru India Mala

195 13 .52 - - - 16.62 12e231962 15.07 18.46 16.01 13.71 17e01 13o081963 14.31 16.68 16.46 12.85 15.66 12.16

18. As can be seen, in general up to 1963 iron ore export prices havenot fallen back below the 195J4/55 level. Only the considerable decline infreights had brought some of the cif-import prices below that level.

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V. THE CURREMT SITUATION ON THE WORLD IRON ORE MARKET /

19. It can be estimated that in 1962 world iron ore mining capacitywas some 15 to 20% higher than demand. Additions to capacity in 1963 werelarger than additional demand created by a revival of steel production inmany important producing countries.

20. Expansion of iron ore produiction capacity continues to take placein those overseas countries which have large deposits of high-grade iron ore.With the exception of Venezuela all these countries have been able to in-crease their exports even during the recent period of stagnating steel pro-duction while producers of lower grade ore have had to reduce their output.

21. The increasing preference for high-grade ore and more recentlyfor pellets, is due to the substantial improvement in blast furnace per-formance that can be obtained by using high-grade ore and in particularpellets. The incentive to use high-grade rather than medium and lao-gradeores has been greatly increased because of the considerable decrease in thepast 6-7 years in the export prices of high-grade overseas ores and freights.West African ores have been delivered to Western Germany for 18.8 cents perunit Fe, Brazilian, Chilean and Peruvian ores for 21G2 - 22.4 cents, whileGerman home ore conicentrates of 37.7% Fe cost 21.8 cents. German purchasesfrom more expensive suppliers such as Canada and Venezuela (at 25 and 26.1cents in 1962) have been reduced in the last fdw years.

22. Most of the new producers who have succeeded in increasing theirshare in the market have open pit mines fairly close to the coast, an amplecheap labor supply and large deposits of high-grade ore. Their productioncosts are probably low compared with traditional suppliers producing mediumor low-grade ore, often from underground mines. Their pricing policies havebeen aggressive, as can be seen from fob-mine values for Brazil, Chile, Peruand Sierra Leone, which in 1962 were between 8.7 and 9.2 cents per unit,compared to 12.1 cents for French ore, 21.8 cents for 37.7% Fe German con-centrates and 14.5 cents for Swedish ore. Since German and French ore pricesare fairly close to cost and most overseas ore mining companies show satis-factory financial results, the latter appear to have a considerable compet-itive advantage over tbe former.

23. Since Chilean and Peruvian ores can be delivered to Western Europefor a cif unit value about equal to the price of Mesabi ores at lower Lakeports they can be assumed to be competitive at least on the east coast of theUnited States. The distance from West Africa to Baltimore is about the sameas from Chile to Baltimore and fob-mine values are only slightly higher inWest Africa than in Chile. Therefore, it seems reasonable to assume that WestAfrican ores also are competitive on the east coast of the United States.

24. Iron ores are delivered to Japan at 21.5 - 23.8 cents from thePhilippines, Malaya, Goa and Peru, while deliveries from Chile, Brazil, Canadaand India range from 26.7 to 27.9 cents. The Unit value of deliveries fromChile is expected to come down as soon as portsohave been improved to permit

/ For more detail see Annex 4.

- 12 -

the use of large ore carriers similar to those already in operation fromPeru to Japan. Brazilian ores are more expensive because of the longdistance transport while Canada and India charge higher prices, although inthe case of India exports consist mainly of hand-picked high-grade lump ore.

25. A notable feature of the present situation is the trend towardthe sale of iron ore on long term contracts instead of anmual contracts onthe free market. Most new ventures contract a large proportion of theirfuture output before starting any construction.

- 13 -

VI. FUTURE DEMNND AND SUPPLY PROSPECTS

26. Demand for iron ore can be expected to show further growth assteel production continues to expand in many countries, although probablyat a slower rate. The increase in demand until 1967 in the three majorimporting areas, i.e. the United States, Japan, United Kingdom and ECSC,is estimated to require an addition of 35 million tons Fe-content to 1962iron ore export capacity. (For a detailed discussion see Annex 6).

27. Knolm additions to export capacities which are scheduled forproduction before 1967 are the following (million tons Fe):

Canada 9.7Latin America

Brazil 5.1Chile 2.2Peru 14

8.7

AfricaAngola 0e4Liberia 9.0Mauretania 3e8Sierra Leone 0.6 13.8

Sweden 3.0Australia 1.0

28. Further expansion by 3-5 million tons Fe in India is probable, andin Venezuela existing mines can raise their capacity by 2-3 million tons Feif necessary in a fairly short period. Therefore, supply should be ample in1967.

29. It is estimated that by 1970 an additional 17 million tons of ironcontent will be required. Expansions of capacity over the indicated 1967level are planned in Australia, Brazil, Canada, Chile, India and Liberiaand would seem to be large enough to avert any shortages.

30. In general, a buyers market without undue pressures of large over-supply will most probably exist up to the end of the 1960's, but recessionyears will bring considerable pressure on high cost and low-grade iron oreproducers.

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VII. PROSPECTS FOR IRON ORE PRICES AIND FREIGHTS

31. Available evidence indicates that pricing policies in the ironore market have undergone considerable chang; since the late fifties.The main cause is the shift from a sellers to a buyers market, brought aboutnot only by an increase in iron ore production capacity and the slower growthof steel production, but also by a substantial reduction in freights whichpermitted many new producers to enter markets that they could not previouslyreach because of the prohibitive transportation cost.

32, The first question then is whether freights are likely to riseagain. Since the fall in freights was due mainly to reductions in the costof transportation and the trend toward long-term chartered or company--ownedlarge ore-carriers continues unabated there is little likelihood of freightsrising back to prohibitive levels. On the contrary-, further reductions intransport costs, although smaller than inthe past, are more likely thanincreases 1/.

33. The present situation is characterized by a slow replacement oftraditional high cost iron ore producers by- many new low cost producers.However, because social and security considerations must often be taken intoaccount in decisions to cut back output of home ore the process is likely tobe slow0 To enter the market newcomers must offer attractive prices, parti-cularly when slower growth of steel production keeps demand for ore from rising8

34. In times of ample supply prices tend to move towards productioncost plus a reasonable profit. When the decline of iron ore prices began in1957 the ore price level was exceedingly high and in 1963 both fob-and cif-pri cswere still well above the 1950 level and for fob-prices were often well abovethat of 1954/55 (see Annex 3). It seems unlikely that production costs inoverseas countries have risen very much in view of the increasing volume ofproduction, further mechanization and the introduction of large scale operations.Therefore, further price reductions are to be expected, in particular fromsuppliers who want to enter or increase their share in the market.

35. The extent to which prices can be expected to decline further willvary from one major market to the other. Competitive conditions prevailing onthe United States market have been described in detail in a former Bank study /and are still applicable, with the exception that elimination of additionalmarginal mines in Michigan and innesota may permit a reduction in the Lake Eriebase price to the equivalent of 200 per unit by 1967 and subsequently to 19¢by 1970. However, since the United States steel industry covers practicallyall its imports from captive mines abroad the question of pricing is oftenreduced to a decision as to whether profits should be maximized at the mine or

at For example: Japanese importers hope to eventually reduce freight on therun from Peru to Japan from US$8 to 4 per ton by using carriers of 65,000 dlt.An 80,000t Japanese carrier in early 1964 reduced freight cost from Peruto Japan by US$1.50,t compared to a 19,00Q0 carrier.

/ The Market for Iron Ore in Western Europe, Annex to T.O. 225a of February-12, 1960.

not. Exogeneous factors, such as changes in taxation, can influence thisdecision.

36. In Japan cif-prices of ore have declined drastically over the last10 years and are at present around 23-2h4 per unit for most ores. The latestAustralian offer is 20¢ per unit cif Japan for deliveries of 5 million tonsannually of high-grade ore with deliveries planned to start in 1966/67 and18¢ per unit for deliveries of 8 million tons per year. There are enormousiron ore reserves in Australia and it seems safe to assume that no newcomerto the Japanese market will be able to place large quantities of comparablequality at an appreciably higher price than 18¢ per unit by 1967. If de-velopments of Australian ore (including its behavior in the blast-furnace)are favorable a further reduction to 16-170 per unit by 1970 can be assumed.

37. The most important changes are to be expected in the Western Europeaniron ore market. Large scale developments of new iron ore mines in West Africawill soon change the Western European iron ore supply pattern considerably.The price of ore cif Western Europe will be greatly influenced by how far WestAfrican producers can go in underbidding traditional suppliers to Western Europe,

38. From material available on investments, production cost, rail andocean freights for iron ore from Liberia, Mauritania and Sierra Leone it canbe estimated that the lowest price cif Western Europe that can be reasonablyexpected by 1967 would be between 14 and 16¢ per unit for an ore of at least60% Fe and good chemical and physical characteristics. Reduction in WestAfrican production costs, due to increasing scale of production, will probablypermit some cuts in prices between 1967 and 1970; a reasonable assumptionseems to be that the price cif Western Europe will not be below 16¢ per unitby 1967 and 14¢ per unit by 1970.

39. All estimated future prices in this study are estimates of actualprices 1/. In viewi of the world-wide inflationary process that erodes - slowilyor more rapidly - the value of many currencies, an attempt to express thewhole analysis in real prices might seem attractive. In this particularcase, however, such a procedure has not been followed for two reasons:

a. Deflating all iron ore prices by a common denominator (e.g. aprice index) raises the question whether each of the individualprices is really influenced by the general inflationary processto the same extent. The wide variety of countries involved inthe present analysis suggests that this may not be the case.

b. Using real prices adds to the required forecast of actual prices,another difficult and risky item, namely estimating the futurespeed of the general inflationary Fr ocess by forecasting thedevelopment of the chosen price index, which is needed to convertthe estimated real into actual prices.

1/ This assumption excludes the occurrence of any major monetary disturbancese

- 16 -

40. Freights will vary widely according to conditions, the most im-portant of which, apart from distance, would appear to be: the maximum ship-size of ships that can be accommodated in loading and receiving ports; thesize of ships actually employed; the volume of traffic and weather (i.e. yearround shipping or not). Under favorable present conditionls the minimumfreights at present are about US$2/t for the first 1000 nautical miles andan additional 75¢/t for each additional 1000 nautical miles more, up to about5000 nautical miles. From that point on the additional cost decreases asis borne out by present freights from South America to Japan. Further re-ductions, particularly on long runs can be expected when ports have beenimproved to accommodate bigger ships and a sufficient number of large orecarriers have beenhuditL.

- 17 -

VIII. PROSPECTS FOR IDIVIDUAL EXPORTflG COUNTRIES

41. Since a moderate svrplus of iron ore supply exists and is ex-pected to continue to exist, some producers may be expected to experiencea loss of markets 1/.

42. The United States market is supplied almost erntirely from captivemines whose capacity is well over present and expected future requirements.The excess capacity could either be left unused or an attempt could be madeto export iron ore to Western Europe or Japan. Since returns on exports toWesterm Europe or Japan would be much lower than on sales to the UnitedStates it seems possible that the mining companies will leave at least partof the excess capacity unused in preference to exporting at lo1prices. The recent abolition of the special exchange rate for iron oreexports from Venezuela (Bolivas3.O9 per $ instead of the official 4.40 per $)will probably improve the competitive position of the Venezuelan iron ore in-dustry considerably and may help to reverse the declining trend of exports.

43. In Western Europe the use cf captive ore as well as of suppliescontracted on a long-term basis may be expected to take a considerably largershare in 1967 than it does today. As a result of increased supplies fromWest Africa, Latin America and Sweden other suppliers are likely to suffer.Recently, a leading manager of the German steel industry stated that theindustry had either stopped the use of ores from France, Luxembourg, Spainand Newfoundland or would stop within a few years. Imports of North Africaniron ores into Western Europe have been decreasing rapidly over the past fewyears and are expected to decline further because they are considered too lowin quality (or too high priced for their quality). Finally, there has beena decline in Western European imports of iron ore from Goa which can beassumed to continue as closer sources of iron ore are opened up. Exports fromSpain, North Africa and Goa to Western Europe may be reduced by 3-3.5 milliontons Fe v/.

44. In the Japanese market excess supply would occur if Indian plansto increase iron ore exports are realized. However, there are serious doubtsas to the timely completion of Indian iron ore projects. The growing concernof Japanese steelmakers over the failure of Indian suppliers to fulfill theiriron ore contracts has led the Japanese industry increasingly to considerAustralia their future main source of ore because of its large, high-gradedeposits, competitive prices and commercial reliability 3/ The effects ofsuch a shift on Indian (and Goan) exports will probably be small up to 1967but may reach considerable proportions by 1970 wJhen the various Australianprojects are all in full production. Reductions of iron -ore imports intoJapan are also lilely to occur from small suppliers such as Korea, Hong Kong,the Philippines, and South Africa.

1/ For a discussion of prospects for low grade ore producersin major steel producing countries see Annex 6.

2/ Some of this reduction might fall on small European exporters likeDenmark, Belgium, Portugal, Greece and Turkey.

3/ Far Eastern Economic Review, March 5, 1964.

- 18 -

45. The possible reductions in exports noted so far would approximatelybring demand and supply into balance in 1967 but there might still be anexcess supply of some 3-5 million tons Fe if captive mines of the United Statessteel industry in Canada and Venezuela decided to lower their prices sufficientlto obtain a larger share of the Western European or Japanese markets. Ifthis were the case non-captive producers in Chile,. Brazil and India/Goa wouldbe most likely to be adversely affected. In general- recession years particular]those producers who have no long-term contracts can be expected to suffer most,This would include the part of the output of captive producers or miningcompanies bound by long-term contracts, which is sold on the free market.Likely candidates again would be Chile, Brazil and India/Goa, as well as - toa smaller extent - captive or long-term bound producers in Canada, Venezuela,Peru and West Africa. In the United States whose steel industry buys practicallno ore on the free market a recession would tend to reduce imports of ore fromCanada and Venezuela.

