CIS Iron and Steel Review 2019 (Vol. 17)

CIS Iron and Steel Review 2019 (Vol. 17)

Iron Ore Market Review 2018

A. Löf, M. Ericsson & O. Löf (2019) Iron ore market review 2018, CIS Iron and Steel Review 2019 Vol. 17.

Iron ore prices remained at relatively high levels during 2018. Premia paid for high quality ores increased and are substantial. Global iron ore production is estimated to grow by around 2% in 2018. Sharp cuts in production of un-beneficiated ore have taken place in China during 2018. Demand for iron ore in general and for high grade products in particular has however increased. Future developments in China, both in the steel and iron ore industries, will be crucial to the global iron ore markets in 2019. This review is written in March 2019 and incorporates as much as possible figures and trends for the full year 2018, in some cases this is however not yet possible.

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Mining’s contribution to national economies between 1996 and 2016

M. Ericsson & O. Löf Mineral Economics 2019.

In several low- and middle-income countries rich in non-fuel mineral resources, mining makes significant contributions to national economic development as measured by the revised Mining Contribution Index (MCI-Wr). Ten countries among the 20 countries where mining contributes most (highest MCI-Wr score) have moved up one or two steps in the World Bank’s country classification between 1996 and 2016. In particular, African countries have benefitted. Socio-economic development indicators also show signs of progress for African mineral-rich countries. This paper provides an update and expansion of an earlier study within the framework of the United Nations University (UNU) World Institute for Development Economics Research (WIDER) initiative Extractives for Development. Based on the detailed data available for the sector, such as production, export, prices, mineral rents, exploration expenditure and government revenues, an analysis is carried out of the current situation for 2016, and trends in mining’s contribution to economic development for the years 1996–2016. The contribution of minerals and mining to GDP and exports reached a maximum at the peak of the mining boom in 2011. Naturally, the figures for mining’s contribution had declined for most countries by 2016, but importantly the levels were still considerably higher than in 1996. The results of this survey contradict the widespread view that mineral resources create a dependency that might not be conducive to economic and social development. In addition, this paper presents an attempt to use already available socio-economic indicators for African mineral-rich countries to measure socio-economic developments. One preliminary conclusion of this survey is that mining countries perform better than oil-producing countries and non-mineral countries in Africa as measured by these indices of human development and governance.



Iron Ore Outlook 2018 - Iron Ore Markets Improve in Most Regions

Taking sharp cuts in steel production during the first half of 2018, future developments in China will be crucial to the iron ore market.

Löf, Anton. Ericsson, Magnus & Löf, Olof (October 2018). Iron ore markets improve in most regions. Engineering and mining journal, 219(10), 48-55.

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Mineral grades: an important indicator for environmental impact of mineral exploitation

Priester, M. Ericsson, M. Dolega, P. & Löf, O. Mineral Economics 2019.

We have collected and analysed grade information for nine metals: copper, gold, iron, lead, manganese, nickel, PGM, tin, and zinc. Based on this analysis, we have developed a proposal of “grade classes”, i.e., what could be considered low-grade, average-grade, and high-grade deposits for all these metals. We discuss the implications of possible developments into the future of the grades of ores, from which these metals are extracted. A focus on high-grade deposits will naturally reduce the environmental impact of mining. For six metals (copper, gold, iron, nickel, PGM, and zinc), we have further analysed the volumes available for the 10% cohort of projects and operating mines with the highest grades. Three metals (iron, PGM, and zinc) show considerable volumes, between 15 and 20% of total metal content in resources in this high-grade percentile. Copper and gold have between 5 and 10% while nickel has only 1.7% in the highest 10% grade percentile.

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Supporting the EU Mineral Sector - Capitalising on EU strengths through an investment promotion strategy

Masuma Farooki, Chris Hinde & Anton Lof

STRADE research indicates that there are strategic reasons to support the EU mining sector, which are not directly related to securing access to physical supply from domestic sources. A strong EU mining sector can contribute to the perception of the EU as a region with strong social, environmental and regulatory standards, which continues to pursue mining activity and is not looking to ‘export pollution’. The EU mining-tech sector, which is recognised as a leader in the international sector, will also benefit by working closely with mining operations and centres of innovation and research, to produce more efficient technology for the global mining sector.

