**June 2011**Iron O re—2009 [ADVA N C E RE L E AS E ] 39.1 

# I ron 

# O re
By John D. Jorgenson

Domestic survey data and tables were prepared by Michelle B. Blackwell, statistical assistant, and the world production table was prepared by Lisa D. Miller, international data coordinator.

U.S. iron ore production in 2009 was one-half that of 2008; consumption during this same period decreased by 40%. World iron ore production and consumption once again rose in 2009, but by only 2%. China, by far the leading consumer, led gross tonnage production of iron ore with relatively low-grade ore. China was the leading producer of iron ore in terms of iron content, followed by Australia and Brazil (tables 1, 17). For the eighth consecutive year, world iron ore trade increased. World prices dropped significantly compared with those of 2008.

Iron ore is the basic raw material for producing iron and steel. The supply of iron ore is critical to the economies of all industrialized nations. Scrap, a supplement to iron ore in steelmaking, is also an extremely important feed material, but owing to lack of supply of high-quality scrap, its use has limitations. Direct reduced iron (D R I) is an alternative to scrap, but requires iron ore for its production.

Two iron oxides—hematite (Fe 2 

### O 3 

### ) and magnetite (Fe 3 

### O 4 

### )— are the primary ore minerals of iron. Taconite, the primary iron ore mined in the United States, contains hematite and magnetite in varying proportions and is found in hard, fine-grained, banded iron formations with low iron content, between 20% and 30%. Almost all domestic iron ore production is transformed into molten iron in blast furnaces by the iron and steel industry. Most molten iron then goes directly to a basic oxygen furnace (B O F) for conversion to steel by removing most of the residual carbon. The remainder is poured into molds to produce pig iron.

In 2009, the United States used 31.0 million metric tons (Mt) of iron ore, a decrease of 20.9 Mt, or 40%, compared with that of 2008, and produced 19.0 Mt of pig iron. Pig iron production decreased 44% from that of 2008 and was at the lowest level since before World War II.

R aw steel production, at 59.4 Mt, decreased 35% compared with that of 2008. U.S. steel consumption decreased to 63 Mt from 102 Mt in 2008. Imported iron ore supplements domestically produced iron ore in the production of pig iron, which is used along with imported pig iron, D R I, and scrap to produce raw steel. Integrated steel mills produce steel from iron ore; minimills produce steel from D R I and scrap. In 2009, the minimill sector of the steel industry made up 62% of the U.S. raw steel production (American Iron and Steel Institute, 2010, p. 73).

Integrated steelmakers can increase steel mill product production without increasing blast furnace production by importing pig iron and semifinished steel. This permits steelmakers to avoid costly startup of less-efficient blast furnaces held in reserve and the employment of additional skilled workers. In 2009, net U.S. exports (exports minus imports) of iron ore substitutes were 5.7 Mt, while in 2008 the United States was a net exporter of 14.8 Mt of substitutes. This increase in exports was owing to continued high levels of scrap steel net exports combined with substantial decreases in net imports of DRI, pig iron, and semifinished steel products. During the year, along with the 33% decrease in raw steel production and a 38% drop in steel demand, iron ore consumption declined 40% from 2008 levels.

Legislation and Government Programs

In 2009, the Minnesota production tax rate to be distributed in 2010 changed for concentrates and pellets produced in 2009, increasing to $2.364 from $2.316 per taxable long ton. The taxable tonnage for 2009 is based on the average tonnage produced in 2007–09.

Changes affecting taconite mining and processing operations passed by the Minnesota Legislature in 2009 included production taxation items that would be based on the 2008 and 2009 production. A Taconite E nvironmental Protection Fund was established to receive 15.5 cents per long ton (about 15.3 cents per metric ton) from 2008 production that would have gone into the Taconite Property Tax R elief Account. Instead, these funds were set aside for use in renewable energy initiatives to be distributed in 2009 only. A production tax change for 2009 that would affect distribution of taxes in 2010 and thereafter included redistribution to 50% mining and 50% processing from 40% mining and 60% processing of the proceeds when mining and processing were carried out in two separate tax districts. Another production tax change for 2009 that would affect distribution of taxes in 2010 was a redistribution of excess tax funds to cities and towns within a school district if distribution to the school district would reduce State aid to the district (Minnesota Department of R evenue, 2009, p. 1, 6, 7, 20; 2010, p. 1, 20).

Production

The U.S. Geological Survey (USGS) develops U.S. iron ore production data through an annual “Iron O re” survey, which is sent to iron ore mines, and those mines provided the production statistics listed in tables 1 through 5. This information is supplemented by employment data, information from consumers, and mine inspection reports. The American Iron O re Association became a supplier-oriented organization, now known as the Iron Mining Association of Minnesota, and no longer provides data on ore shipments from loading docks on the Upper Great Lakes nor receipts at transfer docks and furnace yards nationwide. Steel plant data continues to be compiled by the American Iron and Steel Institute (AISI).

In 2009, domestic iron ore production was 26.7 Mt, about one-half of the 2008 production, which was 53.6 Mt. Michigan and Minnesota taconite mines accounted for almost all domestic iron ore production—six mines operated on the Mesabi R ange39.2 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 

### in northeastern Minnesota and two on the Marquette R ange in Michigan’s Upper Peninsula. Domestic iron ore supply (production minus exports) met 74% of domestic demand in 2009, 3% less than the average from 2005 through 2008.

Cliffs N atural R esources Inc. (Cleveland, O H) announced 2009 iron ore production for its N orth American operations. Mine production, which totaled 20 Mt, was as follows (United States, unless otherwise specified)—Empire, 2.6 Mt; Hibbing Taconite, 1.7 Mt; N orthshore, 3.3 Mt; Tilden, 5.7 Mt; United Taconite, 3.9 Mt; and Wabush (Canada), 2.7 Mt. Cliffs’ share of the total production from these N orth American operations was 17.4 Mt. Total Cliffs’ N orth American production tonnage share for the mines it managed during the year decreased by 25% compared with that of 2008, and overall iron ore sales revenue decreased to $1.45 billion, a decrease of 39% compared with that of 2008 (Cliffs N atural R esources Inc., 2010, p. 56, 57).

In June 2009, Cliffs acquired significant ownership of Freewest R esources Canada Inc. (Montreal, Quebec, Canada), with its three world-class chromite deposits in anticipation of diversifying downstream from its core merchant iron ore business. Cliffs planned to include construction of the open pit mine and mine-site processing facility, as well as an electric arc furnace ( E AF) to further process the chromite ore into high

- grade ferrochromium. The E AF facility was expected to be located on the north shore of Lake Superior after a permitting process anticipated to require approximately 3 years, with production startup in about 2015 (Cliffs N atural R esources Inc., 2009a).

Michigan. —Michigan accounted for about 31% of U.S. usable iron ore output in 2009; nearly all of Michigan’s output was pellet production. The E mpire Mine production was mostly flux pellets. The Tilden Mine produced magnetite and hematite flux pellets. The Empire Mine and the Tilden Mine production each showed a decrease of 2.0 Mt compared with that of 2008. O wing to a postponement of a development project, the reserve estimate for the E mpire Mine was reduced by 45%, while Tilden Mine reserves remained the same net of production (Cliffs N atural R esources Inc., 2010, p. 35, 57; Skillings Mining R eview, 2010c, p. 6–7).

Minnesota. —Minnesota produced 69% of the usable iron ore in the United States in 2009; nearly all of the output was pellet production. Almost all of the production from the State came from open pits on the Mesabi Iron R ange, although a minor amount of the production did come from reworked tailings. Minnesota pellet production, grouped by operating company, was summarized as follows: Hibbing Taconite Company produced standard and high-compression pellets; N orthshore Mining Company produced 3.3 Mt of standard pellets, including a small amount of sinter material and concentrate; United Taconite Company, LLC produced pellets and a minor amount of concentrates; ArcelorMittal Minorca Mine Inc. (Chicago, IL) produced 1.5 Mt of flux pellets, including a minor amount of pellet chips; and United States Steel Corp. (Pittsburgh, PA) had no production from its Keewatin Taconite operations and 7.7 Mt of acid and flux pellet production from its Minntac operations (ArcelorMittal, 2010, p. 51; Cliffs N atural R esources Inc., 2010, p. 57; Skillings Mining R eview, 2010b, p. 8, 12–15; United States Steel Corp., 2010, F–62). In early February, U.S. Steel announced plans to lay off 500 union employees, as well as 90 management employees at its Minntac operations (Mountain Iron, M N ). In December [2008], U.S. Steel had already halted production at its Keetac operation (Keewatin, M N ). Lack of new steel orders forced the steel company to reduce production from its upstream operations (Bowen, 2009), but by August, with rising steel requirements, the company announced plans to start up an additional pellet production line at the Minntac plant in Iron Mountain, M N
, and to start up an additional two lines in September. U.S. Steel would then have four of the five production lines at Minntac in operation (Skillings Mining R eview, 2009d), but at Keetac, the company had workers begin winterizing the plant in anticipation of extending the shutdown of operations (Skillings Mining R eview, 2009b).