July 9) 1964

TABLE 1

CRUDE STEEL PRODUCTION INl SELECTED COUNIESID )E3D3NS, FUR SLECTED TEARS, 1913 10 1963

(Ln thousand n'trin tons)

Countries °1913 1929 1937 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

BnlgtnW.Loaeboorg 3,818 6,837 6,394 6,240 8,168 8,086 7,192 7,837 9,119 9,832 9,760 9,385 10,098 11,263 11,113 11,354 11,554F'r 4,719 9,711 7,920 8,652 9,938 10,867 9,997 10,627 12,592 13 399 14,098 14,605 15,219 17.279 17,572 17,240 17,557Italy 913 2,154 2,087 2,362 3,063 3,535 3,500 4,207 5,395 5,908 6,787 6,271 6,762 8,229 9,125 9,488 10,156N.th.erl nd - - 49 490 553 685 860 928 981 1,051 1,185 1,438 1,672 1,942 1,971 2,087 2,347W. Qers 17,849 18.637 19,817 14,019 16,006 18.629 18,104 20,239 24.501 26.563 27.973 26.269 29,436 34,100 33.158 32.563 31,597

MSTAL ErSC 27,329 37,339 36,267 31,763 37,728 41,802 39,653 43,838 52,588 56,753 59,803 57,968 63,187 72,813 73,239 72,732 73,211

ARtrie 2,611 649 650 947 1,049 1,057 1,283 1,653 1,823 2,078 2,509 2,393 2,511 3,163 3,103 2,969 2,947Sp.,u 387 1,004 167 815 651 907 897 1,100 1,212 1,243 1,346 1,560 1,838 1,928 2,327 2,228 2,256

dSn 602 707 1,122 1,456 851 1,689 1,782 1,862 2,148 2,423 2,5o6 2,413 2,862 3,218 3,556 3,595 3.899Vaited Ningdne 7,787 9,791 13,192 16,554 15,889 16,681 17.891 18,817 20,108 20,991 22,047 19,880 20,511 24,695 22,441 20,835 22,941Othere 9 127 333 1.0D4 1.040 1,220 1.303 1.454 1.881 2.057 2,390 2.456 2,839 3,170 3.345 3.047 3,375

TOTAL ,Western Europs 38,725 49,617 51,731 52,539 57,211 63,356 52,809 68,724 79,760 85,545 90,601 8,6c7o 93,748 108,979 108,011 105,406 WV8, 89

United States 31,803 57,339 53,242 89,959 94,436 85,521 101,251 80,115 108,436 104,524 102,255 77,343 84,773 90,068 88,920 89,183 99,102Cn..da 1,059 1.400 1,425 3,070 3,238 3,35. 3.734 2.898 4.11b 4,813 4,572 3.938 5.376 5.256 5,i68 6,506 7.301

TOTAL North Aio. 32,862 58,739 54,667 93,029 97,674 87,880 104,985 83,013 112,550 109,337 106,827 81,281 90,11.9 95,324 94,788 95,689 jO6,103

TOALL Laitn A-oirina - 151 203 1,317 1,592 1,792 2,029 2,340 2,494 2,908 2,772 3,732 3,309 4,773 5,305 5,818 7,065

Japan 240 2,294 5,801 4,839 6,502 6,988 7,662 7,750 9,408 11,106 12,564 12,115 16,632 22,138 28,268 27 746 31,501rndia 60 585 910 1,461 1,524 1,603 1,531 1,712 1,732 1,738 1,742 1,842 2,473 3,288 3,840 5,145 5,994koatralia - 440 1,108 1.275 1 457 1 647 2,082 2,257 2,276 2.390 3,060 3,216 3.444 3,744 3,936 4 228 4,650Sooth Afric - 39 360 8847 1,007 1,258 1,298 1,431 1,60O 1,550 1,740 1,836 1,896 2,112 2,472 2,632 2,750Al Others - _ 1 57 53 73 134 208 264 286 381 417 498 536 540 550 720

TOTL Free World 71,887 11,865 114,781 155,364 167,020 164,597 182,530 167,435 210,084 21L,860 219,687 191,109 212,1.9 240,894 247,160 247,214 767,712

TABIE 2

OPEN HEARTH STEEL PRODUCTEON rN SMILCTED CnUNTRIES AND 80210S FOR SELECTED TEARS, 1913 TO 1963(I. tho-and ,nr527t -t

Regionsf orCountries 1913 1929 1937 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

BeIgi-/I-eb.urg 200 431 362 379 622 635 507 198 6b8 704 639 579 595 611 539 502 493Franor 1,5a2 2,774 2,291 2,588 3,14 3,381 3,196 3,397 3,901 4,264 41,84 4,531 4,555 5,130 5,064 41,926 b,77ItflW 912 1,911 1,493 1,405 1,707 1,605 1,733 2,204 3,051 3,372 3,896 3,612 3,752 b,601 4,986 5,160 ,266N.th-rlaad - - 49 371 442 595 748 805 803 909 1, oo 990 1,039 1,103 1,025 806 698V. Oenoa 7,916 9.286 i, o0o 7.108 7.761 8.824 9.190 10.179 12,042 12.860 13.578 12.L16 13.18 16.087 15.457 15,049 L1.017TOSAL EESC 10,610 1M,402 15,235 12,581 13,681 15,240 15,374 17,383 20,485 22,109 23,597 22,128 23,.26 27,532 27,071 26,143 2s,248Auetria 1,82 569 510 770 802 811 750 8a4 853 912 966 907 868 990 862 768Sp.in 275 623 141 540 518 599 573 690 770 769 789 956 1,217 1,360 1,691 1,608 1 561Seden b69 496 749 710 721 771 715 724 78l 848 823 769 934 1,091 1,221 1,151United KiE3dn 6,108 9,146 12,252 14,621 13,754 14,389 15,677 16,5o5 17,530 18,292 19,312 17,122 17,602 20,862 18,674 17,132 17,627Other- I/ - 108 26 1404 536 774 856 1.011 1V196 1,257 L17 1.506 1.764 1.973 2.069 2.121

TOTAL Westn Erpe 19,326 25,344 29,185 28,626 30,0b2 32,5a4 33,915 37,117 41,615 14,187 16,954 13,688 415,81 53,808 51,591 49,223 .

United states 2L 946 49,127 47,012 78,253 84,516 75,154 91, lb 72,874 95,582 93,297 92,224 68,839 74,090 78,353 76,660 75,242 80,572Canada 782 1.354 1,31h 2.630 2,671 2.769 3.223 2.189 3.171 3.771 3.630 2.930 4.092 3.700 1.098 _-

NwTAL 8wrth A-rln 22,728 50,481 48,356 80,883 87,190 77,923 94,367 75,063 98,753 97,068 95,854 71,769 78,182 82,053 80,758

TOTAL Latin Am-.a - 94 122 1,117 1,452 1,602 1,869 2,090 2,057 2,396 2,162 2,382 2,329 3,319 3,181

Japan 180 1,863 5,362 3,891 5,375 5.839 6,283 6,366 7, 81b 8,967 9,930 9,211 12,312 15,045 16,971 13,281 11,194Indi. 60 585 910 1.377 1,442 1,525 1,442 1,610 1,630 1,651 1,623 1,762 2,180 2,872 3,162Atotralia - 440 1,108 1,229 1,107 1,587 2,012 2,183 2,197 2,310 2,980 3,136 3,354 3,641 3,831 4,030Sooth Afric. - 39 337 639 812 1.10 1.137 1,265 1.38 1.,19 1.496 1.560 1.617 1.783 2.116 -

TOTAL Fr. World 1 42,294 78,846 85,380 U7,762 127,750 122,200 111,055 125,704 155,455 157,998 161,000 133,508 145,785 162,521 161,903

Only n trise ror which da. ae able.

TASL' 3

EIECTRIC STEEL PRODUCTION DI SELECTED COUIIMRIES AND .EGIONS, FOP SELECTED YEAIRS, 1913 TO 1963

(In th,ousnd metric tons)

Regions orCountries 1913 1929 1937 1950 1951 1952 1953 1954. 1955 1956 1957 1958 1959 1960 1961 1962 '963

BelgiuAV nb.org - 26 47 152 217 260 21h 205 299 429 498 358 391 522 536 921 295Fr-nce 21 159 329 537 766 803 686 83. 927 1,011 1,116 1,276 1,291 1,993 067 313 322Itlo7 32 243 584 957 1,321 1,535 1,509 1,681 1,988 2,202 2,511 2,323 2,611 3,179 3,507 3,691 -735Nftherl.ad. - - - - - 90 112 121 138 11,2 185 169 193 201. 198 208 211W. Ge.-a 89 221 661 33b 478 571 16,2 539 988 1,225 1,1,24 1,602 1,876 2.173 2.365 2.567 *67

OTAL ECSC 11,2 691, 1,621 1,980 2,782 3,259 2,963 3,380 4,390 5,009 5,739 5,728 6,362 7,571 8,173 7,200 1,710

A.ntri 35 80 110 173 226 239 201 256 295 315 339 321 350 400 1.23 371Spin 10 19 1 88 100 110 1l5 173 200 252 327 377 377 29. 359 333 8.03Seed.n 3 127 263 600 63o 758 829 811 967 1,1095 1,13 1,106 1,383 1,561 1',62 1,578Unit.d Ktogte - 88 219 798 832 945 995 91.9 i,116 1,217 1,231 1,i4. 1,370 1,713 1,679 1,509 1,118Other / 15 65 100 10. 134 192 166 21h1 291. 27!. 293 b58 474 956 1,096

TOTAL Western EswoPe 190 973 2,279 3,689 4,674 5,b.5 5,275 5,730 7,132 8,132 9,098 8,969 10,300 12,013 12,813 12,087

United States 30 967 859 5,978 6,179 6,167 6,608 4,931 7,302 7,839 7,230 6,038 7,749 7,601 7,860 8,175 -907Cod. - 5b 59 53h 563 590 511 103 537 581 189 825 560 650 670

TDiAL North Aneritu 30 1,021 918 6,012 7.082 6,757 7,115 5,331 7,839 8,420 7,719 6,163 8,300 8,251 8,532

TOTAL LatiD Aneoina - 26 91 140 110 150 162 200 257 112 510 630 860 1,256 1,108

Japan - 53 435 753 932 919 1,035 1,021 1,187 1,690 2,186 2,081 3,112 L,.6 5,940 5,821 262India - 1 61 55 59 68 70 58 72 65 6i 77 71 78entral-s - _ - 46 50 60 70 79 79 80 80 86 90 103 105 110Sooth Africa _ _ 23 115 106 102 104 112 124 131 182 210 220 281 368

TOTAL free Wrlid/ 220 2,073 3,697 10,816 12,999 13,517 13,823 12,591 16,686 18,937 19,790 18,500 22,959 26,112 29,292

1/ Only countries fbr tslch data are ailable.

TABLE 4

CONVERTER STEEL PROWUCTION IN SELECTED COUNTRIES ASD REGIONS, FOR SEYETED ARS, 1913 TO 1963(ecol. s02geo converters) (In thousand neirlo tons)

Regions orCountrIes 1913 1929 1937 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 961 1962 163

B.IgiVL-o-bhurg 3,618 6,383 5,850 5,709 7,308 7,200 6,4b3 7,117 8.172 8,699 8,632 8,466 9,122 10,130 10,038 10,312 10,413Prance 3,059 6,178 5,298 5,525 5,916 6,679 6,113 6,393 7,741 8,121 8,495 8.798 9,373 10,572 10,518 10,026 9.916Itl - - 10 1 35 195 258 317 356 334 380 336 399 449 632 637 655Netherlands _ _ _ _ -W. Grnany 9.449 9.130 8.109 6.539 7.766 9.177 8,300 9.054 11.467 12.475 12.916 11.907 13.527 14.977 14.435 13,211 12.481

TOTAL ECSC 16,126 21,691 19,267 17,774 21,025 23,251 21,114 22,881 27,736 29,629 30,423 29,507 32,411 36,128 35,623 34,186 33,465

Austria 764Spair 102 361 24 197 170 198 179 237 242 222 232 227 244 266 274 255 227Seden 116 84 109 146 174 159 238 327 400 459 473 462 435 440 5l 447United Kingd= 1.626 536 683 1.111 1,121 1.151 1,080 1,1a 1.304 1.330 1.329 1.193 1.234 1.357 1.244 1,l14 1.187

TOTAL Western Europe 18,734 22,672 20,083 19,218 22,490 24,759 22,611 24,629 29,682 31,640 32,457 31,389 34,324 38,191 37,652 36,032

United States 9,698 7,236 3,505 4,114 4,437 3,196 3,498 2,311 3,012 2,928 2,245 1,266 1,252 1,079 799 730 873Canada 276 2 - -_ - - -

TOTAL North A-erina 9,974 7,238 3,505 4,11b 4,437 3,196 3,498 2,314 3,012 2,928 2,245 1,266 1,252 1,079 799 730 873

TOTAL Latin A.eins _ _ -- - - - 50 100 100 100 120 120 137 154

Japa 60 1 66 195 196 200 3bb 364 407 b49 398 36 - - - _ _India - - - - - - - - - - - - - - - _ -AustralIa South ArrIca _ jj _ L IL 1/ IL 1. IL 1/ .. 1/

TOTAL Free Wrld 28,768 29,911 23,654 23,527 27,123 28,155 26,453 27,354 33,201 35,u7 35,200 32,812 35,696 39,407 38,605 36,762

1/ Sine. 1950 enee production iloouded under open herth.

TA BLE 5

OXYGEN ONVERTER STEEL RODUCTION IN SELECTED COUNTRIES AND REGMNS, FOR SELECTED YEARS, 1913 TO 1963(In thousand metric tons

Regions orCountries 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

Belgium/Luxembourg - - - - - - - - - 251France - - - - - - - 84 423 658 1,341Italy - - - - - - -Netherlands - - - 279 440 635 748 1,073 1,438W. Germany - - - 55 344 549 863 1,201 1,736 2,452

TffAL ECSC - - - - 55 623 989 1,582- 2,372 3,467 5,482

Austria 332 593 675 851 1,204 1,165 1,293 1,773 1,818 1,830Spain - - - - - - - - 32 66Sweden - - 21 67 76 110 126 204 434United Kingdom - _ - - - 200 650 670 963 2,009

TOTAL Western Europe 332 593 675 872 1,326 1,864 2,592 4,131 5,064 7,010 -

United States - 279 459 555 1,2no 1,691 3,035 3,599 5,036 7.750Canada - 300 400 450 470 600 700 900 1,100

TOTAL North America - 300 679 909 1,025 1,800 2,391 3,935 4,699

TOTAL Latin America - - - - - - - 50 258

Japan - - - - 56 790 1,205 2,629 5,367 8,14L41 12,045Ii ia - - - - - - 200 400 600Australia - - - -South Africa - - - - -

TOTAL Free Wcrld 332 893 1,354 1,781 2,407 4,454 6,388 11,145 15,988

Notes: In South Africa a small amount of Rotor steel has been included under open heath.Experimental production, as e.g. in Pompey, France in 1957-59 has not been included.In Spain some LD steel started to be produced in 1961, but data areonot available (included under open hearth).In Norway 5,000 tons of LD steel were produred in 1961 (Included in Western Europe).Canada - Production estimated from capacity figures.Australia - December 1962 - first of 2 LD converters of 200 + easch started prodiction.Latin America is estimated - only Belgo-Mineira in Brazil roduces LD steel.Irdia is estimated.

iJ includes "others", not shown seperately.