The analysis of EU mineral production levels suggests that very little progress has been made in increasing exploration expenditure in the region and for base-metals at least, production is not expected to increase. While current EU mining support mechanisms (SIP and Horizon 2020 funding) should continue, there needs to be a focused investor promotion strategy. This needs to address three important issues; improving the mining regulations in Member States; better organised access to geological data and finally addressing the issue of negative social perceptions around mining by EU citizens.

STRADE recommends that to increase exploration expenditure in the EU, which is key to developing a healthy mining project pipeline, the best practice principles for mining regulations need to be more widely applied in EU Member States.

Restricting exploration licences and transfers through government discretion may not be the correct regulatory tool for this purpose. Clear regulatory rules would better serve to achieve this goal. The EC, through its support for exchange of best practice under SIP Action Plan, should assist governments to choose the appropriate tools for achieving their mining policies.

The construction of a Mining Rights Management System at the European Commission would be recommended, to be undertaken from a commercial investor prospective, to improve the access to geological data and licences. Investors can reach out to Member States for more detailed information.

The report recognises that while it may be felt by some stakeholders that the improvement of the public perception of mining is the mining industry’s responsibility, given the importance of minerals and metals for the health of European economies, the EU needs to consider creating citizen awareness campaigns and provide more information to European Parliamentarians as part of its responsibilities.

To create more investor interest, a One Stop Shop, operating under the umbrella of the EU is recommended, to be the first port of call for international investors seeking information about projects, regulations, codes and support for mining projects in the EU Member States. For the mining-tech sector, support for the domestic EU mining sector is required. In addition, the current EU funding for research, development and innovation should continue. One further aspect of research that could be added here is the meeting of mining technology research and innovation and communities who are impacted by innovation and technology. The SIP and EIP documents indicate that there is a good understanding of the factors that will promote mining in the EU, these need to be matched with raising investor interest and participation.

Farooki, M. Hinde, C. & Löf, A. (2018). “Supporting the EU Mineral Sector – Capitalising on EU strengths through an investment promotion strategy” European Union report strategic dialogue on sustainable raw materials for Europe (STRADE) No. 05/ 2018

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EXTRACTIVE INDUSTRIES - The Management of Resources as a Driver of Sustainable Development

Edited by Tony Addison & Alan Roe

New initiatives recognize that resource wealth can provide a means, when properly used, for poorer nations to decisively break with poverty by diversifying economies and funding development spending. Extractive Industries: The Management of Resources as a Driver of Sustainable Development explores the challenges and opportunities facing developing countries in using oil, gas, and mining to achieve inclusive change. While resource wealth can yield prosperity it can also, when mismanaged, cause acute social inequality, deep poverty, environmental damage, and political instability. There is a new determination to improve the benefits of extractive industries to their host countries, and to strengthen the sector’s governance. Extractive Industries provides a comprehensive contribution to what must be done in this sector to deliver development, protect often fragile environments from damage, enhance the rights of affected communities, and support climate change action. It brings together international experts to offer ideas and recommendations in the main policy areas. With a breadth of collective insight and experience, it argues that more attention must be given to the development role of extractive industries, and looks to the future to explain how action on climate change will profoundly shape the sector’s prospects.