ArcelorMittal (Luxembourg) attributed the reduction in production from 2.8 Mt in 2008, to a shutdown of operations between May and September in 2009. O wing to market conditions, no iron ore was produced during this period (ArcelorMittal, 2010, p. 51).

Cliffs extended the shutdown of the N orthshore Mining Co. facilities, which had been initiated in April through July (Skillings Mining R eview, 2009e). Cliffs indicated that the joint

- venture owners of the Hibbing Taconite Mine [ArcelorMittal, 62.3%; Cliffs, 23.0%; and U.S. Steel Canada Inc. (Hamilton, O ntario, Canada), 14.7%] had agreed to lengthen the shutdown at the plant, which has a rated capacity of 8.1 million metric tons per year (Mt/yr). This extended the shutdown—which started with two of three pellet lines shut down in March and then the plant shut down for 15 weeks beginning in May—through the first quarter of 2010 (Cliffs N atural R esources Inc., 2009b).

Steel Dynamics, Inc. (Fort Wayne, I N ) completed construction and began commissioning on the $260 million Mesabi N ugget project in Hoyt Lakes, M N . The main plant facility has a 180-foot-diameter gas-fired rotary-hearth furnace (RHF) that, through a chemical reduction process, was expected to yield millions of 96% to 98% iron nuggets. The feed material— iron ore concentrate, coal, and binding agents—was to be mixed and dried to form marblesized “dry balls” in ancillary facilities. These balls were then to be melted in the R HF to form the iron nuggets. At full capacity, the plant was expected to produce 500,000 metric tons per year (t/yr) of iron nuggets. Steel Dynamics expected to follow through with additional investments in an adjacent iron mine, once the required permits were received from the State of Minnesota (Skillings Mining R eview, 2009c; Steel Dynamics, Inc., 2010, p. 5).

Magnetation, Inc. ( N ashwauk, M N ) began production of iron concentrate from its Mesabi Chief plant near Keewatin, M N

. Magnetation invested $9.6 million to bring its plant online. The plant was expected to produce low-cost iron concentrates at a rate of 300,000 t/yr from lean ore stockpiles of hematite and natural ore tailings. Plans for expansion to 750,000 t/yr of concentrate were being made to help feed the 500,000 t/yr (96% to 98% iron) Mesabi N ugget facility being constructed at nearby Hoyt Lakes, M N , by Steel Dynamics (Metal Bulletin, 2009e; R edmon, 2009).Iron O re—2009 [ADVA N C E RE L E AS E ] 39.3 

### Consumption

U.S. iron ore consumption declined by 40% to 31.0 Mt from the 2008 figure of 51.9 Mt (table 1). Pig iron production, at 19.0 Mt in 2009, was almost one-half of the 5-year average of 37.5 Mt/yr for 2004 through 2008. R aw steel production using B O F technology, which had been at the lowest production level in more than a decade in 2008, decreased by more than 40% to 22.7 Mt.

Consumption of iron ore, including agglomerates, reported to the AISI by producers of iron and steel totaled 30.3 Mt, including 26.2 Mt of pellets; 3.8 Mt of sinter, briquettes, and other products; and 0.3 Mt of natural coarse ore (table 7). O f the ore consumed, 74% was domestic production; 10%, imports from Canada; 2%, imports from other countries; and the balance was drawdowns of domestic stocks. O ther iron-bearing materials charged to blast furnaces included mill scale, slag scrap, and steel furnace slag.

The three consumption numbers used in this annual review are reported in tables 1, 7, and 8. The first consumption number (31.0 Mt in 2009), in table 1, is the sum of the ore consumed by input type reported by the AISI, the ore consumed in D R I production, and the ore consumed in nonsteel uses, as reported to the USGS (American Iron and Steel Institute, 2010, p. 81). The second consumption number (30.4 Mt in 2009), in table 7, is the ore consumed in U.S. iron and steel plants by type of ore reported by the AISI. The third consumption number is an estimate of D R I and other miscellaneous uses, which include iron ore consumed in production of cement and iron ore shipped for use in manufacturing paint, ferrites, heavy media, cattle feed, refractory and weighing materials, and for use in lead smelting are listed in table 8. The latter consumption figure was the ore consumed in D R I production (of which there was none produced in 2009) and nonsteel uses (0.60 Mt in 2009). Data on iron ore consumption in nonsteel end uses (table 8) were compiled from USGS surveys and information provided by Midrex Technologies, Inc. (2010, p. 7).

Prices

At the beginning of 2009, the secretary general of the China Iron & Steel Association (CISA) reportedly indicated that China would not seek “unreasonable decreases” during 2009 iron ore contract price negotiations. China tried to negotiate for price reductions to be made retroactive to January so that Chinese mills would not be forced to pay 2008 negotiated prices. CISA indicated that it would like more flexibility to adjust prices midyear, but did not want to be hampered by an iron ore index for long-term supply contracts (Li, 2009). CISA for the first time included a representative in the Chinese delegation discussing annual iron ore price contracts. CISA reportedly wanted to strengthen coordination among Chinese steel producers and would need to agree to any benchmarks established by China’s major producers (Metal Bulletin, 2009b).

As the April 1 annual contract date passed, contract negotiations continued between the leading iron ore producers and steelmakers. BHP Billiton Ltd. (Melbourne, Australia) indicated that it would like to eliminate the 12-month contract system using either the spot market or some type of index price. Both Vale S.A. ( R io de Janeiro, Brazil), the world’s leading producer of iron ore which had officially changed its corporate name from Companhia Vale do R io Doce (CV R D), and R io Tinto plc (London, United Kingdom) favored continuing with a contract price because they felt it was more stable. At the time of the negotiations, China reportedly was expected to reduce iron ore imports in 2009 by 20% compared with 2008 import levels. A price reduction of upwards of 30% was expected to be negotiated for contract year 2009–10 (Matthews, 2009a; Vale S.A., 2009a).

At the end of May, R io Tinto settled the 2009–10 annual iron ore contract with Japanese steel firms—JFE Holdings Inc., Kobe Steel Ltd., N ippon Steel Corp., and Sumitomo Metal Industries Ltd.—and Korea’s P O SC O . The agreement was for a 33% lower price for fines and a 44% lower price for lump ore, the first price reduction in 7 years. Chinese steelmakers continued to negotiate deeper discounts on both lump and fine ores. Vale continued discussions with steel firms (Thompson, 2009). Despite the impasse in iron ore price negotiations, Chinese imports of iron ore through May 2009, at 242 Mt, increased 26% compared with those of the same period in 2008. The import value of this ore was almost 28% lower when comparing these two periods (T E X R eport, The, 2009c).

Following the rejection of a $19.5 billion investment offer to increase its ownership of R io Tinto by the Aluminum Corp. of China Ltd. (Chinalco) (Beijing, China) and the subsequent decision to develop a joint venture of Australian iron ore assets by BHP Billiton and R io Tinto, an Australian executive of R io Tinto was arrested by Chinese authorities on suspicion of espionage and stealing state secrets ( R itchie, 2009). The failed offer, joint venture, and arrest of R io Tinto’s executive came amidst a failure by BHP Billiton, R io Tinto, and Vale, to reach an annual contract price agreement with Chinese iron ore purchasers. Vale appeared to be holding back to avoid repeating the 2008 problem of settling earlier for a lower price than either BHP Billiton or R io Tinto (Matthews, 2009b).