TABLE 6

I/P80DUCTERN OF PIG-IRON AND BIAST-POENACE FERND-ALLOsT IN SELECTED ODUN015ES AND REGIONS. FR FMSCTED YEARS, 1913 TO 1963

(I. thou.-d metric tons)

Regions or ICoontrien '1913 1929' 1937 1950 1951 1952 L953 1954 1956 1957 1958 1960 V61 1962 1963

B1gi.N)/L-b.ourg 5,033 , 6,947 6,316 6,19k 8,007 7,851 6 954 7,426 8,b75 9,077 8,914 8,794 9,376 10,266 10,220 10,346 10,502Prune 5,207, 10,361. 7,855 7.761 8,750 9,772 8,666 8,85 io,10960 11,580 11,915 11,971 1.2,472 15,14.4 15.566 13,959 16.306Ituly 532 734 790 505 953 1,102 1,222 1,298 1,6707 1,935 2,130 2,107 2,121 2,715 3,092 3.678 3,866NlthorlA do - 25b 312 b5S 524 539 593 611 670 662 701 917 1,140 1,346 1.456 1,571 1,706Wf. Onrnnw 16.761 15,506 15,960 11,157 13.067 15.427 14,036 15i009 19,361 20.608 21.526 19.742 21.602 25.739 25.b30 25.251 22.909

TOTAL ECSC 27,433 33,805 31,233 26,070 31,301 35,691 31,471 33,185 41,153 43,762 45,19b 53,531 56,712 54,210 5,764 53,805 53,289

Austria 2,367 459 389 883 1,09 1,173 1,321 1,355 1,506 1,737 1,960 1,818 1,836 2,232 2,263 2,118 2,106SpoiD b25 753 132 658 65b 768 780 881 963 925 930 1,302 1,651 1,888 2,152 2,079 1,997Sdn 7b2 524 648 785 851 1,052 1,001 939 1,176 1,328 1,428 1,309 1,58O 1,518 1.756 1,812 1i885United Kitgdn. 10,b25 7,712 8,629 8,787 9,82h 10,900 11,354 12,074 12,670 13,382 L4,512 13,183 12,784 16,016 14,984 13,926 15,859Othtrs 78' 196 61 574 630 694 740 722 1 009 1.173 1.537 1,449 1.660 2 105 2.157 2.371 J2

TOTAL Wstern B-rcp. 451,70 43,548 51,092 37,757 45,309 59,278 46,667 19,155 58,567 62,307 65,461 62,592 66,o0o 77,969 78,076 76,111 76,768

United Sttes. 31,563 43,298 37,721 58,596 63,749 55,620 67,916 53,241 70,571 68,910 71,977 52,503 55,184 61,072 59,235 60,126 65,664Canod. 1,031 1 188 999 2.072 2 282 2,397 2.694 1.977 2,917 3,237 3.373 2.880 3,912 j408 4.572 4.797 _5365

TOTAL North Airion 32,594 44,486 38,720 60,668 66,031 58,017 70,640 55,218 73,588 72,147 75,350 55,283 59,096 65,080 63,807 64,923 71,009

TOTA. Ltin Ari. 96 156 967 1,234 1,352 1,444 1,672 1,687 1,985 2,170 2,363 2,537 3,323 3,830 4,111 4,328

Jepso 2b3 1,112 2,397 2,233 3,127 3,474 4,518 5,608 5,217 5,987 6,819 7,394 9,4b6 12,896 15,821 17,972 19,936bjad 210 1,518 1,655 1,293 1,442 1,485 1,338 1,365 1,297 1,389 1,516 2,109 3,127 4,154 b,969 5,7b1 0,750Anstrell. b7 469 928 1,ll5 1,331 1,453 1,719 1,856 1,899 1,951 2,133 2,321 2,331 2,698 3,210 3,1.8 3,682South Afriec - 18 276 753 785 1.098 1.189 1.170 1.315 .363 1.424 1.582 LA80 1-993 r236 &l JA6611

TODAL Free World 74,4614 91,047 85,224 104,786 118,261 126,157 127,515 115,084 143,370 147,128 155,873 133,654 145,394 167,113 172,082 175,761 184,914

1/ excluding eletrin funone ferro-lloys.

Annex 1Page 7

NOTES ON PIG IRON AND CRUDE STEEL PRODUCTION TABLES

1. Figures for production of pig iron include blast-furnace ferro-alloys.

2. Figures for steel production by processes do not necessarily addup to total steel production since sometimes small amounts areclassified under "other processes", and since for some countriesbreakdowns wfere available for ingots only but not for steel forcastings.

3. Wherever no data were available for a country but informationexisted on plants estimates have been made on the basis of cap-acity figures of the various types of furnaces.

4. In the case of duplexing, production is shown under the finalprocess used.

5. All data refer to countries within the boundar-es existing at theparticular moment with the exception of the Saar which has alwaysbeen included with Germany.

6. The following sources have been used:

UN, ECE, Quarterly Bulletin of Steel Statistics.

UN, ECE, Steel liarket Reviews, 1953-62.

British Iron and Steel Federation, Statistical Yearbooks.

Quinn Press, London, Iron and Steel Works of the world.

Chambre Syndicate de la Siderurgie Francaise, Paris, StatisticalBulletins.

TABLE 1

PRODUJCTION OF IRON ORE. CONiCENTRATES AND AGGO(,'~RATESIN SELFTE~D COUNTRIES AND TLRAN 1929 TO 1963

(Million Metric Tows)

F. Content 1950~ 25. im 19 22 1934 122 1 5_ 5Zm 1 25822 1960 1,?61 1962 196.3

W. Amrica: United States gj 74.2 73.2 99.6 118.4 99.4 119.9 79.4 104.7 99.5 107.8 68.8 61.3 90.2 72.4 72.9 73.5Canada ~/55 1.5 1.6 3.3 4.3 4.8 5.9 6.6 14.7 20.3 20.2 14.2 22.3 19.5 18.5 24.6 25.4Mexico 60 0.1 0.1 0.4 0.5 0.5 0.5 0.5 0.7 0.8 0.9 1.0 0.9 0.9 1.2 1.7 1.9Others 2 64- 0.27 0.a5 .. . .2. ..Q .3 0-. .2.2 .2.. ..22 .2.1 ..2.1 -..Z. 0..g 0- 0.2

Total 76.5 75.4 103.3 123.2 104.9 166 86.7 120.4 120.8 129.3 84.1 846 110.8 92.3 99.4 LU1.0

S. Amerioa: Brazil 70 . 0.2 2.0 2.4 3.1 3.7 3.0 3.4 4.1 5.0 5.2 8.9 9.3 9.3 110 13.2Chile 60 1.8 1.5 2.9 3.3 2.2 2.9 2.2 1.5 2.6 2.7 3.7 3.9 4.7 7.0 8.1 8.0Peru 60 - - - - - 1.0 2.2 1.7 2.6 3.6 3.6 3.6 5.2 5.4 5.4 5.5Venezuela 62 - . 0.2 1.2 1.9 2.3 5.4 8.4 11.1 15.3 15.4 17.2 19.5 14.6 13.4 12.0Others 2/4 .21 ..1 . .21 .2.5 .2.2 -.aW.2 0..2 - 0.8

Total. 1.8 1.7 5.1 7.0 7.3 9.9 12.9 15.5 20.9 27.2 28.6 34.2 39.5 37.1 38.7 93

Wd. Europe France 31 50.7 37.8 30.0 35.2 40.8 42.5 43.8 50.3 52.7 57.8 59.4 61.0 67.0 66.6 66.3 =8.5Belgiumt 33 o.2 0.3 - 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 0.1 0.1 0.1Luxembourg 28 7.6 7.8 3.8 5.6 7.2 7.2 5.9 7.2 7.6 7.8 6.6 6.5 7.0 7.4 6.5 7.0Geraman 27 6.2 9.6 10.9 12.9 15.4 14.6 13.0 15.6 17.0 18.3 18.0 18.1 18.9 18.9 16.6 12.9

Total FCSC 654 *5 4. 43 6. 54 93 47 7. 5Z 85.4 87.0 94.3 94.2 90.7 62

United Kingdom 28 13.4 14.4 13.2 15.0 16.5 16.1 15.9 16.5 16.5 17.2 14.8 15.1 17.4 16.8 15.5 15.2Noroay 65 0.7 1.0 0.3 0.3 0.8 1.2 1.1 1.2 1.5 1.6 1.6 1.6 1.7 1.6 1.8 2.1Sweden 1./ 60 uI.s5 15.o 13.6 15.3 17.0 17.0 15.3 17.4 18.9 19.9 18.3 18.4 21.3 23.2 22.1 23.1Spain 49 6.5 1.3 2.1 2.4 2.8 3.0 2.9 3.8 4.5 5.3 5.1 4.6 5.6 6.0 5.9 5.5kustria 31 1.9 1.9 1.8 2.3 2.6 2.7 2.7 2.8 3.3 3.5 3.5 3.4 3.6 3.7 3.8 3.7Others 2k/ 45 0.2. ~ J" .. 0 .2.&. 1JQ .1 2 6 2.9. 2- 2. .52.5. 3.6

Total Wd. Europe 102 91.2 77.0 904 105.0 106. 103.3 184 263 136.0 1.5 329 147.1 148.6 14. 1331

Africa Algeria 52 2.2 2.4 2.5 2.8 3.0 3.4 2.9 3.6 2.6 2.7 2.3 1.9 3.5 2.8 2.1 1.8Mtorocco 55 1.1 1.5 1.3 1.5 1.6 1.5 1.2 1.3 1.8 1.8 1.5 1.2 1.6 1.7 1.1 1.0Tunisia 50 1.0 0.9 0.7 0.9 1,0 1.0 0.9 1.1 1.2 1.2 1.1 1.0 1.0 0.8 0.8 0.8Guinea 50 - - - - . 0.4 0.6 o.6 0.8 1.1 0.4 0.3 0.8 0.5 0.7 0.7Liberia 66 - - - 0.2 0.9 1.3 1.2 1.9 2.1 1.9 2.3 2.6 3.0 3.3 3.3 7.8Sierra Leone 60 - 0.6 1.2 1.1 1.2 1.4 0.8 1.3 1.3 1.3 1.3 1.4 1.4 1.8 1.7 1.8Union of S. Africa 63 - 0.5 1.2 1.4 1.7 1.9 1.9 20 2.0 2.0 2.2 2.8 3.0 4.0 4.4 4.4Others l 60 0... .. 1 0.2.. (..2 ..Q. 06 !25 .22 ... Q6 1.6

Total 4.3 5.9 6.9 7.9 9.4 1-1.0 9.6 12.0 12.1 12. 11. 12.1 15.3 16 15.7 RAaia. India 61 2.5 2.9 3.0 3.8 4.0 4.0 4.4 4.8 5.0 5.2 6.1 7.9 10.7 12.3 13.1 11.3

Goa 56 - - 0.1 0.4 0.5 0.9 1.4 2.2 2.5 2.9 2.9 3.0 5.9 6.0 6.0 5.0Malaya 55 0.8 1.7 0.5 0.8 1.1 1.1 1.2 1.5 2.4 3.0 2.8 3.9 5.7 6.8 6.5 7.3Philippines 55 - 0.6 0.6 0.9 1.2 1.2 1.4 1.4 1.4 1.3 1.1 1.2 1.1 1.2 1.4 1.3Japan 55 0.2 0.8 0.9 1.2 1.4 1.5 1.6 1.5 1.9 2.2 2.1 2.5 2.8 2.8 2.4 2.4Others 2/56 0.6 .2 0.4 0.4 .22 0. 028 1-Q 1.) 1.4 -.LA 1.4.J _.WL 1.3L -W

Total 4.1 6.3 5.5 7.5 8.9 9.4 10.8 12.4 14.3 -6.0 16.4 19.9 27.5 30.4 30.7 -4

Oceania: Australia 63 0.9 1.9 2.4 2.4 2.7 3.4 3.6 3.7 4.0 3.9 4.0 4.2 4.5 5.1 4.8 1'Others 2/ 55- - - - 0.2 _ - .2.1 S. .. 2 ... 2 .Q~2.2 .

Total 0.9 1.9 2.4 2.4 2.7 3.T4 -3. 3.7 4.0 4.1 4.3 4.5 4.8 5.4 5.1 P

Grand Total 187.8 182.4 200.2 238.4 2 38.2 266.9 226.9 282.4 298.4 325.2 276.5 238.2 345.0 330 3 332.6 331.0

1/Production sod Fe-content refer to usable cre../The average Fe-content in the United States has varied a follows 1929 -52;2 1937 - 49.6, 1950 - 49.4, 1955- 51.1. 1960- 53.7, 1961- 54.5 ; 1962 5 -94.9

21/ Donnican Republic and Cuba..2/Argentina and Columbia

Pre-uar - 30% FeDenmark, Greece. Portugal, Switzerland. Finland, Yugoslavia

7]United Arab Republic, Angola, Southern Rhodesia2/Hong Bong,* Republic of Korea, *Lebanon. Pakistan. Thailand and Turkey

21 New, Caledonia

TABLE 2 Annex 2Page 2

World Exports of Iron Ore, Concentrates and Agglomeratesby Selected Countries and Ye 29 to 1963

(thousand metric tons)

Ccuntries 1929 1937 1950 1955 1960 1962 1963

I Major Producers for ownrequirements

United States 1,325 1,284 2,591 4,589 5,320 5,992 6,922

France 16,v405 17,891 7,545 13,705 27,l54 25,683 21,204Belgium/Luxembourg 818 283 103 423 128 189 164Germany 116 10 52 310 _244 280 282Total ECSC .87 17,363 20,188 7,768 Z 26,-39 21.6$0

II Major Producers for Export(a) Before World War II

Sweden 10,899 13,965 12,943 15,653 19,716 19,397 20,256Spain 5,595 848 936 20136 2,556 1,904 North Africa 3 116 J 82 4 2 6 044 5,44. n4016

Total 19,610 19,795 18,318 233 27,712 25,317

(b) After World War IICanada 1,545 1,182 2;021 13,217 17,213 21,771 22,207Brazil - 186 890 2,565 5,160 7,656 8,600Chile 1,816 1,473 2,596 1,237 5,191 7,299 7,092Peru 101 - - 1,697 5,193 5,918 6,282Venezuela - - - 7,235 19,579 13,310 12o354Liberia - - - 1,745 2,963 3,659Sierra Leone - 644 1,161 1,353 1,566 1,851 1,954India and Goa - 8 128 2,840 9,144 9,075 9,868lalaya 823 1 564 529 1 618 5388 6,544 66221

Total 4t 5,5 7,325 33,57 71,597 77,083 .i

III All Others 1,662 3,t497 1,743 5,230 6,203 7,267 ,.

Total Free World 44,245 49,821 37,745 81,645 138,5401423048

Export as percent 23.v.6 27.3 18.9 28.9 40.2 42.7of production

1/ includes 1,300 tons for Mauritaniav/ includes "others" not shown seperately.Sources: UN - ECE: Long Term Trends and Problems of the European Steel

Industry; U.S. Bureau of Mines: Minerals Yearbook; United Nations:Commodity Trade Statistics.

