Iron Ore: A concise guide for ASX investors Iron ore: An overview
Iron ore types: There are several types of iron ore including hematite, magnetite, and limonite, which differ in their iron content and iron oxide composition. Hematite is the most common type with high iron content of approximately 70%. It is the primary source of iron ore production in Australia and typically found in Western Australia. Magnetite is less common, with a lower iron content of around 60% and limonite has even lower content.
Understanding grades: Not all iron ore is made equal. Iron (Fe) grades typically range between 58% (low grade) to 65% (high grade). High grade iron ore requires less processing which makes it a more efficient and cost-effective raw material. It also produces less emissions.
Understanding prices: Iron ore prices are benchmarked to grades of 62%. You’ll then see iron ore miners sell iron ore typically at a discount or premium to that price – depending on what kind of grades they’re producing.
All about steel: Approximately 98% of iron ore is used to produce steel and the majority of that goes towards the construction industry. Other industries that use iron ore include the automotive, shipbuilding and railway industries.
Champion Iron is a Canada-based miner that produces a high-grade 66.2% Fe. To add some perspective, Fortescue's grades typically sit around 58-60% iron content while BHP's are around 60%. According to Champion Iron, its high-grade product can reduce blast furnace emissions by up to 10%. It's also working on a Direct Reduction Pellet Feed to produce 69% Fe to reduce emissions by up to 50%.
In late January, Macquarie was Neutral-rated with a $7.50 target price after CIA's third quarter result observed lower sales volumes and higher costs, which was only partially offset by higher prices.