A move to a more market-based, rather than negotiated, contract iron ore price became evident. At the end of the July, BHP Billiton announced that it had reached agreement on 53% of its iron ore sales for the 2009 contract year. O nly 23% was set based on the annual contract price, while the other 30% was priced using quarterly, spot, and index-based prices. In 2008, when spot prices collapsed, some buyers reneged on contracts, leaving annual contract prices little more than an upside limit for producers. The arrest of the R io Tinto executive in China gave additional incentive for producers to rely to a greater degree on independently established market prices (Denning, 2009). Amidst the continued stalemate between Chinese buyers and worldwide iron ore producers, an iron ore trade association—the Iron O re & Steel Derivatives Association (I O DA)—was formed to promote the trade of iron ore and related derivates, develop standard terms for iron ore contract transactions, and support the development and use of independent market indices. I O DA was seen, by itself, as having an important role in the iron ore market as the market moved from annual contract pricing toward a spot market (Metal Bulletin, 2009d).

Fortescue Metals Group Ltd. ( E ast Perth, Australia) agreed to a price 3% below the benchmark into the Asian markets for its39.4 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 

### iron ore sold to Chinese steel mills. This agreement permitted Fortescue to complete a $6 billion deal to obtain financing from Chinese sponsors for project expansion (Mining Journal, 2009b).

As negotiating posturing began for 2010 contract negotiations, CISA indicated that iron ore oversupply would worsen in the fourth quarter of 2009. China’s imports for the first three quarters were 469.4 Mt of iron ore, an increase of almost 36% from those of the same period during the previous year. CISA was pressing a unified iron ore import price and a qualifications review for iron ore importers (Metal Bulletin, 2009c).

Transportation

The Lake Carriers’ Association reported that the iron ore shipments on the Great Lakes fell to the lowest level in 71 years. Iron ore cargos on the Great Lakes (includes Great Lakes and St. Lawrence Seaway ports to Great Lakes destinations) totaled 28.8 Mt, the lowest level since 1938. Iron ore shipments for 2009 were 53% of the 5-year average of 2004–08. The Soo Locks on the Great Lakes closed for the season on January 15 and were reopened on March 25 in accordance with a multiagency agreement to allow inspection and maintenance of systems, structures, and key equipment (Great Lakes & Seaway Shipping N ews, 2009; Lake Carriers’ Association, 2010a, b).

E arly in 2009, the CSL Argosy , an 800-foot bulk carrier loaded with iron ore, ran aground in the Chesapeake Bay, just north of Annapolis, MD. The vessel, headed to Baltimore, MD, had 19,300 t of iron ore removed and was refloated before proceeding to inspection in Annapolis (American Metal Market, 2009).

Foreign Trade

In 2009, U.S. exports of iron ore exceeded imports by a slight margin, which represented only a minor percentage of domestic apparent consumption. E xports decreased by 65%, while imports decreased by 58% compared with 2008 figures. U.S. iron ore exports were 96% pellets (3.8 Mt), and 78% of the exports was shipped via the Great Lakes to Canadian steel companies, while 6% was shipped to Germany, 5% each to Belgium and France, 3% to China, 2% to Mexico, and the rest to 21 other countries. U.S. imports totaled 3.9 Mt, of which Brazil’s share decreased to 5% from 28% in 2008, Canada’s share increased to 81% from 64%, and Chile’s share increased to 5% from 2% in 2008 (tables 1, 9–15).

World Industry Structure

Consumption. —Although global iron ore consumption is not measured directly, imports of iron ore and production of crude steel, D R I, and pig iron can be used as guides to indicate whether consumption rises or falls. D R I and pig iron production are likely to be more direct indicators of iron ore consumption than crude steel production because, to varying degrees in each country, part of steel production comes from scrap consumption in minimills. Iron ore net imports cannot be used as a straightforward indicator of a change in iron ore consumption in countries that produce iron ore unless a country’s ore production remains constant. World consumption of iron ore was estimated to have decreased slightly as indicated by slight decreases in pig iron and D R I production compared with 2008 levels. O f the nine countries that had 2% or more of world pig iron production in 2009, seven of the countries showed negative growth, including the United States, comparing 2009 production with each country’s average pig iron production from 2005 through 2009. The growth rates compared with the 5-year average (2005–09) for these countries were as follows: India, 26%; China, 22%; R epublic of Korea, -4%; R ussia, -10%; Japan, -18%; Ukraine, -18%; Germany, -28%; Brazil, -42%; and the United States, -43%. Of the five leading producing countries of pig iron in 2009, only China (16%) and India (32%) showed an increase in production from that of 2008—decreases for the other countries were as follows: Japan, 22%; the R epublic of Korea, 12%; and R

ussia, 10%. Interest in mine development increased toward the end of 2009 owing to a recovery from the global economic downturn, as producers positioned themselves to take advantage of expected continuing high levels of consumption driven by Chinese economic growth. With new iron ore production capacity, world supply of iron ore was expected to be adequate through 2010.

World crude steel production fell to 1.2 billion metric tons (Gt) from 1.3 Gt in 2008. Six countries produced more than 30 Mt of crude steel each and combined accounted for almost 70% of world production in 2009. O f those countries, China produced about 68 Mt more crude steel in 2009 than in 2008 and India produced 8 Mt more. The others (Germany, Japan, R epublic of Korea, and the United States) combined produced 83 Mt less crude steel in 2009 than in 2008. Annual world crude steel production, excluding China, decreased by more than 130 Mt in 2009. Between 2000 and 2009, China, Germany, India, Japan, R epublic of Korea, R ussia, and the United States accounted for two-thirds of combined world crude steel production. China’s 2009 production was more than 70% greater than its average for the 10-year period, while that of the United States was 37% less than its average for the 10-year period (United N ations Conference on Trade and Development, 2010, p. 118–121).

Production. —World iron ore production of 2.2 Gt, gross weight, increased slightly from 2008 production levels. Annual world production has exceeded 1 Gt, gross weight, each year since it first reached that level in 1995, and has exceeded 2 Gt since 2007. Australia’s and Brazil’s combined share of world production by gross weight from 2005 through 2009 averaged 32%. In 2009, iron ore was produced in 42 countries, with production exceeding 1 Mt, gross weight, in 28 of those countries. World D R I production decreased to 64.4 Mt, which was 5% less than that of 2008 (Midrex Technologies, Inc., 2010).

Trade. —World iron ore imports of 941 Mt rose by 4% compared with 2008 levels. Following large year-on-year increases in imports for the past 7 years (21% in 2002, 33% in 2003, 40% in 2004, 32% in 2005, 19% in 2006, 17% in 2007, and 16% in 2008), China posted another sharp rise to 628 Mt in 2009 from 440 Mt in 2008—a gain of more than 40%. Since 2000, four countries have accounted for more than two-thirds of world iron ore imports. Germany’s share of imports in that period decreased to 3% from 10%, Japan’s share decreased toIron O re—2009 [ADVA N C E RE L E AS E ] 39.5 

### 11% from 26%, and the R epublic of Korea’s share decreased to 4% from 8%. China’s share more than tripled during this 10-year period to 67% from 14%. Australia’s and Brazil’s combined share of world iron ore exports remained the same at 67% in 2009 compared with their revised share in 2008. Five countries represented more than 86% of world iron ore exports. In decreasing order of market share, Australia held 38%; Brazil, 28%; India, 12%; South Africa, 5%; and Canada, 3% (United N ations Conference on Trade and Development, 2010, p. 100–103).

In China, the State Administration of Taxation in the Ministry of Finance announced the rate of value-added tax for imported iron ore would be raised from 13% to 17%. This increase became effective beginning January 1, 2009 (T E X R eport, The, 2009d). According to The T E X R eport (2010), China, the world’s leading importer of iron ore, imported 599 Mt of nonagglomerated iron ore and 30 Mt of agglomerated ore in 2009. The leading exporters of nonagglomerated ore to China were Australia (43%), Brazil (23%), India (18%), and South Africa (6%), with the remainder shared among more than 30 countries. The leading exporters of agglomerated ore to China were Brazil (25%), Canada (17%), Ukraine (12%), R ussia (11%), and Kazakhstan (11%), with the remainder shared among more than 23 countries.