TABLE 3 Annex 2- Page 3

World Imports of Iron Ore, Concentrates and Agglomeratesby Selected Countries_and Yenars_1929 to 2

(thousands of metric tons)

Countries 1929 1937 1950 1955 1960 1962 1963

United States 3,192 2,481 8,414 23,822 35,146 33,795 34,009

Belgium/Luxembourg 14,057 12,4lO 8,254 14,967 20,600 21,143 19,720France 1,141 921 168 553 1,505 1,896 3,478Germany 16,953 2o,621 41,870 14,325 33,654 29,139 27,081Netherlands 461 610 812 1,059 2,314 2,310 2,522Italy 212 183 137 83 2 6142 4,14214 526

Total ECSC 32,8214 2317 14.. 2V4 1,740 3f,l2' 58,027

United Kingdom 57714 7061 8,515 1364 18,302 13,176 1 ,551Total ECSC & U.K. 38,538 641806 22,756 414504 79,T I 2,0d 72,578

Japan 2,259 3,3)3 1,425 5,459 14,861 22,445 25,975

All Others 2,593 2,523 4,969 7,561 10,021 12,510 of which:Can,da 2,221 1,928 2,786 4,118 4.,587 49678Austria 2 8 198 854 1,612 1,422Soviet Bloc imports

from West - - 1,751 1,871 3.I042 5,368 1/All Others 370 587 234 718 780 1,042 lJ

Total 46,582 50,123 37,564 81,646 139,045 140,838

1/ partially estimated

Sources: Die Eisenerzwirtschaft der Welt in Zahlen, Dusseldorf, 1961US',Buzrelaw of -Mines: -ine.raTs Ye afbook-United Nations: Commodity Trade Statistics.

Annex 3Page 1

THE TREND CF IRON ORE PRICES AND FREIGHTS

Only a few price quotations for iron ore are plublished regularly.Most ore is either captive or sold on contract, i.e.,it is sold outside thefree market. The most important quotations for free ore are the Lake Eriebase price for a 51.5% iron ore and Swedish prices for various ores, mainlyKiruna B and D. However, even these quotations are usually published withthe caution that they are "only a guide to possible worth" and that "actualprices will depend on the outcome of negotations under various economicconditions".

An approximation of the average export price of different iron orestraded internationally can be obtained by calculating unit values of iron oreexports from trade statistics for countries that are large exporters. Theresulting figures would be averages and therefore not be identical with pricesquoted for an individual ore to an individual buyer. Similarly, unit valuescan be calculated from import statistics of major ore consuming countries.The difference between export and import unit values would be due mainly toocean freight 1/, although some of the difference could also be due to thefact that an importing country pays a price which differs substantially fromthe average export price. This could be due to purchases of particularlyexpensive or cheap type of ores, having a particularly strong or weakbargaining position, or to pricing policies if the iron ore mines are captive.

Tab'es I ta, WT set out unit values of exports for selected countriesand of imports into Germany, the United Kingdom and Japan from 1950 to 1963.Unit values were calculated only when quantities traded were over 100,000 tonsper year.

Unit values of exports and of imports have in general moved in thesame direction, although not parallel. Since the end of World War II therehave been two peaks, in 1952/53 and in 1957/58, and a trough in 1954/55.These movements reflect movements in demand during a period of tight supply.The recession of 1953 in Europe and 1954 in the United States induced the de-cline in iron ore prices from their 1952/53 peak to a low in 1955. Boom con-ditions from 1955 to 1957 were accompanied by another rise in prices. The1958 recession then brought about a decline in ore prices which in some caseshas continued to the present as a result of the great increase in supply andthe weakness in demand from 1961 onwards.

Canadian export unit values have not followed this pattern. Insteadof fluctuations there has been a steady slow increase in prices. Neverthelessthe export unit value of Canadian iron ore in 1962 was 5% below that of Swedishore although it had been the same in 1950. However, in 1963 Canadian exportunit values were considerably higher than Swedish, mostly because exports ofhigher grade products, in particular pellets, increased rapidly. Since thebulk of Canadian iron ore exports go to the United States and most mines arecaptive, this regular development is probably due to the iron ore pricing

]/ With the exception of the United States which reports thevalue of imports on an estimated fob-basis.

A-nnex 3Page 2

policies of American steel companies. For the same reason, similar develop-ments can be observed in Chilean and to a lesser extent Venezuelan unitvalues of iron ore exports. The existence of some modest fluctuations areprobably due to the fact that, compared to Canada a larger proportion oftheir ore exports goes to the free market.

Import unit values have generally moved in the same direction asexport unit values but fluctuations have been wider due to the addition offreight, which in the past has moved in step with iron ore unit values, thusaccentuating fob-value fluctuations. The greater the transport distance andthe more spot chartering involved, the wider these fluctuations have been.

Although movements of unit values have mostly been in the samedirection the spread 1/ between them has varied. The most important phenom-enon has been the reduction of the spread in the last few years. This canbe shown by expressing the unit value for each country as a percentage ofthe average unit value for all countries concerned. For export unit valuesthe results are as follows (annual average = 100):

AverageDiver-

Alg- Sierra Lib- Vene- Mal-Can- genceSweden eria Leone eria Brazil Chile Peru zuela India aya ada from 100

1950 116 99 62 - 1142 49 - - 105 111 116 22.51953 126 107 108 - 153 57 - 94 105 72 78 22.01955 123 124 94 127 144 60 57 77 117 82 94 24.51957 125 116 90 114 145 74 68 80 118 78 93 21.41962 117 93 86 104 108 91 65 101 133 99 112 12.81963 107 95 1/ 86 92 104 99 67 91 130 104 126 12.8

J 1962

Unit values of imports include freights and their spread is de-termined by freight rate fluctuations in addition to fob-value fluctuations.

As an example, movements of unit values of German iron ore importsexpressed as a percentage of the average unit value of imported iron ores wereas follows: (average import unit value of countries selected = 100) j/

Vene- Sierra Average Diver-Sweden Brazil Chile Peru zuela Liberia Leone Canada Goa gence from 100

1953 83 142 110 - - 110 90 60 105 19.11955 82 132 104 114 85 108 84 79 112 15.51957 77 138 122 112 83 118 89 75 87 20.l1962 100 107 105 98 118 92 88 97 96 6.61963 96 108 108 92 117 89 93 105 91 8.5

i/ "Spread" is defined as the divergence of all prices from their averagedivided by the nmber of prices in0olved. It is not a reasiLre of eKtrernevalues but rather one of the onTera1l scatter of all values,

2/ In 1950 Germany did not import moret than 100,000 to-s from any of theselected countries except Sweden and Sierra Leone.

Annex 3Page 3

At periods of peak freight rates the spread has been greatest, eeg.in 1953 and 1957. Growing competition among ore suppliers during the lastfew years and a steady decrease in freight rates have resulted in a muchnarrower spread in 1962 than in the fifties for both export and import unitvalues. Note that in 1962/63 the spread has become very small which indicatesa highly competitive market.

The competitive position of individual iron ore exporters isgreatly influenced by ocean transport cost. For important suppliers of WesternEurope and Japan the approximate share of freight in the cif-price has variedas follows (import unit value minus export unit value as percentage of importunit value):

I. Imports into GermanySierra

Sweden Brazil Chile Peru Venezuela Liberia Leore Canada

1950 28 - - - - _ 38 -1953 22 45 73 - - - 37 321955 22 43 70 74 53 39 41. 381957 22 49 71 73 53 54 48 401962 25 35 51 56 45 28 39 26

II. Imports into the United Kingdom

Sweden Brazil Venezuela Liberia Sierra Leone Canada

1950 27 _- -_1953 30' 44 - - 37 341955 33 44 61 45 50 431957 37 46 54 44 49 471962 31 46 45 39 41 37

III. Imports into Japan

Brazil Chile Peru India Malaya Canada

1950 - - _ _ _ _1953 - _- -1955 - - - 50 54 531957 60 78 80 58 67 601962 51 58 59 35 37 38

Even with the low freights in 1962, transport cost representsbetween 25% to more than 50% of the delivered unit value. When freights werehigh, as e.g. in 1957, their share was in general considerably larger. How-ever, the decline in their importance is not due only to declining rates butalso to the shift away from spot chartering of tramps towards long-termcharters or ownership of specialised iron ore carriers. The competitive ad-vantages enjoyed by suppliers located close to main consumers can be seen fromthe fact that their freights account for a much lower share of cif-prices thanthose of more distant suppliers.

Annex 3Page4

Estimates of average freight per ton for various routes can becalculated by comparing export anid import unit values of iron ore, However,export unit values for each country are calculated from its total iron oreexports. If a country exports several grades of ore it is conceivable thatone importing country may purchase only the cheap, another one only the ex-pensive grades of ore. Consequently, being calculated by deducting exportunit values from import unit values, the implied freights would be under-stated in the first and overstated in the second case. The most importantinstances of this kind are the following: United Kingdom imports from Swedeninclude a substantial amount of more expensive low phosphorous ore, whileGermany imports a large amount of phosphorous ores. Corsequently the impliedfreight per ton to the United Kingdom is somewhat overstated. Similarly UnitedYingdom imports from Canada generally have an average iron content of 53% ascompared to about 49-50 for Germany, which probably results in an understate-ment of implied freights to Germany. Exports from Brazil up to the middlefifties consisted largely of high grade, open-hearth lump ore. Since thenBrazilian exports of blast furnace ore have grown quickly and today only theUnited Kingdom imports such quantities of the highest grade of Brazilian oresthat derived freights from Brazil to the Urited Kingdom can be considered asover-stated. However, the fact that implied freight rates for Brazilian oreto the United Kingdom are higher than those to Germany is not due only tothese overstatemelnts but also to the fact that most of the British ports re-ceiving iron imports can accommodate relatively small ore carriers only.Finally, in a fewx instances the deviations of the implied freight from theaverage are inexplicable. These must be due either to the prices of theparticular iron ore shipments concerned or to abnormal freight rates.

The following average freights can be derived from available tradestatistics. (US$/ton, difference between import and export unit values):

Canada to: I Sweden to: Chile to:

UK Gei&K Japan UK Germany Germany _Jpanr

1951 - 6.59 - 2.56 3.l _ -

1953 3.69 3. 4 3 - 4.84 3.19 14.1)41955 5.88 aZ7o 8.78 4.81 2.82 11.37 -1957 7.76 5.85 13.20 6.84 3.32 16.86 23.801959 5.18 h444 70o4 5.48 2.70 9.64 11.281962 5.43 3.35 5.76 4.39 3.19 5.85 8.251963 3.60 2.36: 3.97 3.59 2.75 4.96 8.40

1/ The 1963 figures probably represent a slight understatement of freightssince large-scale shipments of higher grade products to the United Statesincreased the average fob value of Canadian iron ore exports.

Annex 3Page 5

Brazil to: Peru to: Venezuela to:UK Germaxy Japan Germany Jaj UK Germany

1953 11.25 11.21 - - -

1955 9.27 8.85 - 13.02 - 9.61 7.051957 11.57 12.94 20.52 15.47 24c04 8.73 8.451959 9.38 6.62 7.h9 8.22 8.81 9.03 7.841962 7.87 4.86 9.39 7.20 8.11 6.96 6.871963 6.59 4.60 8.18 5.56 7.35 6.60 6.67

Liberia to: Sierra Leone to: Malaya to: India to:UK Germany UK Germany Japan Japan

1953 - - 5,75 5.98 - -1955 8.143 5.81 7.67 5.37 7.88 9.541957 8.e42 12.40 80OO 9.00 13.05 14.851959 4.23 4.12 4,83- 4.20 4.89 5.241962 5.51 3.28 4-83 4.45 5.19 5.041963 4.29 3.21 4,04 3.98 3.68 5 O3

4

Fluctuations have been wider on some routes than on others. Runsfrom Canada, Sweden and Venezuela were the first to use specialized iron orecarriers and changes in average freights were moderate until 1957, with theexception of shipments from Canada to Japan. Up to that time the Japanesehad imported the bulk of Canadian ore on trampso When they started to uselarge ore carriers and long-term charters average freights from all destinat-ions declined rapidly. Part of the reductions in average freights betweenLatin American and African supplier countries and Western Europe is also dueto this shift toward long-term charter (or ownership) of large carriers 1/.In 1962 less than 5% of total seaborne iron ore trade was carried in tramps.

The decline in average freights has affected the individual ex-porting countries to a different extent. To show this the implied averagefreight of iron ore imports from different countries into Germany and Japanhas been expressed as a percentage of freight from the closest major supplier,i.e. Sweden for Germany and Malaya for Japan.

1/ This can be seen by plotting the derived freight rates in the chartof freight rates and distances contained in "The Market for Iron Orein Western Europe" T.0. 225a (Annex 9, page 14). The scatter liesmainly around the line for long-term charter, i.e. well below the spotcharter line.

Annex 3P-age b7

Into Germany Into JaPan

Average Average Average AverageFrom: 1956-58 1960-62 i963 From: 1956-58 1960-62 1963

Sweden 100 100 100 Malaya 100 100 100Canada 177 108 .. India 136 101 133Liberia 316 93 117 Canada 127 108 105Sierra Brazil 180 149 216Leone 248 148 147 Chile 203 159 222Brazil 362 178 167 Peru 267 156 194Chile 509 240 180Peru 451 242 208Venezuela 270 224 243

Compared to the closest supplier the position of all other suppliershas been considerably improved, except for 1963 to Japan, which is due to thedrastic decline in the implied freight from the base country, i.e. Malaya,However, the degree of irmiprovement is not proportional to the distances involvedsince the reduction in average freight depends on a variety of factors. First,only if deep-water ports exist can larger ore carriers be employed. Secondly,only if large quantities of ore are purchased a regular economic use ofspecialized carriers is possible. Thirdly, there is not yet a sufficient numberof large carriers and the smaller ones (belai 203000 d-it.) are probably usedon the different routes to a varying extent.

It should be borne in mind that all considerations relate to averagefreight from frontier to frontier. In akialyzing a particular case trans-portation cost from mine to frontier and from the latter to the individualconsumer must be taken into account 1/.

1/ For an attempt to do this see Annex 4.