Chapter 3. Mining's contribution to low- and middle-income economies 
Magnus Ericsson & Olof Löf (2018)

Chapter 25. Downstream activities: The possibilities and the realities 
Olle Östensson & Anton Löf (2018)

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Raw materials management in iron and steelmaking firms

This paper adds new knowledge on how raw materials should be managed in iron and steelmaking firms. While previous research has contributed significantly to how firms should deal with functional challenges related to raw materials, the understanding of Raw Materials Management from a holistic perspective is largely lacking, and extant research does not provide qualified advice to firms on this matter. This study provides such knowledge by drawing on insights from Höganäs AB, a world leader in ferrous powder metallurgy, and their efforts to identify key aspects and principles of raw materials management. Our elaboration of a more holistic view on raw materials management builds on two elements. First, we depict five external uncertainties and three internal conditions that impact firm-level raw materials management. Second, we present six critical capabilities that underpin proficient firm-level raw materials management. The paper concludes with a discussion of implications for both firms aiming to increase their raw materials proficiency and to future investigations into this important area.

Florén, Henrik. Frishammar, Johan. Löf, Anton & Ericsson, Magnus. (2018). Mineral Economics.



Iron Ore Market Report 2017

Prices and demand for high-quality iron ore increases. Future over capacity could threaten lower quality and high cost iron ore operations.

Löf, Anton. & Ericsson, Magnus. (November 2017). Iron ore market report 2017. Engineering and mining journal (1926), 218(11), 32-37.

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Mining’s contribution to low- and middle-income economies

In several low- and middle-income countries with important extractive sectors, gross national income has developed favourably. Africa has benefitted most, particularly West Africa. This survey provides an up-to-date statistical analysis of the contribution of non-fuel minerals mining to low- and middle-income economies.

Using the detailed data available for the minerals sector, an analysis is carried out of the current situation for 2014, and of trends in mining’s contribution to economic development for the years 1996–2014. The contribution of minerals and mining to gross domestic product and exports reached a maximum at the peak of the mining boom in 2011.

Although the figures for mining’s contribution had declined for most countries by 2014, the levels were still considerably higher than in 1996. The results of this survey contradict the widespread view that mineral resources create a dependency that might not be conducive to economic and social development.

Ericsson, Magnus. & Löf, Olof. (June 2017). Mining’s contribution to low- and middle-income economies.  WIDER Working Paper 148/2017 UNU-WIDER.

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The mining-tech sector in the European Union – A collaborative competitiveness

Löf, Anton. Ericsson, Magnus. & Gustavsson, Lennart. (May 2017). The mining-tech sector in the European Union – A collaborative competitiveness.  European Policy Brief, Strategic Dialogue on Sustainable Raw Materials for Europe (STRADE) No. 04 / 2017.

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Downstream activities: The possibilities and the realities

The paper discusses the practical possibilities of achieving increased downstream processing and the policies that are commonly used for this purpose. It reviews the reasons why forward vertical integration is not always an optimal choice for extractive industry companies. It finds little support for the argument that differences in market power dictate the geography of downstream processing.

Tariffs on processed products may also play only a limited role. The degree of vertical integration varies and appears to be mainly driven by production economics. Market determined processing margins fluctuate, which raises the risks of investing in downstream processing capacity.

Policies for downstream processing are discussed based on experiences in four countries: India, Indonesia, Zambia, and Tanzania. In most of these cases, a very limited amount of analysis appears to have been undertaken to design the policies. Results so far seem to indicate that a number of unintended consequences dominate the outcomes.

Östensson, Olle. & Löf, Anton. (May 2017). Downstream activities: The possibilities and the realities. WIDER Working Paper 113/2017 UNU-WIDER.

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Iron Ore Market Report—2016

Production cutbacks won’t be sufficient to eliminate the industry’s oversupply problem in the near future.

Löf, Anton. & Ericsson, Magnus. (November 2016). Iron ore market report - 2016. Engineering and mining journal (1926), 217(11), 22-26.

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Tillstånd och miljöprövning för att öppna gruvor – en internationell utblick

I detta PM granskar Tillväxtanalys vilka formella tillstånd som behövs för att öppna gruvor i Sverige och fem andra ledande gruvregioner – Finland, Polen, Ontario, Western Australia och Minas Gerais. Vi studerar också hur miljöfrågor hanteras i tillståndsprocessen.