Mergers and Acquisitions. —In O ctober, Cliffs exercised its right of first refusal and announced it would purchase Wabush Mines, with mine, rail, concentrating, pelletizing, and port operations in N ewfoundland and Labrador, and Quebec Provinces, Canada. Cliffs planned to purchase Wabush Mines from the two other joint-venture partners—ArcelorMittal Dofasco (Hamilton, O ntario, Canada) (a subsidiary of ArcelorMittal) and U.S. Steel Canada (Hamilton, O ntario, Canada) (a subsidiary of U.S. Steel). The $88 million purchase would increase Cliffs’ ownership in the operations to 100% from 26.8%. Wabush Mines has a production capacity of 5.6 Mt/yr and reportedly about 70 Mt of iron ore reserves (Cliffs N atural R esources Inc., 2009c).

In January, Vale announced a purchase and sale agreement with R io Tinto to acquire 100% of the Corumbá open pit iron ore operations in the State of Mato Grosso do Sul, Brazil. The price for the iron ore assets was $750 million and included associated logistics assets—port and barges. The Corumbá Mine had a production capacity of 2.5 Mt/yr and reportedly had proven and probable reserves at yearend 2007 of 583 Mt with a 62.7% iron ore content. By mid-September, Vale completed the purchase of the iron ore mine, including associated transport operations on the Paraguay R iver. Vale announced tentative plans to increase production capacity at Corumbá to 15 Mt/yr at a cost of greater than $2 billion (Vale S.A., 2009b, c).

Chinalco, a Chinese state-owned enterprise, proposed a $19.5 billion investment in R io Tinto. Approximately $7.2 billion of the investment would be in convertible bonds, which when exercised would give Chinalco 18% ownership of R io Tinto (Wilson and others, 2009). Australia’s Foreign Investment R eview Board (FI R B) faced an inquiry by state representatives into the bid by Chinalco, as well as a bid by another Chinese state-run enterprise (Hunan Valin Iron and Steel Group Co. Ltd.) for 16.5% interest in Fortescue Metals. FI R B regulates foreign ownership in Australian companies and restricts control of natural resources by foreign entities (Wilshaw, 2009).

In June, a nonbinding agreement was signed between R io Tinto and BHP Billiton to form a joint venture covering production for both companies’ Western Australian iron ore assets. The 50–50 ownership was expected to enhance each company’s profitability through combination of adjacent mines into a single operating unit, more efficient utilization of rail and port facilities, improvement in blending and product quality, optimization of future facilities growth and project development, and combination of staff functions within a single entity. This merger follows a breakdown of the proposed deal between Chinalco and R io Tinto, in which the Chinese state-owned company would have obtained partial ownership of R io Tinto (BHP Billiton Ltd., 2009b, p. 1; Brindal, 2009).

BHP Billiton and R io Tinto later decided not to proceed with the formation of a joint-venture iron ore marketing entity and instead market production from their planned joint venture separately. The companies continued plans to merge production and development units to take advantage of significant operational synergies (BHP Billiton Ltd., 2009a). The decision to keep separate marketing entities may aid regulators in appraising the merger. CISA’s unification of all Chinese iron ore purchasing in one organization may be seen, especially in light of the two major iron ore producing companies’ withdrawal from a unified sales strategy, as a strong move away from balanced trade negotiations toward a market in which the purchaser (China) has greater control (Metal Bulletin, 2009f).

In April, China’s N ational Development and R eform Commission approved the purchase of 260 million shares of Australia’s Fortescue Metals by Hunan Valin for $A644.8 million (US$445 million). The share purchase agreement, giving Valin 17.3% of Fortescue capital ownership, was signed on February 25 and subsequently approved by the Australian Federal Treasurer. Hunan Valin planned to assist Fortescue in obtaining additional debt financing. It was estimated that an additional $3 to $4 billion would be required to raise production capacity to 90 Mt/yr from 50 Mt/yr at Fortescue’s iron ore mines. Fortescue is the third largest producer of iron ore in Australia reportedly with 1.6 Gt of iron ore reserves in Western Australia’s Pilbara R egion (Fortescue Metals Group Ltd., 2009).

In an effort to acquire additional equity interest in Australian iron ore resources, Chinese investors sought and received approval from Australia’s FI R B for Anshan Iron & Steel Group to increase its equity ownership of Gindalbie Metals Ltd. to 36.28% from 12.6%. Gindalbie was developing the Karara iron ore project in Western Australia, with plans for port development at O akajee and a joint-venture pellet plant in China (T E X R eport, The, 2009b; Wall Street Journal, The, 2009). FI R B also approved a $246 million deal between Centrex Metals Ltd. (Adelaide, Australia) and Wuhan Iron & Steel Co. (WISC O ). Chinese Government-owned WISC O was then able to take a 60% stake in iron ore rights to five Centrex tenements on the E yre Peninsula in South Australia. WISC O planned to invest an additional $169 million in staged payments linked to achieving J OR C-inferred resources of up to 2 Gt (Mining Journal, 2009e). Centrex also received approval from FI R B for a joint venture with Baotou Steel Group, a Chinese state-owned39.6 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 

### entity headquartered in Inner Mongolia. The 50–50 magnetite joint venture planned to develop tenements on the E yre Peninsula, with potential for production of between 3 Mt/yr and 5 Mt/yr (Metal Bulletin, 2009a).

World Review

Afghanistan. —The Ministry of Mines of Afghanistan requested expressions of interest for the Hajigak iron deposit. The deposit was estimated to contain about 1.8 Gt of iron ore resources at a grade of 62% iron content within 16 ore bodies along a strike length of 32 kilometers (km). The deposit is located about 130 km west of Kabul. Successful applicants were to be notified by the Ministry of Mines on or before May 20, 2009, and would receive a bid package for the Hajigak deposit (Mining Journal, 2009c). The bidding was later reopened in early 2010 in order to improve transparency issues related to the first bidding process (Rupert and Najafizada, 2010).

Australia. —BHP Billiton announced full-year production figures for 2009. BHP Billiton’s share of salable quantities of iron ore (wet) were as follows (Australia, unless otherwise specified)—Area C Joint Venture (JV) (85% owned), 37.0 Mt; Goldsworthy JV (85% owned), 1.7 Mt; Mt. N ewman JV and Jimblebar (85% owned), 30.4 Mt; Samarco (Brazil) (50% owned), 8.9 Mt; and Yandi JV (85% owned), 39.9 Mt. BHP Billiton’s share of total world mine production was 117.8 Mt in 2009, a slight increase from that of 2008 (BHP Billiton Ltd., 2010a, p. 4).

BHP Billiton completed its R apid Growth Project 4 with the opening of the N ewman Mining Hub—the company’s center for mining, crushing, and screening in the E astern Pilbara region of Western Australia. The $1.85 billion project was designed to raise BHP Billiton’s production capacity in the Pilbara by 26 Mt/yr to 155 Mt/yr, part of an overall expansion plan to raise iron ore production to 300 Mt/yr by 2015. R apid Growth Project 5, a $4.80 billion project with engineering 85% complete and construction 25% complete by yearend 2009, was expected to add 50 Mt/yr to system capacity by the second half of 2011 (Skillings Mining R eview, 2009a; BHP Billiton Ltd., 2010b).

Rio Tinto announced full-year production figures for 2009.
R io Tinto’s share of salable quantities of iron ore plus pellets were as follows (Australia, unless otherwise specified)— Channar (60% owned), 6.6 Mt; Corumbá (Brazil), 1.5 Mt; E astern R ange, 9.3 Mt; Hamersley, 106.8 Mt; Hope Downs (50% owned), 10.3 Mt; Iron O re Company of Canada (I O C) (58.7% owned), 8.1 Mt; and R obe R iver (53% owned), 28.8 Mt. R io Tinto’s share of total world mine production was 171.5 Mt, a 12% increase from that of 2008 ( R io Tinto plc, 2010, p. 166).