Annex 3Page 7

TABLE I

Unit Value of Iron Ore Exports from Selected Countries, 1950-1963- US$ per metric ton -

Sierra Vene-Year Sweden Algeria Leone Liberia Brazil Chile Peru zuela India Malay Canada

1950 6.04 5.15 3.21 - 7.39 2.54 - - 5.43 5076- 6e061951 7.25 5.87 3.45 - 9.85 2,94 - 5.85 7.38 6.92 6.G41952 10.65 10.35 4.45 - 114.73 4032 - 7.79 9.45 7.34 6,5141953 11.58 9.85 9.98 - 14.15 5.24 - 8.60 9.62 6.63 7.171954 9.92 10.86 8.51 - 13e11 4.58 6.59 6.81 8.63 6.37 7.341955 lOoOl 10.14 7.67 10.38 11.69 4,90 4.67 6.27 9.52 6.67 7,651956 10.76 10.60 8.32 10o.41 12.80 6.03 5149 6.87 1MM02 6.90 7.991957 11,65 10.87 8.36 10.68 13e55 6.89 6.35 7.43 10.97 7.27 8.701958 11.98 11.19 8.71 lO.43 13.93 6.46 6.55 7.55 11.06 7.76 8.811959 10,40 9.23 7.51 10143 10.96 6.41 5.84 7.31 10.82 8.51 8.741960 10.25 8.03 7.40 11.69 10.9i. 6.75 6.31 8.56 11014 8.19 9.311961 10.19 7.90 7033 10.41 9.57 7.15 6.61 9.07 10.88 8.18 9.301962 9.75 7.76 7.28 8.64 9.07 7e6 5.60 8.45 11114 1/8.29 9,33g.1963 8.76 *. 7.01 7.56 8.50 8.06 5.50 7.48 10.63 -8.148 10.34±'

1/ Estimate for India excluding Goa, whose exports were 5.4 milliontons at US$5,40 in 1963.Excluding agglomerates: US$9.89, direct shipping ore only $9.23,

Sources: UN, Yearbook of -International TradeUN, Cofm6odi2ttT-rade StatisticsForeign~bCcmierce- YearbookNational TrAde Statistics.

TABLE II Annex 3TABLE II Page 3

Unit Value of Iron Ore Imports into Germanyfron Selected Origins, 1950-1963- USM per metric ton -

Vene- SierraYear Brazil Chile Peru zuela Liberia Leone Canada Sweden Goa

1950 - - - - - 5.21 _ 8.44 -1951 - - - - - 12.99 12.63 10.39 -

1952 26.26 - - _ 19.17 13.54 11.89 15.48 17.911953 25.36 19.38 - - 19.45 15.96 10.60 14.77 18.611954 23.09 14.43 - 14.40 17.76 - 10.36 12.93 16.221955 20.54 16.27 17.69 13.32 16.91 13.04 12.35 12.83 17.491956 24.18 20.24 19.27 15.34 19.20 15.57 12.59 13.38 18.471957 26.49 23.75 21.82 16.16 23.08 17.36 14.55 14.97 16.861958 22.52 21.69 18.27 16.24 17.98 14.29 1i.4. 14.63 15.741959 17.58 16.05 14.06 16.34 14.55 11.71 13.21 13.10 13.451960 16.10 14.55 13.76 16.041 14.50 11.45 12.45 13.05 13.371961 15.23 14.2-6 14.15 15.98 12.84 11.53 12.74 13.39 13.021962 13.93 13.61 12.80 15.41 11.92 11.46 12.66 12.96 12.541963 13.10 13.02 11.06 14.15 10.77 11.26 12.70 11.51 10.96

ENote: Ir,?orts in 1963 from Angola a1l. 62Mauritania $11.77Suibt: Union .p8.83

Sources: National Trade-StatisticsUUTI Commodity Tiade Stat-istics.

TABLE III Annex 3Page 9

Unit Value of Iron Ore Irports into The United Kingdomfrom Selected Origins 1950 - 1963

- US; per metric ton -

Year Svifden Algeria Brazil Venezuela Canada Liberia Sierra Leone

1950 8.31 8.341951 9.81 13.941952 16.93 17.211953 16.42 16.39 25.4O - 10.86 20.84 15.731954 14.51 14.51 20.09 - 10.71 18.50 14.511955 14.82 15.00 20.96 15.88 13.53 18.81 15.341956 16.70 15.89 24.70 15.34 16.18 18.36 16.211957 18.41 16.94 25.12 16.16 16.46 19.10 16.361958 17.62 15.84 20.87 16.24 14.09 16.66 13.401959 15.88 14.72 20.34 16.34 13.92 14.66 12.341960 14.59 12.47 18.74 16.04 13.46 15.44 12.221961 14.42 12.46 17.63 15.98 13.91 15.09 11.851962 14.14 12.36 16.94 15.41 14.74 1i.15 11.84t1963 12.35 11.38 15.39 14.08 13.9L 11.85 11.32

Nrte: Ihports 4 1963 from Peru - US$12.94.

Sources: National Trade StatisticsUN, Commodity Trade Statistics

TABLE 1V Annex 3Page 10

Unit Value of Iron Ore Imports Into Japanfrom Selected Ori insp 1952-1]96 3

_~~~~., -Iu . _. ._ .

- USQ per metric ton -

Year Goa India Halaya Philippines Brazil Chile Peru Canada U.S.A.

1952 - _ _ 15.46 - - _ _ 23.221953 - - - 12.75 - - - - -' 954 13.18 16.62 12.23 11.69 - - _ 13.52 -

i)55 15.31 19.06 14.55 12.43 - - - 16.43 -

L956 20.81 24.65 15.85 13.87 28.45 25.54 29.84 16.91 20.321957 23.01 25.82 20.12 14.13 3h.07 30.69 30.39 21.90 23.321958 19.54 18.40 12.93 11.53 26.19 18.94 30.09 20.70 20.391959 12.54 16.06 13.40 11.72 18.45 17.69 1L4.65 15.78 15.69i960 13.08 16.18 13.48 11.82 18.56 16.33 15.01 14.91 15.451961 12.83 16.66 13.41 11.73 18.74 15.65 14.55 15.02 15.621962 12.81 17.01 13.08 11.83 18.46 16.01 13.71 15.07 14.74

1963 11.97 15.66 12.16 11.48 16.68 16.46 12,85 14U31 13.90

Sources- 1'ational Trade StatisticsUll, Corroaodity Trade Statistics

Annex 4Page 1

THE CURRENT SITUATTOl ON THE IJORLD IRON ORE I4ARKET

World iron ore mining capacity can not be determined exactlyalthough a rough approximation of maximum production possibilities canbe obtained by adding up record annual production for all countries.To avoid inclusion of record data based on mines which may have beendepleted subsequently only the last 5 years (1957-62) have been takeninto account. The resulting figure is 386 million tons compared toan output of 330 million tons in 1962. Reductions have taken placemainly in the United States, the ECSC, the United Kingdom and inVenezuela. Some of these reductions are probably due to depletionoIr the closing down of uneconomic mines-/. The exact extent ofthese cannot be established. However, there is no doubt thatsupply is ample and that a buyer's market exists.

The present situation is characterized by a trend toincreased use of high-grade imported ores, concentrates, sinter andpellets in most major steel producing countries. In the UnitedStates this is due to the exhaustion of high-grade ore reserves, inWestern Europe to a tendency to replace low-grade home ore by richimported ore and agglomerates while in Japan the lack of usable homeore has necessitated imports practically from the start of largescale steel production.

Numerous discoveries of high-grade ore deposits overseas,low costs of procluction and low ocean freights have given many overseasexporters an excellent chance to compete successfully with the leanhome ores of major steel producing countries. Unit values per pointFe of iron ore sold on the German market in 1962 may serve as anexample.

Average Fe Content US Cents per Unit FeOrigin of Ore of German Imports fob Average

fob-mine fob-port cif Germany

Brazil 66.3 9.2 12.7 22.4Chile 64.2 8.7 11.2 212Liberia 63.3 10.9 13.6 18.8Sierra Leone 60.8 9.2 11.5 18.8Peru 60.2 8.9 9.3 21.3Venezuela 58.8 11.1 13.6 26elSweden 57.4 14.5 lo63 22.6Goa 55.4 9.1 9.8 22.6Canada 48.9 10.5 16.9 25 0France 29.1 12.1 12.1/ 16.4-/Home Ore (1960) 27.0 11.0 11.0 11.0Home Ore Concentrate (1960) 37,7 21.8 21.8 21s8SJ Additions to capacity since the record year are small in these

countries. For most other countries 1962 was the record year.2 fob mine and cif Saar values.

Annex 4Page 2

In general high-grade ores receive a premium as compared to low-grade ores, Among the high-grade ores, however, differences in unit valuesper point Fe are no longer linked to differences in iron content. Forinstance, the most expensive ores cif Germany are Venezuelan and Canadianores, while West African ores are the cheapest, although the latter are ofhigher grade than the former. This is due to differences in pricingpolicies. Wvhile high-priced Venezuelan and Canadian exports to Germanycome from non-German captive mines, low-priced exports from Liberia andSierra Leone are sold on long-term contracts and, particularly in the caseof Liberia, priced with a view to increasing their share in the Germanmarket. All other imports vary between 21.3 and 22.6 cents per unit.At a unit price of 21.8 cents for a 37.7% Fe concentrate the competitiveposition of home ores is extremely weak. French ores are only 13%cheaper in the Saar than West African ores at the German frontier.Obviously, only the short haul keeps the Minette competitive.

Differences among fob export values are large. However, thesefigures include widely differing transport costs from mine to the frontier,i.e. the port. To arrive at an auproximate figure for fob-mine values,estimated rail freights have been deducted /. The lowest priced oresfob-mine are Brazilian, Chilean, Peruvian and ores from Sierra Leone withfob-values varying around 9 cents per unit. The most expensive areSwedish ores in terms of cost, probably because of the large percentagemined underground and in terms of price because of the strong Swedishbargaining position as a close, important and traditional supplier.Canadian, Liberian and Venezuelan ores occupy an intermediate positionamong overseas suppliers with fob-mine values ranging from 10.5 to 11.1cents per unit. In Canada, severe mining conditions may cause costs tobe higher than in most other countries covered. Liberian ores havebecome much cheaper during the last few years and their prices may beexpected to decrease further so that they will soon be among the cheapestgroup. French fob-mine values are well above all others except Swedishand close to cost which underlines their weak competitive position.This is true also for German ores and concentrates.

It is to be noted that supplies from Chile, Peru and WestAfrican producers have made Western Europe more and more independent ofCanadian and Venezuelan supplies and consequently the price of ore hasstarted to decline below the 22.5 cents per unit cif Western Europe, setas the lower limiT in an earlier Bank study2 !. W4hile Canadian andVenezuelan ores are still well above that level, most other ores (withthe exception of Swedish and Goan) are cheaper. As a result, WestEuropean imports from Canada and Venezuela have shown a declining trendfrom 1960 to 1962.

Figures for Germany can be considered as fairly representativefor Wrestern Europe. Corresponding data cannot be calculated for theUnited States since its imports are reported on an estimated fob basis

U Taken from or estimated on the basis of:The Market for Iron Ore in Western Europe, Annex 9, p.11and Annex 5 of the present study.The Market for Iron Ore in Western Europe T.O. 225a, p.11-12.

Annex 4Page 3

and consequently exclude transport cost. However, if Chilean andPeruvian ores can be delivered to Germany for a cif unit value aboutequal to the price of Mesabi ores at lower lake ports there is littledoubt that they are competitive at least on the east coast of the UnitedStates. This should be true also for West African ores since they areabout as far from the American east coast as Chile. However, steelplants on the east coast and in Pennsylvannia use mainly Venezuelan andCanadian ores from captive mines.

In the third large market, Japan, unit values per point Fe ofiron ores imported in 1962 were as follows:

Average Fe Content US Cents per Unit FeOrigin of Ore of Japanese Imports f.o.b. Average c.i.f. Japan

Brazil 69 13.7 26.8India 61 18.3 27.9Chile 60 11.2 26.7Peru 60 9.3 22.9Goa 56 18.3 23.1Malaya 60 13.8 21.8Philippines 55 18.3 21.5Canada 55 16.9 27.4

There are twio groups of suppliers: First, Malaya, Goa, thePhilippines and Peru which deliver for 21.5 to 23.8 US cents per unit Fe,and second, India, Brazil, Chile and Canada which deliver for 26.7 to27.9 US cents per unit Fe. The cif unit value of Chilean ore in Japanis expected to decline as soon as port facilities in Chile have beenimproved to permit the use of the large ore carriers already operatingon the route from Peru. In the case of Brazil the enormous distanceinvolved accounts for the high cif-value, in the case of Canada higherfob-prices are the reason. India's position is weak as its fob-valuealso is by far the highest of all major suppliers.

The competitive position of individual iron ore producersdiffers according to whether they are captive or not, and whether they havelong-term contracts for the delivery of specified quantities of iron oreor not. Annex 5 gives available information on mining companies in mostimportant iron ore exporting countries. Existing information does notpermit an exact breakdown of output figures into production that iscaptive or not bound by long-term contracts. Particularly with regardto long-term contracts, information is not complete. Probably a numberof long-term contracts are not known to the public and in most instancesthe individual clauses (especially escalator and escape clauses) whichwould influence the competitive position of the supplier concerned arealso not known. Finally, it is rarely possible to establish how muchore the captive mines sell on the free market from year to year.

However, a rough estimate can be made from Annex 5 of theproportions of ore sold on the world market (excluding intra-ECSC trade)as captive and on long-term basis on the one hand and on the free marketon the other. In 1962 free market sales represented about 1o0%, the most

Annex 4Page 4

important suppliers being Sweden, Brazil, Chile and India (incl. Goa).Among the captive suppliers Canada and Venezuela stood out, while agreater number of mines had long-term contracts. During the past fewyears the trend has been toward more long-term contracts instead ofspot sales on the free market and most new ventures contract animportant part of their future output before construction of mines andtransport facilities start.

An important feature of present trends is the rapid expansionof pellet production. Starting from zero in 1955, capacity in the FreeWorld reached about 39 million tons by the end of 1963 and will reach atleast 47 million tons by 196q1J. The reason for this quick increase isthe substantial improvement of blast furnace performance achieved throughthe use of pellets. At present, the interest in pellets seems greaterthan their supply and they command premiums of about 3 cents per unitover high-grade ores. The future development of this premium willdepend mainly on the relationship between the cost of pelletizing on theone hand and the saving in total pig iron cost than can be achievedthrough the use of pellets.

/ A list of pelletizing plants is given at the end of Annex 5.

Annex 5Page 1

THE IRON ORE MINING INDUSTRY IN MAJOR EXPORTING COUNTRIES

The following compilation of available material on the ironore mining industry in major exporting countries serves as a backgroundfor an evaluation of the present situation as well as of future pro-spects for each individual exporter. The availability of material variesgreatly from country to country and company to company. Therefore, nosystematic tabulation has been attempted and information is presentedby company and/or mine as available. Countries are listed in alphabeticalorder.

ALGERIA

1. Compagnie de Mokta, operating the Beni_Saf mine, gave up its con-cession in 1963 since it found it impossible to place its 1963 production.

2. Societe Anonyme des Mines de Zaccar (major shareholder: Grangesberg)suspended operations in June 1iE3 for lack of sales. Both Mokta andZaccar have been taken over by the Algerian Government.

3. Romina mines have been inactive since 1958.

4. Ouenza mines are the biggest in the country and still operating.

5. Deposits of Gara Diebilet, 130 Km SE of Tindouf have about 1000 milliontons of phosphorous 57-8 Fe ore. A pilot plant for beneficiation wascompleted in April 1963. Transport and selling of the ore are being studied.

