Iron ore is one of the most abundant of all minerals throughout the world. Deposits are well distributed geographically with vast reserves ...
Iron ore is one of the most abundant of all minerals throughout the world. Deposits are well distributed geographically with vast reserves found on all continents. Although quantitative estimates are not available, much evidence supports the conclusion that the elasticity of supply of iron ore traded internationally is high; that~iS~ a small increase ,.;. in price will call forth large additional quantities of ore.,. The Japanese import iron ore from Australia, Brazil, and Canada, mostly under medium- or long-term contracts. In recent years they have become involved in the development of new mines. Ste~l producers in Western Europe make a substantial proportion of thei r or e purchases under shor t-term (usually one year) contracts,
and the rest under long-term arrangements. United States producers tend to own their own mines and to operate them pr incipally for their own use. (See the appendix to this chapter. ) The United States is a net importer of iron ore (table :3 2.10). About 70 percent of the iron ore consumed by the U.S. steel industry comes from domestic sources; of the imported supplies, about one-half comes from Canada and most of the remainder from Latin America. U. S. dependence on foreign ,iron ore was necessitated by the diminution of quality domestic ores. The major sources of U. s. iron ore in 1972 are shown in table 2.11.
Large iron ore mines that were developed by Amer ican steel companies have been nationalized in Chile, Venezuela, and Peru. Venezuela, the second largest ore exporter to the United States, expropriated the Orinoco Mining co., a wholly-owned subsidiary of United States Steel Corp., and the Iron Mines Co. of Venezuela, a wholly-owned subsidiary of Bethlehem Steel Corp. I:.:,; Both companies secured long-term contracts for the continued delivery of ore from the now nationalized companies. These were the only major steel companies to import iron ore from Venezuela. U. S. companies are increasingly hesitant about becoming reliant on foreign supplies and have tended to avoid further overseas ventufes (except in Canada) in favor of developing and upgrad iig the large, lower grade u. S. resources. -34- Another potential problem concerning the supply of iron ore from foreign sources stems from the fact that ten countries agreed to form an Association of Iron Ore Exporting Countries (AlEC). The producing countries included in the pact are Algeria, Australia, Chile, India, Mauritania, Peru, Sierra Leone, Sweden, Tunisia, and Venezuela. The organization was set up to act as a clear ing house for information on pr ices and markets. To date, these countries hav~not established a unified price for iron ore, nor is an attempt to fix prices expected to be successful in the future. Such an event should have a significant impact on steel producers in Europe and Japan. Excepting the imports from Canada,
the United States depends on the world market for only a relatively small portion of its iron ore needs. The domestic supply of iron ore is rather elastic because of the vast potential stocks of taconite that could be exploited if foreign iron ore prices were to rise substantially. Taconite is already being used in large quantities by steel firms in the Uni ted States. The development of taconite in the United States gives u.s. producers the bargaining power necessary to defend their own and the Nation's interest in obtaining adequate supplies of iron ore. If necessary, iron ore requirements could be met entirely from domestic resources. Vast quantities of taconite are found in the United States, most of them in the Mesabi Range of Minnesota, and the Marquette Range of Michigan, thus having the advantage of close proximity to much of our steelmaking -35- capacity. Low-grade ores must be upgraded through pelletization for use in blast furnaces. In the event that international iron ore prices should be forced up dramatically by méans of, cartel action, American steel producers will probably have little difficulty expanding the mining and beneficiation of ~"" low-grade taconite ores and the output of their operations in Canada.
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