R io Tinto announced that its HIsmelt pig iron plant (Kwinana, Western Australia) would be placed on care and maintenance for 1 year at the end of March. The Kwinana plant, with design capacity of 800,000 t/yr, used proprietary, direct-smelting technology to produce pig iron from high-phosphorus iron ore fines and noncoking coal. Rio Tinto (60%), United States’ Nucor Corp. (25%), Japan’s Mitsubishi Corp. (10%), and China’s Shougang Corp. (5%) jointly own the plant (T E X R eport, The, 2009a).

Atlas Iron Ltd. (West Perth) secured additional berthing facilities at Port Hedland to bring its production capacity to 6 Mt/yr. The Utah Point facilities were under construction and were expected to begin exports of Atlas iron ore in April 2010. Atlas began mining iron ore from its 100%-owned Pardoo Mine in 2008, and shipped its first direct shipping ore (DSO) in December 2008 (Atlas Iron Ltd., 2009).

Fortescue Metals decided to fund an expansion of its Pilbara operations after a deal with Chinese investors failed. The proposed $6 billion funding requirement would be used to double iron ore output to 90 Mt/yr. O riginal funding with Chinese investors had been tied to an agreement by Fortescue to sell 20 Mt of iron ore to Chinese steel mills at a 35% reduction on the previous year’s prices (Welch, 2009).

Brazil. —In 2009, Vale reported iron ore production was 238 Mt (includes Vale’s Samarco, which was a joint venture until becoming fully owned by Vale in September)—a 21% decrease compared with that of 2008. Vale’s share of salable quantities of iron ore was as follows, in decreasing order of tonnage— Southeastern System, 89.5 Mt; Carajás, 84.6 Mt; Southern System, 55.2 Mt; and Samarco, 8.6 Mt. Vale pellet production in 2009 was 23.9 Mt—a 47% decrease compared with that of 2008. The breakdown of salable quantities of iron ore pellets was as follows, in decreasing order of pellet production— Samarco, 8.0 Mt; N ibrasco, 5.8 Mt; Tubarão I and II, 3.9 Mt; Vargem Grande, 2.2 Mt; Kobrasco, 1.7 Mt; Itabrasco, 1.5 Mt; Hispanobras, 0.6 Mt; Fábrica, 0.2 Mt; and São Luís, 3,000 t. O f this pellet production, 14.0 Mt was blast furnace pellets and 9.8 Mt was direct reduction pellets. A large part of pellet production in 2009 was shut down owing to reduced global demand and a desire to avoid excessive inventory buildup. The Vargem Grande pellet plant continued to ramp up production and construction continued on two new plants: Tubarão VIII (16.5 Mt/yr pellet production capacity) and another plant in O man (9.8 Mt/yr direct reduction pellet production capacity) (Vale S.A., 2010, p. 2, 3).

MMX Mineração e Metálicos S.A. ( R io de Janeiro) announced that resources at its Serra Azul Mine had increased five-fold to 515 Mt, with measured and indicated resources totaling 381 Mt (MMX Mineração e Metálicos S.A., 2009).

Canada. —I O C [owned jointly by Labrador Iron O re R oyalty Income Fund (15.1%), Mitsubishi Corporation (26.18%), and R io Tinto (58.72%)] produced 5.7 Mt of iron ore concentrates and 8.1 Mt of iron ore pellets. ArcelorMittal Mines Canada (formerly Québec Cartier Mining Company) produced 13.1 Mt of iron ore concentrates and pellets. Wabush Mines Ltd. [owned jointly by ArcelorMittal (28.6%), Cliffs (26.8%), and U.S. Steel Canada (44.6%)] produced 2.7 Mt of iron ore pellets (ArcelorMittal, 2010, p. 53; Cliffs N atural R esources Inc., 2010, p. 57; Skillings Mining R eview, 2010b, p. 10–11).

Consolidated Thompson Iron Mines Ltd. (Toronto, Canada) signed a letter of agreement with China’s WISC O for the investment of $240 million in return for 19.9% of the shares of Consolidated Thompson. WISC O would also receive a 25% interest in the company incorporated to operate the future Bloom Lake iron ore mine in Quebec. Bloom Lake planned to produce 8 Mt/yr of iron ore, with expansion potential to 16 Mt/yr. Initial startup, although planned for late 2009, was postponed to 2010 (Consolidated Thompson Iron Mines Ltd., 2009).Iron O re—2009 [ADVA N C E RE L E AS E ] 39.7 

### Labrador Iron Mines (LIM) Holdings Ltd. (Toronto, O ntario) acquired an additional 50 Mt of DS O in the Province of Quebec. The deal was comprised of five separate transactions, in which Schefferville Mines Inc. (a fully owned subsidiary of LIM) obtained rights to several properties in different stages of exploration and development. The DS O properties are located near the company’s planned western Labrador operations, which were scheduled to begin production in mid-2010 (Gordon, 2009).

China. —In June, it was reported that China discovered a massive iron ore deposit with 3 Gt of iron ore reported reserves in the northeastern province of Liaoning. The Dataigou deposit has an ore grade of between 25% and 62% iron and was located between 1.2 and 2.0 km below the surface.

China continued to report new project developments in advance of the upcoming 2010 iron ore price negotiations. It was reported that an iron ore deposit with 1 Gt of reserves was discovered in Luannan, Tangshan City, Hebei Province, in the northern part of the country. The Macheng deposit was reported to contain an average grade of 35% iron and was located between 100 and 600 meters below the surface. The Hebei Government reported that the deposit would be developed by Hebei Iron & Steel Group, the country’s second leading steel producer (Skillings Mining R eview, 2010a).

Congo (Brazzaville). —Xstrata plc (Zug, Switzerland) planned to invest $50 million to explore the Zanaga iron ore deposit. Zanaga is considered a world-class deposit and, if the results of the prefeasibility study were sufficiently encouraging, Xstrata planned to purchase the property and begin operations as soon as possible ( R euters, 2009).

Liberia. —Members of the country’s parliament raised concerns related to the $2.6 billion agreement approving the development of the Bong iron ore deposit by China Union Holdings Ltd. (Shenzhen, China). Final approval was being withheld until issues relating to the basis for some tax exemptions were clarified (Mining Journal, 2009a). ArcelorMittal reported a planned $1.5 billion iron ore mine startup would be delayed owing to the downturn of the global economy and its effect on the steel market. ArcelorMittal still planned to make its first iron ore shipment from the Nimba Mine in the third quarter of 2011, and construction and development work would start during 2010 (Biesheuvel, 2010).

African Aura Mining Inc. (Vancouver, British Columbia, Canada) reported inferred mineral resource of 1.08 Gt containing an average of 38% of iron ore at the Company’s Putu joint venture with Severstal. The Putu iron ore project is 38.5% owned by African Aura. A prefeasibility study was expected to be completed (African Aura Mining Inc., 2010, p. 1, 3, 6).

Peru. —Shougang Group (China), the parent company of Shougang Hierro Peru S.A., announced plans to invest $1 billion to double iron ore production capacity at its Peruvian iron ore operations by 2010. The iron ore production capacity was to be raised to 10 Mt/yr (Skillings Mining R eview, 2009f).

Russia. —In mid-January, Mikhailovsky Mining & Processing (MG O K), owned by Metalloinvest Holding Co. (Moscow, R

ussia), resumed iron ore pellet production, which it had shut down to perform processing plant maintenance during a decline in iron ore market demand. MG O K had shipped stockpiled pellets while production was idled at the Lebedinsky and Mikhailovsky Mines since N ovember 2008 (Interfax Ltd.— R

ussia & CIS—Metals & Mining Weekly, 2009). O JSC Magnitogorsk Iron & Steel Works (Magnitogorsk, R

ussia) announced the startup of iron ore production at the Sosnovsky Mine in the Chelyabinsk R egion. R eserves at the Sosnovsky deposit were estimated to be 70 Mt with a full production rate of between 2.0 Mt/yr and 2.5 Mt/yr, with 1 Mt/yr of sinter produced by dry magnetic separation. Mining rates of 370 Mt/yr and 500 Mt/yr were anticipated for 2009 and 2010, respectively ( O JSC Magnitogorsk Iron & Steel Works, 2009).

Saudi Arabia. —London Mining Plc (London, United Kingdom) reported 157 Mt of ore resources with an average grade of 41.1% iron at the Wadi Sawawin prospect. The feasibility study suggested a run-of-mine production rate of 11.6 Mt/yr with an ability to produce 5.5 Mt/yr of direct-reduction iron pellets. The initial capital costs were estimated to be $1.8 billion. London Mining would develop the project with Saudi Arabia’s N ational Mining Co. (Mining Journal, 2009d).