General Information

In 1963, it was said that exporting became more and more difficultsince quality is considered too low. The only success was a new contractfor exports of iron ore to Bulgaria, said to involve 250,000 tpy.

The capacity of all existing Algerian iron ore mines is estimatedto be 4 million tons, but production in 1962 was only 2 million tons.

The Bone steel mill is expected to consume 800,000 tpy. of ironore, mostly from Cuenza.

ANGOLA

Companbia Mineira do Lobito, largest iron ore producer of the country.Probably some German participation as all exports go to Germany and Kruppis doing all construction work. An agreement between Lobito and Kruppprovides for weekly shipments of 20,000t of Cassinga ore, probably to Krupptssteelworks. There are two open cast mines: Cuima, from which 0.5 milliontons are exported annually and Cassingg, which is to start production withinthe next two years at the rate of 1 mtpy to be increased to 2 mtpy soonafter. Construction work at the mine will be US$4o million. Iron ore is

Annex 5Page 2

of 60 to 66% Fe. Krupp is building railway of 95 Km between the Cassingamine and Mocamedes railway as well as a new loading pier at Port Mocamedesfor US$45 million. Total Angolan iron ore exports are to be increased to3 million tons shortly while production capacity will reach 5 mtpy.

AUSTRALIA

A federal law forbidding the export of iron ore prevented anyexports until 1960. Discoveries of very large deposits of high-grade ironore mainly in Western Australia have recently resulted in the issuance ofa number of export permits for sizeable quantities of iron ore. Manycompanies are involved and the situation is not yet clearly delineated.However, the following projects seem to emerge as more or less realisticpossibilities.

1. Hamersley Range

Hamersley Iron Pty. is deve'loping this area. Kaiser Steel Corp.of the United States holds a 40/5 interest in the company. The remaining60% are held by Hamersley Ho'ding Pty., which is owned by Conzinc Rio Tintoof Australia.

The deposits are enormous. So far 5,000 million tons of iron orehave been defined The ore is generally high-grade (60-64%l Fe). Min:ing willbe open cast. Distance to the projected port will be about 280 Km. by rail.

In July 1963 a formal agreement was signed by the Western AustralianGovernment and Kaiser Steel and Hamersley Iron Pty. to develop the depositsin four stagess

1. By the end of 1964 a report has to be submitted proving marketsand producing plant to export at least 1 mtpy. by 1967.

2. Investment of at least US$84 million on facilities for iron oreexport. This is to include a port, ultimately to handle 100,000ton ore carriers, a railway, towns complete with power and watersupply, ore extraction, roads, and handling plant.

3. Investment of at least US$27.4 million on an ore processing plantof at least 2 mtpy. capacity. Plans must be submitted to thegovernment within 10 years after iron ore exports started.

4. Investment of at least US$112 million for the erection of a 1 mtpy.integrated steel plant within 20 years after exports begin anda start of steel production not later than 25 years after exportsbegin.

In February 1964 the Federal Government approved exports of 200million tons from the Hamersley Rangeo It is assumed that the period in-volved would be 21 years.

Annex 5Page 3

The port site is likely to be King's Bay near Roebourne, 280 Km.from Hamersley Range.

In March 1963 Hamersley offered the sale of 66.5 million tons for20¢ per unit cif Japan to 10 Japanese steel firms over a 15-year period,and in 1964 made an offer for 18¢ per unit cif Japan if 8 million tons peryear were contracted for over a similar period. The ores would be trans-ported by 55,000 dwt carriers from King's Bay which eventually could bedeepened to accommodate vessels up to 100,000 dwt. Transport cost toJapan is;estimated to be US$2.80 per ton.

During the summer of 1964 a Japanese steel industry mission willvisit Hamersley Range

Mount Newman Iron Ore Company. a wholly owned subsidiary ofAmerican Metal Climax, plans to exploit the same ore body further inlandfrom IHamersley Range. Recently, an offer has been made to Japanese steelmakers of 95 million tons of 62-64% Fe ore, to be delivered by Japaneseships over 19-20 years from 1969 onwards.

2. Mount Goldsworth

The Mount Goldsworth NliningAssociates are developing this deposit.Associates are: Consol dated Gold Fields Pt 7 tralia , Crus Mines(United States) and Utah Construction and Mining Co r United States)* Thedeposit contains a 55 -6li,Fe her,atite ore. In June 19 3 governmexnt approvalfor the export of 64t million tons at the rate of up to 4 mtpy. was obtainedon the condition that exports start within 5 yearss, i.e. by mid-1968. Thedeposit is about 100 Km. from the coast but railway distance to the provision-ally chosen port site at Depuch Island would be 190 Km. Estimates of in-vestments required vary from US$40 to 50 million. Negotiations with 10Japanese steel firms are underway.

3. Geraldton

Iron ore deposits are being developed a short distance inland frcmGeraldton by Western DIn ig_o. and its US partners Hrnna Mining andHomestead Miinig Companies. In 1963 a 7 year contract for the sale of atotal of 5.1 million tons of ore to a group of 10 Japanese steel firms wasconcluded. The port of Geraldton is to be deepened to enable ships of20,000 dwt to load ore. Presently only 10,000 tormers can be accommodated.

In April 1964 an offer by lWestern Mining to Japanese steel makerswas reported. It involves 23.5 million dry long tons of 62% Fe ore to bedelivered from 1969 onwards at 15.9 cents fob per unit Fe for lump ore and13.4 fob ce,nts for fines.

4. Tasmania

In 1963 an iron ore deposit was explored along the Savage River.82 million tons of a 65% Fe ore were found available to open cast mining.Provisional plans envisage the construction of a port capable of accommodating

Annex 5Page F

65,000 dwft. vessels and of a mine producing over a million tons of oreannually. Exports will be mainly to Japan. Pickands Mather is preparedto construct a pelletizing plant as soon as a contract can be signed withthe Japanese.

General Information

Further important finds are reported from Queensland and in theNorthern Territory.

Other companies holding temporary leases and still prospecting,mainly in Western Australia, include Broken Hill Pty, Co. Cleveland CliffsBasic Materials Co.; and Metal Traders Corp,

BRAZIL

1. Cia Vale do Rio Doce, a government-o-med company is by far the largestproducer of iron ore. In 1962 production amounted to 5.5 million tons whileexports were 6.1 million tons, rising to 7 million tons in 1963. The companypurchases ore for export from smaller companies. Its main deposits are atItabira. The ore is high grade, averaging 66% Fe. Ilining is open cast.

The company is engaged in a large expansion program. The port ofVitoria, at present able to accommodate ore carriers from 45,000 to 60,000dwt., will be improved for vessels up to 100,000 dwt. Furthermore, a newport is to be built 10 Km. north o. Vitoria at Ponta de Tuberao. *Work starte(in 1963 and is planned to be finished by 1966. Export capacity of both portscombined wAll be increased from 12 to 20 mtpy. This will permit shipmentsof iron ore to Japan to start in 1966 in fulfillment of a contract concludedwith 10 Japanese steel companies to deliver 50 rmlillion tons over 15 years.

The company has also formed a shipping company, the Docenava inorder to export at cif-prices rather than fob in the future.

A contract has also been concluded with S.A. Mineracao de Trindade(Samitri), a subsidiary of Cia. Siderurgica Belgo MKineira which in turn isa subsidiary of Arbed of Luxembourg. Samitri is opening up the Piracicaba(66% Fe. 3000 million tons reserves) deposits in Minas Gerais* The firstmine will be at Mlorro Agudo and most installations were to be finished by1963. In 1964 it is planned to produce 2.5 million tons and in 1965 3.4million tons. The contract provides that Samitri will sell half its pro-duction to Vale do Rio Doce, which in return will transport the other halfwhich Samitri will sell itself. Furthermore, Vale do Rio Doce will form incollaboration with Arbed a company in Luxembourg for the distribution andsale of Brazilian iron ores. Capital of the new company will be split 50:50.A 15 year agreement between Rio Doce and Ferteco SA, owned by - among others -

Thyssen, Phoenix-Rheinrohr, Dortmund-Horder Huttenunion, Rheinstahl,Bcchumer Vereia> Niederrheinische Hutte and Hoesch, provides for deliveriesof at least 600,000 tons of ore per year, to be increased later to 1.2 milliontons from the Ferteco mines in Ilinas Gerais. Ore from these fields will betransported by Rio Doce to Tuberao. The Germans will also buy a similar

Annex 5Page 5

quantity of ore from the Rio Doce mines.

Rio Doce is at present building a new railway line from Tuberaoto its mines and will add an extension to the Ferteco mines.

In kiay 1964 an agreement was signed between Yugoslavia'sassociation of Port Enterprises of Rijeka and Rio Doce to build a pellet-izing plant for Brazilian ore at the port of Bakar which will handle about1.5 mtpy of ore. Output will be exported to European countries.

General Information

There are plans to expand iron ore exports to 16 million tons by1965. For this investments of US$107 million are required, of which over 25million was spent in 1962.

At present the situation for foreign companies in itinas Geraishas becomr,e difficult since the Governor of the state is urging the statemining corporation Metamig to issue a decree of expropriation and take overproperties of foreign firms. The most important company concerned is EanmiaMining which has a concession containing some 50O million tons of ore,

CAIYADA

1. Algoma Ore Properties Division, owned by the Algoma Steel Corp0 Ltd.9operates mines and a sinter plant near Wawa. Ont. Siderite (34.35% Fe) ismined from open-pit and underground (about 5O:50) and concentrate of 50% Feis shipped (1.6 million tons in 1962).

2. Brynnor Mines, Ltd.,.owned by Noranda Mines Ltd., produces magnetite(over 5O0 Fe) near Kennedy Lake, Vancouver Island, B.C. from open pit andships magnetite concentrate of 64 Fe. (1962: 400,000 tons, expansionplanned to 700,000 tons). Shaft drilling has now begun for underground miningThe company has a contract with Japanese steel firms to supply 5 million tonsover 7 years from 1963-1970.

3. Caland Ore Co. Ltd. owTned by Inland Steel Co., mines hematite andgoethite from open pit mines at the east arm of Steep Rock Lake, Ont., andships direct shipping ore of 52.65% Fe. (1962: 2.0 million tons). A pellet-izing plant is under construction.,

4. Canadian Charleson Ltd., owned by Oglebay Norton Co., mines hematite-bearing gravels of 11% Fe south of Steep Rock Lake, Onto., and ships jig andspiral concentrates of 55.8% Fe (1962: 119,000 tons).

5. Empire Development Co. Ltd., owned by Mannix Ltd., and Quatsino Copper-Cold Mines Ltd., mines magnetite from open pit (48.4/ Fe) near Vancouver, B.C.and ships magnetite concentrate of 57o8% Fe. (1962: 22,000 tons; 1961:265,000 tons).

6. Hilton Mines Ltd., owned by Steel Co. of Canada Ltd. Jones & LaughlinSteel Corp, and Pickands Mather & Co., mines nmaFetite from open pit(approximately 20% Fe) near Bristol, Qte., and ships iron oxide pellets of66% Fe. (1962: 785,000 tons).

7. Iron Ore Co. of Canada, owned by M.A. Hanna Cot, Hollinger Cons. GoldMines Ltd., Armco Steel Corp., Bethlehem Steel Corp., Hanna Coal & IronCorp., National Steel Corp.. Republic Steel Corp., Wheeling Steel CoreLYoungstown Sheet and Tube Co., mines hematite-goethite from open pit nearSchefferville, Que. and ships direct ore of 53% Fe. (1962: 9.8 million tons).It also mines specular hematite from open pit of 37.5% Fe at Labrador City,Labrador, 300 Km. north of Seven Islands, Quea, and ships specular hematiteconcentrate of approximately 67Z/15%Fe (196TO.7 million tons; expectedfinal annual capacity: 7 million tons, of which 5 million tons are pellets).

8. Jedway Iron Ore Co. Ltd., owned by Granby Mining Co. Ltd,, mines magnetitefrom open pit (51-5250 Fe) on Moresby Island, BC,C and ships magnetite con-centrate of over 60% Fe. (Shipments started in 1962 with 100,000 tons andare expected to reach 400,000 tons shortly).

9. Jones & Laughlin Steel Corp., is developing an open pit mine near Kirk-land Lake. Ont., and plans to mine magnetite of 25% Fe as from 1964. Pelletsof 65-66% Fe are expected to be shipped at the rate of 1 mtpy.

10. Lowphos Ore Ltd.,owned by National Steel Carp., and M.A. Hanna Co.,mines magnetite from open pit (31.4i% Fe) in the Sudbury area near Capreol Ont.and ships pellets (1962: 015 million tons).

11. Marmoraton Mining Co., owned by Bethlehem Steel Corp., mines magnetitefrom open pit (35.37$ Fe) near Marmora, Ont., and ships iron oxide pelletsof 65.1% Fe. (1962: 425,000 tons).

12. Nimpkish Iron Eines Ltd., owned by International Iron Mines Ltd..& andStandard Slag Co., mines magnetite from open pit (41.6 Fe) at Beaver Cove.Vancouver Island, B.C.. and ships magnetite concentrate of 62% Fe (1962340,000 tons).

13. Quebec Cartier IMining Co., owned by the United Statos Steel Corp.,mines specular hematite (31.7%o Fe) from open pit at Gagnon, near LakeJeannine, Que., about 300 Km. from Port Cartier in operation since July 1961and ships specular hematite concentrate of 64.4% Fe. Shipments in 1961 were1.24 million tons, in 1962 up to 4.5 million tons and are expected to reach8 million tons eventually. Investments for the whole project will be aboutUS$250 million.

14. Steep Rock Iron Wines, owned by Premium Iron Ores Ltd., ClevelandCliffs Iron Co. and others mines hematite-goethite from open pit and underground mines (about 90:10 in 1961/62) at Steep Rock Lake, Ont., and shipsdirect ore (52.5%o Fe) and gravity concentrate (55,% Fe). Production hasbeen declining from 1.59 rmillion tons in 1960 to 1.2 million tons in 1961and 963,000 tons in 1962 due to a weakening of the non-captive market formedium grade ore in the United States.

Annex 5Page 7

15. Texada Mines Ltd., a private companys mines magnetite (41.2% Fe) fromopen pit on Texada Island, B.C., and ships magnetite concentrate of 61.6%Fe (1962: 525,000 tons).

16. Wabana Mines Division, oned by Dominion Steel and Coal Corp. Ltd.,(Dos-o) mines hematite-chamnosite from various underground and open pit minesin Newfoundland (Bell Island, Conception Bay, east coast of Newfoundland).Ratio open pit to underground was 7:93 in 1961. Average iron content was49% Fe. Slhipments of concentrate (51% Fe) declined because of increasingdifficulties in the West European market despite a more intensive sales pro-gram and continuous efforts to increase mine efficiency. Reduction was from2.8 million tons in 1960 to 2.3 million tons in 1961 and 1.3 million tons in1962.