Johnson, Eva Liedholm. & Ericsson, Magnus. & Löf, Anton. (March 2016). Tillstånd och miljöprövning för att öppna gruvor – en internationell utblick. PM 2016:05. Myndigheten för tillväxtpolitiska utvärderingar och analyser. Östersund.

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Coltan, Congo & Conflict

Ridder, M. de. Ericsson, M. Usanov, A. Auping, W. Lingemann, S. Espinoza, L. T. Farooki, M. Sievers, H. & Liedtke, M. (2013) Coltan, Congo & Conflict: Polinares case study. The Hague Centre for Strategic Studies, Hague.

In the early 2000s, tantalum – a rare metal with some unique properties that make it an important raw material for information and communication technologies – suddenly moved from obscure geological publications into a wide public spotlight. Effective NGO campaigns using catchy slogans, such as ‘No blood on my mobile’, emphasized that consumer demand in the West for mobile phones, computers, game consoles and other electronic devices, all of which contain small amounts of tantalum, fueled mass atrocities in the Democratic Republic of Congo (DRC).

The strong public attention on tantalum and coltan is somewhat puzzling. Coltan is far from being the most important mineral that is mined in the DRC, and the DRC has never been the main tantalum supplier to the global market. This report therefore seeks to redress the largely mediatic coverage of the role of coltan mining in the DRC conflict, contributing to a more informed analysis of the relationship between the two.

The report was prepared as part of the POLINARES project, which aims to examine the main global challenges surrounding access to fossil fuels and mineral resources. First, it provides the main facts and data on tantalum, such as its properties and uses, the supply chain from mine to metal, and price developments. Next, the report gives a short historic overview of conflict in the DRC which is followed by an overview of coltan and tantalum resources and coltan mining in the country. Then, the report focuses on the specific role of coltan in the present conflict in the DRC. It analyzes the involvement of armed groups in the mining and mineral trade and touches upon the debate on greed and grievances when assessing the motivations of armed groups. Finally, the report gives an overview of the policy measures that were adopted or proposed to mitigate the negative effects of coltan mining and trade on the conflict in the DRC, and analyzes their effectiveness and efficiency. 

The report concludes that the importance of coltan as a source of revenue for armed groups is often exaggerated. With the exception of a short-lived coltan boom in 2000-2001, it was never a substantial source of funding for armed groups. Although armed groups have profited from the DRC’s mineral wealth, coltan was not the main instigator of the conflict in the DRC and was at most a contributing factor.

Many policy initiatives aimed at breaking the link between mining, mineral trade and conflict, including Section 1502 of the Dodd-Frank Act in the U.S., suffer from problems related to both effectiveness and efficiency. First of all, there is little convincing evidence that initiatives focusing on limiting the mineral revenue of armed groups are likely to lead to a significant reduction of violence in the DRC. We believe this is because many conflict mineral policy initiatives assume that mineral revenues are the main reason behind the continued fighting in eastern DRC. However, reducing the mineral revenue of armed groups primarily addresses symptoms of a deeper problem. As long as the underlying reasons for conflict continue to exist and the right governance structures to address grievances are lacking, rebels will simply shift from trade in minerals to other sources of revenue, such as taxing agriculture or foreign aid. There are obviously moral reasons for reducing the mineral revenues of armed groups. However, even in this case it is important to understand that challenges such as weak governance, corruption and large compliance costs, might easily undermine their successful implementation.

The main problem in the DRC is the weakness of governance and the inability of the state to fulfill its basic functions. In such a context, ending the violence requires a long-term and comprehensive approach that combines military, political, and economic efforts, with a particular emphasis on building capable and legitimate institutions, restoring the state’s monopoly on violence, and promoting economic development that is not based on illegal activities.

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Overview of State Ownership in the Global Minerals Industry

Ericsson, Magnus. & Löf, Frida. (May 2011). Overview of State Ownership in the Global Minerals Industry: Long Term Trends and Future. Extractive industries for development series ; no. 20. Washington DC ; World Bank.