South Africa. —Kumba Iron O re Ltd. (Centurion), the fourth leading supplier of iron ore for the seaborne trade, continued work on the Kolomela Mine, formerly known as the Sishen South Mine. The new mine, located 70 km southwest of the existing Sishen Mine, was expected to begin producing in 2012, with an annual production capacity of 9 Mt (Creamer, 2009).

Sweden. —At Luossavaara-Kiirunavaara Aktiebolag (LKAB) (Luleå) iron ore pellet production decreased to 14.7 Mt from 19.9 Mt in 2008. Pellet production was most of the total production, although 3.0 Mt of fines and minor special products were produced, a decrease in production of this material from 3.9 Mt in 2008. Decreased production resulted from all six pellet plants being closed intermittently during the first half of the year owing to declining market conditions. LKAB announced Kiruna’s proven ore reserves to be 598 Mt at 48.6% iron content, and probable ore reserves of an additional 76 Mt at 46.4% iron content. The company reported Malmberget’s proven ore reserves to be 298 Mt at 43.8% iron content, and probable ore reserves of 52 Mt at 37.8% iron content (Luossavaara-Kiirunavaara Aktiebolag, 2010, p. 5, 19).

Venezuela. —The Venezuelan Government unilaterally assumed exclusive control of the Materiales Siderúrgicos SA (Matesi) 1.5-Mt/yr hot briquetted iron (HBI) plant, formerly owned by Tenaris SA (Luxembourg). Three other privately owned hot briquetted iron producers were in negotiations for the nationalization of their holdings. Later in the year, following nationalization of several HBI plants, extremely low levels of HBI production were reported. Technical problems, labor issues, and output cuts caused by low prices and decreasing demand for product all contributed to these lower production levels (Weik, 2009a, b).

Outlook

It appeared that U.S. production in 2010 would increase almost to 2008 levels, and indications were that recovery from the strong economic downturn would continue into 2011 with steel and iron ore production returning to tonnages seen in the previous decade. Most U.S. iron ore production is sold39.8 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 

### directly to the domestic steel industry, although a large amount of domestic ore is shipped to Canada and small amounts are generally exported to other countries. N either the domestic dependence nor the pattern of exports to Canada is expected to change in the near future, although changes in ownership of some steel plants have led to minor changes in the countries from which iron ore is imported.

Trends in the steel industry are provided in the “ O utlook” section in the Iron and Steel chapter of the 2009 USGS Minerals Yearbook, volume I, Metals and Minerals. The development of projects, using new and existing direct reduction technology being developed in northern Minnesota, was expected to encourage growth of the U.S. iron ore industry within the next few years, as developments such as Steel Dynamics’ Mesabi N ugget project comes to full production and E ssar Steel’s Minnesota Iron project is built.

The increase in Chinese iron ore imports in 2009 was a major indicator for growth in the global iron ore industry. O verall world trade in iron ore increased and international imports of iron ore and production of iron ore and pig iron—key indicators of iron ore consumption—pointed toward continued dependence by the global iron ore industry on increasing Chinese iron ore consumption. China was becoming increasingly involved in overseas projects in Australia and on the African continent through equity participation, which may well affect the balance of supply and demand for iron ore in the midterm. Downward price pressures would be anticipated as China acquires additional sources of supply, which may help to offset reduced supply from India, where it is expected that the domestic steel industry will take a larger share of iron ore production.

Following the economic downturn, which continued through most of 2009, the annual benchmark system of pricing lost its predominance in annual global iron ore sales. It is expected that more frequent benchmarking and indices developed based on spot sales will become a much stronger factor in the determination of future pricing. The possibility of developing a commodity exchange for the sale of iron ore still remains many years in the future. The new pricing system, for the short term, appears to give an advantage to the few major iron ore producers with respect to the many steel companies needing to make purchases.

Development of new iron ore mines in the next few years can be expected to add production capacity faster than the growth of demand, if those projects already considered strongly probable of coming onstream in the next few years actually do. Although supply is expected to remain tight in relation to demand, some easing of the supply deficit of iron ore needed to satisfy the iron ore requirements of China and India’s growing steel industries can be expected. This would possibly lead to a leveling off of price growth in 2010 through 2013.

N ew developments and growth of D R I technology would allow the iron ore industry to become a major supplier to an expanding D R I sector, as well as to existing customers—the integrated steel plants. Coastal U.S. steel producers already rely on imported D R I to supply a quality raw-material input to help meet steel alloy purity specifications, which cannot be obtained solely using traditional scrap. However, even in the event of strong global D R I growth during the next decade, D R I would be able to replace only a small portion of the world’s blast furnace production. Although no new “greenfield” pig iron facilities have been built in the United States in the past 30 years, and owing in part to the continued slow growth in the D R I market, the blast furnace, with its need for an assured supply of iron ore, is expected to remain the mainstay of the iron and steel industry in the immediate future.

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Iron. Ch. in United States Mineral R esources, Professional

Paper 820, 1973.39.10 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 

### International Iron and Steel Institute. Iron and Steel Society. Iron O re. Ch. in Mineral Facts and Problems, U.S. Bureau of

Mines Bulletin 675, 1985. N atural R esources Canada. R oskill Information Services Ltd. reports. Skillings Minnesota Mining Directory, annual. T E X R eport, The, and Iron O re Manual, annual. United N ations Conference on Trade and Development:

Trust Fund Project on Iron O re Information. U.S. Department of E nergy, E nergy Information Administration. U.S. Department of Labor, Mine Safety and Health

Administration.

TABLe 1

SALIenT Iron ore STATISTICS 1

(Thousand metric tons and thousand dollars unless otherwise specified)

2005 2006 2007 2008 2009 United States, iron ore, usable, less than 5% manganese: 2

Production 54,300 52,700 52,500 53,600 26,700 Shipments:

Quantity 53,200 52,700 50,900 53,600 r 27,600
Value 2,370,000 2,840,000 3,040,000 3,770,000 2,560,000 Average value at mines dollars per metric ton 44.50 53.88 59.64 70.43 92.76 exports:

Quantity 11,800 8,270 9,310 11,100 3,920
Value 584,000 636,000 718,000 1,240,000 356,000 Imports for consumption:

Quantity 13,000 11,500 9,400 9,250 3,870
Value 532,000 611,000 543,000 918,000 376,000 Consumption, iron ore and agglomerates 60,100 58,200 54,700 51,900 31,000 Stocks, December 31:

At mines, plants and loading docks 3 2,040 1,650 4 2,090 4 4,070 4 5,060 4
At receiving docks 5 (6) (6) (6) (6) (6) At consuming plants (6) (6) (6) (6) (6)

Total 7 (6) (6) (6) (6) (6) Additional stocks, December 31:

Crude ore at mines and plants 915 1,140 4 749 4 947 4 580 4
Unagglomerated concentrates for pelletizing plants 1,870 1,260 1,550 1,320 896 World, production 8 1,550,000 1,840,000 2,040,000 2,210,000 r 2,240,000 e

e estimated. r revised.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

2 Direct-shipping ore, concentrates, agglomerates, and byproduct ore.

3 excludes byproduct ore.

4 Crude ore stocks and unagglomerated concentrates for pelletizing plants removed. Marketable stocks only.

5 Transfer and/or receiving docks of lower Great Lake ports.

6 American Iron and Steel Institute no longer collects this data as of 2004.

7 Sum of stocks at mines, consuming plants, and U.S. docks.

8 Gross weight. 

### Iron O re. Ch. in Metal Prices in the United States Through 1998,

U.S. Geological Survey Special Publication, 1999. Iron O re. Ch. in Mineral Commodity Summaries, annual. Iron O re. Mineral Industry Surveys, monthly.