17. Wabush Mines, of which Pickands-Mather & Co;, is the managing agenthas the following participating companies: Steel Co. of Canada Ltd4Dominion Foundries and Steel Ltd., 4amnnesm i Canadian Ores Ltdjo HoeschIron Ores Ltd., and Wabush Iron Co. Ltd,, The latter company is ownedby Youngstown Sheet and Tube Co, Inland Steel Co., Interlake Iron Co-M.Pittsbugh S§teel Co., Finsider of Italy and Pickands-Mather&QC. Anopen pit mine is under construction near tLabrador City. 300 Km. from SevenIslands 1@ ie. Tne 37% Fe ore will be concentrated to 64 -65% Fe and pelletsmay be produced. Expected capacity is 5.5 million tons and production isto start 1964 or 1965.

18. Zeballos Iron Mines Ltd., owned by International Iron Mines Ltd.tstarted to mine a 48% Fe magnetite on Vancouver Island, B.C. in 1962 andshipped 200,000 tons of concentrate of over 0 Fe. Production is plannedto reach 750,000 tons.

In addition to iron ore producers some companies produce ironconcentrates or pellets as a by-product. The most important of these arethe following:

1. Falconbridge Nickel Mines Ltd., at Sudbury, Ont., started production of67-685 Fe iron oxide calcine in 1963 and expects to produce some 100,000 tonsannually.

2. International Nickel Co. of Canada produces iron oxide pellets at SjidbuyvOnt. Shipments were 250,000 tons in 1962 and are planned to reach 750,000tons.

3. Noranda Mines, Ltd., produced small amounts of iron ore calcine (64-66% Fe)at Cutler, Ont.

General Information

Rated capacity of Canadian iron ore mines was 38 million tons atthe end of 1962 and is expected to rise to at least 45 million tons by 1965.Shipments, however, are expected to increase only to 34-41 million tons.

Annex -5Page 8

The Canadian Department of Mines estimates that about three-quarters of shipments from mines are made by companies based in the UnitedStates or with strong American part-cipation. Of the remaining quarter mostis also captive and onLy a few smaller companies sell their output onthe free market. Of these, producers in British Columbia have long-termcontracts with Japanese steel firms. The largest free producer, SteepRock Iron Mines is said to have suffered a cornsiderable decline in shipmentssince 1960 because of increasing competition that was due, primarily, toa weakening of the non-captive merchant ore market in the United States.

Recently, two important new discoveries have been announced.Crest Exploration Ltd. a subsidiary of the Standard Oil Co. of Californiafound a multi-billion ton iron occurrence in the Snake River area near theNorthwiest Territories border at latitude 600 15' N, The deposit is a beddedjasper-hematite formation of 50% Fe or more. Another discovery was made byBritish Ungava Explorations Ltd., near the Mary River on Baffin Island. Theore is an unusually high grade hematite of 68-71% Fe. m-purities arepractically non-existent and silica is very low. In 1963 extensive sampling,geophysics and other ground work took place. In the 1964 season drilling willstart and plans are to produce 1-1.5 million tons from massive deposits, aver-aging 69% Fe.

CHILE

1. Bethlehem Chile Iron Yines Co. a subsidiary of Bethlehem Steel Co.,operates two mines in the province of Coquimbo:

a. El Tofo which is nearing exhaustion. Only 413,000 tons ofdirect ore of F were shipped in 1962. Distance to the coast (CruzGrande) is 23 Km. by rail. Mining is open cast. Concentrator for existinglower grade ores is under construction and will go into operation in September1964 (about 1 mtpy on a 1-shift basis).

b. Romeral which is expanding production rapidly. Shipments ofdirect ore of 60' 5 were 1.35 million tons in 1961 and 1.9 million tonsin 1962. Expansion to 2.5 million tons took place in 1963. A magnetic concen-tration plant has been installed to raise average Fe to 64%. Distance to portGuyacan is 32 Km. MIning is open cast.

All ore from both mines was shipped to the United States until 1962;a part has since been sold to Japan. A certain amount has to be deliveredat 9bst-tb the Chil&aafsteel plant in Huachipato.

2. Cia. N4inera Santa Fe.

In 1961 Minerals and Chemical Philip Corn. acquired a controllinginterest in this company for US$8 million. The Canadian Foreign DevelopmentCo. (East Branson Shipping major stockholder) also has an interest and is atpresent investing US$30 million to develop Santa Fe's deposit at Cristales(35 Km. from the coast), in the neighborhood of Vallenar, province of Atacama.

Annex 5Page 9

It is hoped to start production in 1967. The ore is 64% Fe. However, thedeposit consists of many comparatively small pockcets and mining costs areexpected to be fairly hi~gh. The only large operating mins of the companyis at present the Carmen mine which in 1960 was mechanised and its capacityraised to over 1 mtpy. Fe-content is 66%. Transport is 12 Km. by truck and50 Km. by rail to the company-owned Port of Chanaral. The company operatesa large number of smaller non-mechanised mines (no individual data available)and in addition purchases the production of part of the "pequena mineria"(i.e. small mining) which it exports. In 1962 its own production amountedto 1 45 million tons (1960 : 1.1 million tons), while exports were 3.17million tons, of which 1.7 million tons to the United States, 0.8 milliontons to Japan and 055 million tons to Europe.

In 1964 it is planned to start construction of a mechanized loadilngport in Tifuca, which will cost US$2 million.

The company has a subsidiary, the Cia Pacifico which operates thePunto Sur Mine. Production in 1962 was 74,17)4 tons.

3. Cia. de Acero del Pacifico (GA ? formerly a government company. Of theUS$52 ialli6ori b stock outst<andizgD !2 26 ail-lion are hlde' b.y GOJI^F 5 5million by Viortgage Banks ana. the rest is owned by private interests. Incollaboration with Wells Chile the company developed the Algarrobo mine in theprovince of Atacama for US;7 .78 million. The project cost includes owner-ship of the mines and loading facilities at the mine and the port. The orehas an average iron content of 63%. Distaince to the port of Huasco is 86 Km.Mining is open cast. Production in 1962 was 935,378 tons for the accoumt ofCAP and 672,000 tons for that of Wells Chile, i.e. 1.6 million tons in all.Total production is expected to reach 3 million tons shortly. An authorizationto export 16 million tons at the rate of 3 mtpy. was obtained from the govern-ment. Exports are mainly to Japan and the United States, but long-term con-tracts have been concluded with European steel firms.

4. Cia. Minera Santa Barbara in 1962 produced 783,243 tons of iron oreand exported 801,353 through the port of Huasco (province of Atacama). Itsmain open pit mine is Huanteme, 12 Km. by road and 38 Km. by rail from Huasco.Fe-content is over 62i. The Ore Marketing Corporation of Panama (East BransonShipping is major stockholder) has an interest in the company.

5. Cia Minera de Atacarna Ltd.- a subsidiary of Mitsubishi and Yawata pro-duced 4 2,195 tons in 1962. The entire production was exported to Japan.The mine is at Las Adrianitas and connected by a 56 Km. road to the port ofCalderilla. Investments were US$7 million for 600,000 tpy. capacity. By1967 capacity is to be 1.3 mtpy.

6. Sociedad Minera Cerro Iman is negotiating with the Dutch company Montanaabout developing further its Cerro Iman deposit, which in 1960 produced738,831 tons. Fe-content is over 62F,,7 mining is open pit, distance to port ofCaldera 79 Km. by rail.

Annex 5Page 10

General Information

In addition to the listed companies there are a considerable numberof medium and small producers. Chilean publications refer to them as "medianamineriall and "pequena mineria" (i.e. medium and small mining). For instanceCominex with an annual output of 217,510 tons in 1962 is considered as medium.Small mines often produce only a few thousand tons a year from small deposits.There are over 50 of them although the number of producing mines fluctuateswidely from year to year.

LIBERIA

1. Liberia Mining Co., operates an open cast mine at Bomi Hills, 65 Km fromMonrovia by rail. The ore mined is a magnetite of 65-70% Fe and is shippedmostly as direct ore with some concentrates at the rate of 3 mtpy. RepublicSteel Co., has a 59.18% interest in the company. Most of the rest is beingheld by C0l. Christie.

2. National Iron Ore Co. (NIOC) has developed iron ore deposits along theMano River. The ore of 57-58% Fe is brought to Bomi and then to Monroviaby rail. Regular shipments started in July 1962 and are expected to reach3.5 mtpy. in the first and 5 mtpy. in the second stage. The entire product-ion up to 1971 is already sold. The Liberian Government has a 50% interest inthe company, Liberia Mining Co., has 15% and Col. Christie most of the remainderThe cost of the project has been about US$30 million. Loans were obtained fromFirst National City Bank in New York and the Ex-Im Bank.

3. Liberian-American-Swedish Minerals Co., (LAMCO) has developed deposits of64-67% Fe with proven reserves of 300 million tons at Mount Nimba. The ore isbrought by a 265 Km railway to the newly constructed port of Buchanan, whichcan accommodate 45,000 dwt-carriers and is presently being improved for65,000 dwt-carriers. Regular shipments started in the summer of 1963 andreached 2.5 million tons in that year. It is planned to ship 7 million tonsin 1964 and 7.5 million tons in 1965. A further increase to 12 million tonsby 1970 is envisaged and, if necessary, capacity could be easily raised to20 million tons without large size investments. Long-term sales contracts havebeen concluded. Bethlehem Steel Corp., has contracted to take 25% of the out-put* Certain German ore buyers agreed to purchase 1.5 million tons in 1963and 2.0 mtpy. thereafter to 1979 with an option of renewal till 1999 for abasic price covering LAPCO's operating expenses, replacement costs, interestexpense, amortization of debt and fixed return on equity capital; also topurchase an additional 0.5 mtpy from 1964 at a price to be agreed upon. French,Italian and Belgian ore buyers have contracted for sales of ore during 1963to 1968.

The mining concession is owned 25% by Bethlehem Steel and 75% byLAMCO. The Liberian Government has a 50% interest in LANCO. The other halfis owned by the Canadian-based Liberian Iron Ore Co., (LIO). The SwedishLambco syndicate, which includes Grangesberg Corp. Atlas Copco, NordstromsLinbanor. Ifoverken, Sentab and Skanska Cement, holds 63% of LIO. InternationalAfrican American Corp. in which British Metals Corp. and Noranda Mines areparticipants,hold 14.Wso. LIO was posted for trading on the Toronto Stock Ex-change on June 4, 1963.

Annex_5Page 11

The project costs have been US$217 5 million, including railwayand harbor. Under the Joint Venture Agreement LAMCO had to furnish 75% andBethlehem 25% of the total cost. Loans were obtained by LAMCO in the formof long-term mortgage debt from the Kreditanstalt fur Wiederaufbau inGermany, Ex-Im Bank and First National City Bank of New York for a total amountof US$100 million. The Swedish syndicate purchased US$46 million debenturesand the rest has been covered by equity contributions from the Swedish stock-holders. Grangesberg Corp. is project manager.

4. German-Liberian Mining Co. (DELIMCO) is presently developing an iron oredeposit of the Bong Range. The ore has about 37% Fe and is to be shipped asconcentrate of 0 Fe. Mine installations and the railway to Monrovia (80 Kim)are under construction. The company hopes to start shipments of concentrate bythe end of 1964 at the rate of 3 mtpy to be increased to 5 mtpy soon after andeventually to reach 8 mtpy. DELIMO is owned 50:50 by the Liberian Governmentand a German group of steel producers, of which Tyssen holds the largest sharevThe estimated cost of the project is US$100 million.

MAURITANIA

Societe Anonyme des M,ines de Fer Mauritanie (MIFER1XA) operates an open pitiron ore mine at Fort Gouraud. The ore has an average of more than 63% Fe.Proven reserves are 94 million tons. A 675 Km railway links the mine withPort Etienne which can berth 60,000 dwt carriers. Shipments of direct ore were1.3 million tons in 1963 and are expected to be 4.2 to 4.6 million tons in 1964hExpansion to 6 - 6.5 million tons is planned.

As of August 16, 1963 stockholders were as follows:

British Ore Investment Corporation 20.00USINOR (French Steel Industry) 15.25Finsider (Italy) 16.00Gewerkschaft Exploration (Germany) 5.00MM. de Rothschild Freres 18.60Bureau de Recherches Geologique et Minieres 25.15

(French Government)

100.00

At present the Government of MIauritania is about to pay in a shareof 5% of the present capital to become a shareholder in HIFERMA.

PERU

1. Marcona Mining Co owned by Utah Construction and M1ining Co., (56.252and Cyprus Mines Corp]. (43.75%) has developed the i'varcona deposits inSoutherm Peru, which have been leased until 1982 from the Corporacion Peruanadel Santa. The average grade is 56% Fe. Because of the sulphur content(2.51%) of the main ore body N-larcona has built a US$21.5 million beneficiationplant in the deepwater port of San Nicolas, 1h Km from the open pit mine.Transport is by road and conveyer belt. In 1963 a 1 ntpy pelletizing plantwent into operation at San Nicolas. Cost was US$20.5 million. RecentlyIlarcona formed a company with Mitsui Bussan Co. of Japan (capital 50:50) to

Annex 5Page 12

produce 1.5 mtpy of 68-69% Fe pellets in Japan from imported Niarcona Nines.Shipments of ore in 1962 were 4.6 million tons. It is planned to expandshipments to 7 million tons. Some sources indicate that Marcona has con-tracted to deliver 50 million tons from 1963 to 1970 to Japanese steel firms.In 1964 a contract was concluded with Nippon Kokan, Yawata and Sumi'tomo forthe delivery of four million tons of pellets of 66% Fe over the next fiveyears. Price for the first two years was 26.5 US cents cif per unit Fe.

2. CiaO Explotadora de Hierro de Acari. is oined by Pan American Commodities,a Peruvian corporation. The company is exploiting the Acari deposits, 60 Kmby road from the deepwater port of San Juan. The company obtained a loan ofUS$6 million at 7;aS from Overseas Finance Co., New York. Sales contractsfor 2 million tons of open hearth and 1 million tons of blast furnace ore havebeen concluded with the Ore Marketing Corp. S.AA., Panama.

SIERRA LEONE

The Sierra Leone Development Co., Ltd owined by Mr. James Cantbellof London, has developed an open pit mile at Marampa, connected to the portof Freetown by an 80 Km 3ft.6 irailway. The ore is a specular hematite of47' Fe. Recently, an expansion and improvement program has been underwaywhich will be completed by April 1964. New rails have been laid, a new oreloading pier has been built in Pepel near Freetown, which will permit loadingat about 2,500 t/hr. A new crusher and a concentrator have been built andconcentrate of 64% Fe is now being shipped. Cost of these improvements havebeen US$25 million. Shipments have been just under 2 million tons so far, butby the end of 1964, capacity will be 2.8 mtpy. The company hopes to ship 2.5million tons in 1965. Long-term contracts exist for annual deliveries of 0.9million tons to German steel producers. Similar contracts are said to existwith British steel producers.