Other

American Metal Market. Association of Iron and Steel E ngineers. Company annual reports to stockholders and 10–K reports to

Securities and E xchange Commission. E ngineering and Mining Journal. Institute on Lake Superior Geology.Iron O re—2009 [ADVA N C E RE L E AS E ] 39.11 TABLe 2 eMPLoYMenT AT Iron ore MIneS AnD BeneFICIATInG PLAnTS, QUAnTITY AnD Tenor oF ore ProDUCeD, AnD AVerAGe
oUTPUT Per WorKer HoUr In THe UnITeD STATeS In 2009, BY DISTrICT AnD STATe 1

Production
Iron contained Iron Average quantity per worker hour Average Crude ore Usable ore in usable ore content (metric tons)
number of Worker hours (thousand (thousand (thousand natural Iron
District and State employees (thousands) metric tons) metric tons) metric tons) (percent) Crude ore Usable ore contained Lake Superior:

Michigan 2 1,170 2,430 21,800 8,300 5,000 60.3 8.96 3.41 2.06
Minnesota 2,300 4,430 59,000 18,400 11,500 62.8 13.32 4.15 2.61

Total or average 3,470 6,860 80,800 26,700 16,500 62.0 11.78 3.89 2.41

other States 3 56 116 14 14 8 54.0 0.12 0.12 0.07

Grand total or average 3,530 6,980 80,800 26,700 16,500 62.0 11.58 3.83 2.37

1 Data are rounded to no more than three significant digits, except “Average per worker hour, crude ore” may not add to totals shown.

2 Does not include professional or clerical workers at mines, pelletizing plants, maintenance shops, or research lab workers.

3 Includes California and South Dakota.

TABLe 3 CrUDe Iron ore MIneD In THe UnITeD STATeS In 2009, BY DISTrICT,
STATe, AnD MInInG MeTHoD 1, 2

open pit Underground Total
number (thousand (thousand (thousand
District and State of mines metric tons) metric tons) metric tons) Lake Superior:

Michigan 2 21,800

-- 21,800
Minnesota 6 59,000

-- 59,000

Total 8 80,800

-- 80,800
other States 4 14

-- 14

Grand total 12 80,800

-- 80,800
-- Zero.

1 Includes some byproduct ore. excludes ore containing 5% or more manganese.

2 Data are rounded to no more than three significant digits; may not add to
totals shown.39.12 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 TABLe 4 USABLe Iron ore ProDUCeD In THe UnITeD STATeS In 2009, BY DISTrICT,
STATe, AnD TYPe oF ProDUCT 1, 2

(Thousand metric tons)

Direct other
District and State shipping ore Concentrates Sinter agglomerates 3 Total Lake Superior:

Michigan 2

-- -- 8,300 8,300
Minnesota

-- 271 65 18,000 18,400

Total 2 271 65 26,300 26,700

other States 4

-- 14

-- -- 14

Grand total 2 285 65 26,300 26,700
-- Zero.

1 excludes ore containing 5% or more manganese.

2 Data are rounded to no more than three significant digits; may not add to totals shown.

3 Data may include pellet chips, screenings, and sinter.

4 Includes California and South Dakota.

TABLe 5

SHIPMenTS oF USABLe Iron ore FroM MIneS In THe UnITeD STATeS In 2009 1, 2

Average Gross weight of ore shipped iron

(thousand metric tons) content,
Direct other natural Value
District and State shipping ore Concentrates Sinter agglomerates Total (percent) (thousands) Lake Superior:

Michigan 2

-- -- 8,870 3 8,870 3 60.3 W
Minnesota

-- 271 77 18,400 18,700 62.8 W

Total reportable or average 2 271 77 27,200 27,600 62.0 $2,560,000

other States 4

-- 14

-- -- 14 54.0 921

Grand total or average 2 285 77 27,200 27,600 62.0 2,560,000 W Withheld to avoid disclosing company proprietary data; included in “Total reportable or average.” -- Zero.

1 Includes byproduct ore. excludes ore containing 5% or more manganese.

2 Data are rounded to no more than three significant digits; may not add to totals shown.

3 Source reported to Securities and exchange Commission.

4 Includes California and South Dakota.Iron O re—2009 [ADVA N C E RE L E AS E ] 39.13 TABLe 6
Iron ore-ProDUCInG MIneS In THe UnITeD STATeS In 2009

State and mine County operator Source of iron ore
California:

Baxter Mine San Bernardino Hahm International Inc. Quarried ore. Dredge 21 Yuba Cal Sierra Development Inc. Dredged sands.
Silverlake Mine San Bernardino Hahm International Inc. Quarried ore. Michigan:

empire Marquette Cliffs natural resources Inc. Magnetite taconite ore.
Tilden do. do. Hematite-magnetite taconite ore.
Minnesota:

Hibbing Taconite Saint Louis do. Magnetite taconite ore.
Keewatin Taconite do. United States Steel Corporation Do.
Mesabi Chief Plant do. Magnetation, Inc. Hematite tailings.
Minntac do. United States Steel Corporation Magnetite taconite ore.
Minorca do. ArcelorMittal Do.
northshore do. Cliffs natural resources Inc. Do.
United Taconite do. do. Do. South Dakota, CF & I Pit Lawrence Pete Lien & Sons Inc. Quarried ore. Do., do. Ditto.

TABLe 7
ConSUMPTIon oF Iron ore AT U.S. Iron
AnD STeeL PLAnTS, BY TYPe oF ProDUCT 1

(Thousand metric tons)

Type of product 2008 2009
Blast furnaces:

Direct-shipping ore

-- -- Pellets 43,800 26,200

Sinter 2 6,380 3,720

Total 50,200 29,900 Steelmaking furnaces:

Direct-shipping ore 465 327

Sinter 2 118 91

Total 583 417
Grand total 50,700 30,400
-- Zero.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

2 Includes briquettes, nodules, and other.

Source: American Iron and Steel Institute.39.14 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 TABLe 8
U.S. ConSUMPTIon oF Iron ore For

DIreCT-reDUCeD Iron AnD nonSTeeL enD USeS 1, 2

(Thousand metric tons)

Direct-reduced
iron for nonsteel

Year steelmaking 3 end uses 4 Total

2005 330 928 1,260
2006 360 867 1,230
2007 375 699 1,070
2008 390 734 1,120
2009

-- 603 603
-- Zero.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

2 Includes agglomerates. excludes ore containing 5% or more

manganese.

3 U.S. Geological Survey estimates based on production reports compiled by Midrex Corp.

4 An estimate, which includes iron ore consumed in production of cement and iron ore shipped for use in manufacturing paint, ferrites, heavy media, cattle feed, refractory and weighing materials, and for use in lead smelting.

TABLe 9
U.S. eXPorTS oF Iron ore, BY CoUnTrY oF DeSTInATIon 1, 2

(Thousand metric tons and thousand dollars)

2008 2009 Country Quantity Value Quantity Value Algeria 80 $7,690

-- -- Belgium 218 20,900 194 $18,600

Canada 9,030 r 1,020,000 3,060 276,000
China 91 7,210 99 5,800
Colombia 12 946 20 1,210 Czech republic 83 7,930

-- -- France 210 20,100 179 17,200 Germany 156 14,900 234 22,400 Malaysia 25 499 1 60
Mexico 328 43,200 70 8,730
Poland 103 9,890

-- -- romania 129 12,400

-- -- Serbia 51 7,850

-- -- Slovakia 505 61,700

-- -- South Africa

-- -- 53 5,050 Spain 103 9,770

-- -- Sweden 4 291 6 427

other 3 13 1,620 r 6 442

Total 11,100 r 1,240,000 r 3,920 356,000

r revised. -- Zero.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

2 Includes agglomerates.

3 Includes all countries with less than 5,000 metric tons of exports from the United States in 2008 and 2009. This represents 13 countries in 2008 and 16 countries in 2009.

Source: U.S. Census Bureau.Iron O re—2009 [ADVA N C E RE L E AS E ] 39.15 TABLe 10
U.S. eXPorTS oF Iron ore, BY TYPe oF ProDUCT 1, 2

2008 2009
Unit Unit Quantity value 3, 4 Quantity value 3, 4 (thousand Value (dollars per (thousand Value (dollars per Type of product metric tons) (thousands) metric ton) metric tons) (thousands) metric ton)
Concentrates 142 $13,000 91.24 123 $7,850 63.84
Coarse ores 45 1,160 25.63 4 182 45.50
Fine ores 136 r 12,500 r 91.71 r 25 1,560 62.52
Pellets 10,800 1,220,000 112.64 3,760 346,000 92.10 Briquettes (5) 4 79.15 3 259 86.33 other agglomerates 19 1,100 13.37 (5) 22 80.00 roasted pyrites 1 102 90.66 1 71 71.00

Total 11,100 r 1,240,000 r 111.67 r 3,920 356,000 90.97

r revised.