SIEDE.JN

1. Luossavaara Kiirunavaara AB (LKAB), a government organization producesmore than 756% of Swedish iron ore and accounts for more than 80% of Swedishexports. It operates a number of mines, the most important of which are atKiruna and Malmberget in Lapland. Kiruna is now all undergroind, includinggrading, crushing and even storage. A new mine is being developed 50 Km SEof Kiruna at Svappavaara. A new harbor is being built at Lulea to accommod-ate 35,000 dwt ore-carriers and ship 12 mtpy. The port of Narvik is beingimproved by LKAB to accommodate carriers of 60,000 - 70,000 dwt. A concen-trating and pelletizing plant for 1.5 mtpy of pellets is being built at Kiruna.

Investments since 1951 have been over US$27 million. By 1967/68the company expects to have stepped up mining operations to 24 million tons(compared to 17 million at present). Of this 15 million tons will come fromKiruna, 6 million tons from Malnberget and 3 million tolls from Svappavaara,which is expected to start production in 1965.

Annex 5Page 13

LKAB sells most of its ore on the basis of annual contracts. Ithas a joint marketing organization with TGO which owns some 600,000 dwt ofshipping.

2. Trafik Grangesberg Oxelosund (TGO) is the other large Swedish miningcorporation. TGO since 1907 has shared with the Swedish Government theownership of LKAB but between 1953-1957 the goverlnment exercised its optionto buy up control of LKAB, of which TGO now holds only 4%. At present TGOoperates a number of mines in the middle of Sweden, the most important ofwhich is Grangesberg, which contains an ore of 59 to 62% Fe. ' he companyowns the Oxelosund steelworks which uses TGO ore. Exports of TGO go throughthe port of Oxelosund which is at present being rebuilt and expanded. Com-pletion is scheduled for 1965.

VENEZUELA

1. Orinoco Iron Miining Co., a subsidiary of the United States Steel Corp.works the Cerro Bolivar deposit. The deposit contains a compact high-gradehematite of 63X Fe. Large scale production from open pit mine began in 1954.Production in 1961 and 1962 was 12.2 and 10.1 million tons respectively. Raildistance to port is 1144 Km.

2. Iron Mines Co. of Venezuela, a subsidiary of Bethlehem Steel Co., hasdeveloped the El Pao deposit containing a 68% Fe hematite. Production startedin 1954 and inT 1961and 1962 reached 2.i4 and 3.1 million tons respectively.Rail distance to Puerto de Hierro is 44 Km. In 1963 port facilities weretransferred to Palua.

General Information

There are further large deposits of high-grade ore in Venezuela butso far none has been developed. Recently the government declared the MariaLouisa Ore Co. iron ore concessions 1, 2, 3, 7 and 12 lapsed because they hadnot been exploited.

ANNEX 5Page %i

Iron Ore Pelletizing Plants

Actual or Expoct;d Capacity Fe-ContentCountry and Company Prod-action Start-up mtpy of Pellets %

United StatesHumboldt Mining Co. 1955 0.7 62-63Marquette Mining Co. 1955 0.8 'Marquette M4ining Co. (expansion) 1962o 0.8Marquette Mining Co. (Eagle Mill) 1956 0,8 64-66Empire Iron Mlining Co. 1963 1.2 ,,Hanna Mining Co. 1963 1.3 61-63Erie Mining Co. 1958 7.5 61-62Reserve iining Co. 1955 6.0 61-63.5Reserve Mining Co. (expansion) 1963 3.o 61-63.5Meramec Mining Co. 1963 2.0 "Bethlehem Cornwall Corp. (Grace) 1963 2Jo 64-65Bethlehem Cornwall Corp. (Cornwall) 1958 006 63-66United States Steel Corp. 1962 1.5 65-66

Total United States 28.2

CanadaCons. I-ning & Smelting Co. 1961 0.1 65Carrol Pellet Co. 1963 5.5 65International Nickel Co. 1957 003 68International Nickel Co. (expansion) 1963 005 68Hilton Mines Ltd. 1958 0.8 63-66Marmoraton Mining Co. 1955 O.,5 65

Total Canada, end 1963 707

Jones & Laughlin Steel Corp. 196h 1.0 65-66Caland Ore Co. 1965 1.0 "Wabush Mines 1965 5.0 6b-65

Total Canada, end 1965 14.7

SwedenPlant at Malmberget 1955 o.4 67-63.5

IMabnberget 1964 0-2 67-68TGO Strassa 196h 0,,2 67-68LKAB 1965 1.5 68

Total Sweden end 1965 2.3

Norwfay

Njorsk Jernverk 1964 o.6 68

ItalyMontecatini 1965 0.3 63

JapanKawasaki 1959 1.0

PeruMarcona 1963 1,0 68-69

Annex 6Page 1

FUTURE DEMAND AND SUPPLY PROSPECTS

To estimate the demand for iron ore it is necessary first toestimate future steel production. From this figure iron ore requirementscan be derived by applying a ratio of iron ore consumption expressed intons of Fe-content per ton of steel produced. For a few countries theratio has changed over the last 10-15 years, particularly in Italy andJapan where pig iron production lagged behind rapidly growing steel pro-duction. For these countries the future ratio must be adjusted to takeinto account probable developments.

In the United States steel production can not be expected to growmuch in the coming years. Prospective increases in consumption of steelcontaining products are lilkely to be offset by a steady decline in steelcontent per unit of product, resulting from growing use of higher strengthsteels, thin sheets, high tensile wire in prestressed concrete and to a lesserextent also to the replacement of steel by competing materials, especiallyaluminium and plastics. To some extent, the effect of these developments inthe past can be illustrated by the fact that despite the prolonged favorabletrend in the American economy with several important steel consuming in-dustries producing close to or above record levels steel production has notyet recovered to its 1955 record level of 108 million metric tons. Further-more, the share in overall economic growth of the metal working industriesand of industry as a whole has been declining slowly over the past few de-cades resulting in anetvnA lower ratio between the growth of steel consumptionand the growth of GNP. Finally, the position of the United States as a netexporter of steel has been reversed to that of a net importer. Most of thesetrends are likely to continue, with the possible exception of the foreigntrade position only and therefore, it is estimated that steel production inthe United States will not normally exceed 110 million metric tons in 1967or 1970. In recession years production will probably fall back considerablybelow that level. Consequently, American ore requirements are estimatedfor both 1967 and 197C at 70 million metric tons iron content.

in Western Europe steel production in the United Kingdom and Germanydeclined after 1960 but a revival was noted in the United Kingdom in 1963and in Germany in the beginning of 196I. Production in France, Belgium andLuxembourg stagnated while in the Netherlands and Italy it continued to in-crease. In order to evaluate future prospects, it is necessary to different-iate between the United Kingdom add Germany on the one hand and the remainingmembers of the ECSC on the other. While steel consumption per capita is be-tween 450 and 500 kg in the former two countries, it is around or under 300 kgin the other countries. It seems reasonable to assume, therefore that growthin the latter group will be greater than in the United Kingdom and Germany.Steel production and Fe-content of ore requirements 1/ in these countries istherefore estimated as foIlows (in million metric tons):

/ Taking into account varying ratios of Fe-content tocrude steel production as described above.

Annex 6Page 2

1967 1970Steel Fe Steel Fe

United Kingdom 26 15.6 28 17.hGermany 36 22e4 38 24.2France 22 15 4 25 18.0Italy 13 5.1 16 7.8Belgium/Luxembourg 13 10.0 15 11.2Netherlands 3 2.2 5 3.7

Total ECSC + LT5 113 70.7 127 82.3

In Japan steel consumption continued to grow in 1963 after a tem-porary set-back in 1962. Since steel consumption in Japan is also stillunder 300 kg per capita it can be assumed that there will be further groxth,even if at a somewhat slower rate. It is therefore estimated that steeloutput will be 39 million tons in 1967 and 44 million tons in 1970 repre-senting ore requirements equivalent to 23 and 30 million tons Fe respectively.

On the foregoing assumptions, total iron ore requirements in thethree major consuming areas are estimated at 163.7 million tons Fe in 1967and 182.3 million tons in 1970. To establish import requirements, domesticproduction has to be forecast.

in the United States it is assumed that elimination of marginalunderground and low-grade iron ore mines will be balanced by an increase oftaconite pellet production. Consequently, supply in texms of iron contentcan be estimated at 38 million tons, which would leave 32 million to be im-ported in 1967 and 1970.

In Japan, home production from iron sands is around 1 million tonsiron content. Attempts to develop economic benefication methods have failedso far and therefore, no increase is expected. Import requirements would thusamount to 22 million tons Fe in 1967 and in 1970 to 29 million tons.

In the ECSC iron ore production is practically all low gradeo Out-put reached a peak in 1960 and has been declining since that timie. The fallwas greatest in Germany from 18.9 million tons in 1960 to 12.9 million tonsin 1963. The number of mines in operation declined from 62 in 1954 to 30 in1963. Steel makers have pointed out that it costs 22-38% more to use domesticore than to use foreign ore. Some experts forecast the complete end of theGerman iron ore industry within a few years. Since there is an acute shortageof labor in Germany 1/ it should be possible to overcome the social problemsinvolved in closing down more mines. For all these reasons a further decreaseof ore production can be assured, although at a slowier rate than in the recentpast as only the most efficient mines remain in operation. German ore pro-duction in terms of iron contenit in 1967 and 1970 is estimated at 2.5 and 1.5million tons respectively.

T In 1963 about 1 million foreign workers were employed.

Annex 6Page 3

In France iron ore production declined from 67 to 58.5 milliontons from 1960 to 1963 while iron ore imports rose from 1.5 to 3.5 milliontons during the same period. Wlhile there is little doubt that the Minettecan hold its own in Lorraine for some years to come, increasing difficultiesare expected for deliveries to Belgium and the Saar. A leading authority 1/recently stated that Swedish and overseas ores are nao competitive in Belgiumand may be so shortly in the Saar. The possible impact of this can be seenfrom the fol owing breakdown of Minette deliveries in 1962 (in millions oftons):

Lorraine 34.3 Belgium 8.6Northern France 3.1 Saar 8.6Luxembourg 6.7 Ruhr 0.7

44.1 17.9

Almost 30% of deliveries are threatened by intense competition from richimported ores. The cited authority also stated that the cost of mining variesfrom US$1.50 for a few of the open cast mines to US$3.50 for many of theunderground mines 2/. Benificiation is fairly difficult because of chloridesand dust in over half of Minette production and transport costs per Fe-unitare consequently extremely high. No sintering capacity for export-ore isavailab'.e in Lorraine while most Belgian and Saar steel works have been orare building sinter plants. Consequently, chances are not considered vrery goodfor a reduction of transport costs by sintering at the mine. In view of thesefacts a further decline of Minette production seems probable. However, sincein France closing down of mines is creating difficult social problems therate of reduction will probably be fairly slow. French iron ore production istherefore estimated at 15 million tons Fe in 1967 and 13 million tons Fe in1970.

Iron ore production in Luxembourg has fluctuated around 7 milliontons during the last 10 years. No change is expected as iron ore mines arecaptive, no water transport of imported ore to consuming steel plants isavailable and social problems created by closing down of mines would be con-siderable. Iron content of home production is therefore estimated to remainat 2 million tons in 1967 and 1970.

Italian iron ore production is small and it is assumed it will remainat 0.5 million tons iron content. Belgian production of iron ore is negligible.No iron ore is produced in the lietherlands.

Iron ore production in the United Kingdom has varied between 14.8million tons and 17.4 million tons during the last 10 years. At present 80%of production is open cast and 20% underground. However, many open cast minesare nearing exhaustion and the high phosphorous and sulphur content in most ofthe ores cause a fairly high coke rate. Consequently, it seems reasonableto assume some reduction in output during the coming years, and the iron content

/ Henri Halcor, Die Zukunft der Wlinette, Stahl und Eisen, Dusseldorf,Oct. 1963.

2/ No indication was given in the source whether these figures includedepreciation and interest.

Annex 6Pa-ge T

of British production has been put at 3.7 and 2.9 million tons for 1967and 1970 respectively.

The summary of home production and resulting import requirementsfor the three major markets is as follows (million tons of iron content):

1967 1970Home pro- Import re- Home pro- Import re-

Market duction quirements duction quirements

United Kingdom 3.7 11.9 2.9 14e.5Germany 1/ 2.5 (19e9) 1.5 (22X7)France 17 15O0 (04) 13.0 (5.0)Italy 0.5 4.6 0.5 7e3Belgium/Luxembourg 1/ 2.0 (8.0) 2.0 (9.2)Netherlands - 2.2 - 3.7

Total ECSC + UK 23 .7 47t 0 19.9 62.4

United States 38.0 32.0 38.0 32eOJapan loO 22.0 1.0 29.0

Total 62.7 101.0 58.9 123.4

Compared to 1962, import requirements would grow by 40 million tons Fe to1967 and by 62 million tons to 1970. Over-capacity of the iron ore miningindustry amounts to approximately 24 million tons Fe. However, most of thiscapacity is in the United States, the ECSC and the United Kingdom and ithas been concluded above that production will not regain former peaks inmost of these countries but is probably going to decline even further. Un-used export capacity in 1962 amounted to about 5 million tons Fe (mainlyVenezuela). Thus, demand for imported ore in 1967 will be 35 million Fe-tons higher than export capacity in 1962.

1/ Import requirements for these countries are not corrected foriron ore exports from France to Germany and Belgium/Luxembourg.

Annex 6Page 5

From Annex 5 the folloArng minimum net increases in exportcapacity by 1967 can be derived (in million tons Fe-content):

Canada 9.7Latin America

Brazil 5.1Chile 2.2Peru 1.4 8.7

AfricaAngola 0.4Liberia 9.0Mauritania 3.8Sierra Leone 0.6 13.8

Sweden 3.0Australia 1.0

Total 36.2

In addition to these more or less certain expansions of ironore export capacity, further additions will probably come from India,which plans to increase exports over the next few years by 5-8 milliontons (3-5 million tons Fe) and Venezuela, where existing mines couldeasily expand capacity by 3-5 million tons (2-3 million tons Fe).Finally, there are a number of smaller producers which might start orexpand iron ore exports, as e.g. Swaziland, South Africa, NTorway,Finland. On the other hand, a few small exporters like thePhilippines are planning to erect steel works and use their iron oreat home. Therefore, considerable net increases from small producerscan hardly be expected.

In general, it seems safe to assume that no shortages of ironore can be expected up to 1967. On the other hand, a serious over-supply could develop only if low grade production in major consumingcountries is kept at a comparatively high level. Judging from presenttrends this seems unlikely.

From 1967 to 1970 another additional 17 million tons Fe willbe required. Planned expansions in Australia, Brazil, Canada, Chile,India and Liberia would seem ample safeguard against any shortages.