1 Data are rounded to no more than three significant digits, except unit value; may not add to totals shown.

2 Includes agglomerates.

3 Unit values shown are calculated from unrounded data.

4 Weighted average calculated from unrounded data by dividing total value by total tonnage.

5 Less than 1⁄2 unit.

Source: U.S. Census Bureau.39.16 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 TABLe 11
U.S. IMPorTS oF Iron ore, BY CoUnTrY AnD TYPe oF ProDUCT 1, 2

2008 2009
Unit Unit Quantity value 3, 4 Quantity value 3, 4 Country and (thousand Value (dollars per (thousand Value (dollars per type of product metric tons) (thousands) metric ton) metric tons) (thousands) metric ton) Country:

Bosnia and Herzegovina 23 $1,570 68.43

-- -- -- Brazil 2,620 216,000 82.45 188 $13,100 69.65
Canada 5,900 645,000 109.35 3,140 323,000 102.70
Chile 215 16,800 78.25 203 16,100 79.14
China 14 266 19.00 (5) 2 33.33
Finland 6 233 38.83 6 367 61.17
Mexico 52 4,290 82.56 55 4,610 83.73
Peru 59 3,100 52.59 34 1,670 49.03
russia 127 16,000 126.06 136 8,240 60.60
South Africa

-- -- -- 43 2,980 69.23
Sweden 88 4,540 51.59 31 3,190 102.74
Switzerland 70 5,410 77.29

-- -- -- United Kingdom

-- -- -- 8 1,630 203.75
Venezuela 68 4,210 61.85 21 825 39.29

other 6 4 185 98.92 8 224 39.75

Total 9,250 918,000 99.26 3,870 376,000 96.97 Type of product:

Concentrates 1,250 92,200 73.79 283 22,300 78.95
Coarse ores 48 1,970 41.10 16 2,330 145.50
Fine ores 1,980 149,000 75.59 466 34,900 74.91
Pellets 5,960 674,000 113.03 3,100 315,000 101.90 Briquettes 1 97 97.00 4 159 39.75 other agglomerates

-- -- -- 3 104 34.67 roasted pyrites 12 537 44.75 6 367 61.17

Total 9,250 918,000 99.26 3,870 376,000 96.97
-- Zero.

1 Data are rounded to no more than three significant digits, except unit value; may not add to totals shown.

2 Includes agglomerates.

3 Unit values shown are calculated from unrounded data.

4 Weighted average calculated from unrounded data by dividing total value by total tonnage.

5 Less than 1⁄2 unit.

6 Includes four countries with less than 5,000 metric tons of imports to the United States in both 2008 and 2009.

Source: U.S. Census Bureau.Iron O re—2009 [ADVA N C E RE L E AS E ] 39.17 TABLe 12
U.S. IMPorTS oF Iron ore In 2009, BY CoUnTrY AnD TYPe oF ProDUCT 1, 2

(Thousand metric tons)

Briquettes

Coarse Fine and other roasted Country of origin Concentrates ores ores Pellets agglomerates pyrites Total
Brazil

-- -- 150 38

-- -- 188
Canada

-- -- 245 2,900

-- -- 3,140
Chile 198

-- 5

-- -- -- 203
Finland

-- -- -- -- -- 6 6
Mexico 52

-- -- -- 3

-- 55
Peru

-- -- 29 5

-- -- 34
russia

-- -- -- 136

-- -- 136
South Africa 33 8 2

-- -- -- 43
Sweden

-- -- 31

-- -- -- 31 United Kingdom

-- 8

-- -- -- -- 8
Venezuela

-- -- -- 21

-- -- 21

other 3

-- (4) 4

-- 4

-- 8

Total 283 16 466 3,100 7 6 3,870
-- Zero.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

2 Includes agglomerates.

3 Includes all countries with less than 5,000 metric tons of imports to the United States. This represents three countries.

4 Less than 1⁄2 unit.

Source: U.S. Census Bureau.

TABLe 13

AVerAGe UnIT VALUe For SeLeCTeD IMPorTS oF Iron ore In 2009 1

Average unit value 2 (dollars per metric ton, Type of product Country of origin gross weight)
Concentrates Chile 79.53

Do. Mexico 86.33
Do. South Africa 64.28
Fine ores Brazil 63.96

Do. Canada 82.29
Do. Peru 47.97
Do. Sweden 102.12
Pellets Brazil 93.23

Do. Canada 104.44
Do. russia 60.68
Do. Ditto.

1 Includes agglomerates.

2 Weighted averages of individual customs values.

Source: U.S. Census Bureau.39.18 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 Customs district Quantity Value Quantity Value Baltimore, MD 3,590 $338,000 781 $67,400 Buffalo, nY 1 43

-- -- Charleston, SC 28 647 6 151 Chicago, IL 1,160 81,600 637 45,000 Cleveland, oH 3,160 384,000 1,860 213,000 Detroit, MI (3) 4

-- -- Houston-Galveston, TX 51 5,870 38 3,510 Los Angeles, CA

-- -- (3) 1 Minneapolis, Mn 103 9,660

-- -- Mobile, AL 74 4,570 28 2,270 new orleans, LA 1,020 91,400 465 41,400 new York, nY 1 28

-- -- nogales, AZ

-- -- 3 175 norfolk, VA 10 649

-- -- ogdensburg, nY 12 223 18 325 Philadelphia, PA 6 249 6 367 Port Arthur, TX

-- -- 8 1,630 Seattle, WA

-- -- 28 513 Tampa, FL 24 1,490

-- --

Total 9,250 918,000 3,870 376,000
-- Zero.

2 Includes agglomerates.

3 Less than 1⁄2 unit.

Source: U.S. Census Bureau. 2008 2009 TABLe 14
U.S. IMPorTS oF Iron ore, BY CUSToMS DISTrICT 1, 2

(Thousand metric tons and thousand dollars)

1 Data are rounded to no more than three significant digits; may not add to totals shown.

TABLe 15
U.S. IMPorTS oF PeLLeTS, BY CoUnTrY 1

(Thousand metric tons and thousand dollars)

2008 2009 Country Quantity Value Quantity Value Bosnia and Herzegovina 23 $1,570

-- -- Brazil 616 65,600 38 $3,510
Canada 5,240 602,000 2,900 303,000
Peru 18 736 5 283
russia

-- -- 136 8,240
Venezuela 68 4,210 21 825

Total 5,960 674,000 3,100 315,000
-- Zero.

1 Data are rounded to no more than three significant digits; may not add to totals shown.

Source: U.S. Census Bureau.Iron O re—2009 [ADVA N C E RE L E AS E ] 39.19 TABLe 16

SeLeCTeD PrICeS For Iron ore In THe JAPAneSe MArKeT 1

(Cents per dry long ton unit of iron unless otherwise specified)

April 1-March 31 Country and producer ore types Fiscal year 2008 Fiscal year 2009
Australia:

Hamersley Iron Proprietary Limited and Mount newman Mining Company

Proprietary Limited 2 Lump ore 201.69 112.00

Do. 2 Fines 144.66 97.00

robe river Iron Associates 2 do. 115.30 77.31 BHP Billiton (Yandi) 2 do. 144.66 97.00 Fortescue Metals Group do. nA 94.00
Brazil:

Companhia nipo-Brasileira de Pelotizacao (nibrasco) 2 Pellets 213.59 110.43 Vale S.A. (Carajás) 2 Fines 125.17 89.87 Vale S.A. (Itabira) 2 do. 118.98 85.43 Mineraçoes Brasileiras reunidas Societe Anonyme Lump ore 181.78 100.94

Do. Fines nA nA Samarco Mineracâo Societe Anonyme Pellets 213.59 3 110.43 3 Canada, Iron ore Company of Canada (Carol Lake) Concentrates 117.27 84.20
Chile:

Minera del Pacifico Societe Anonyme (Huasco) Pellets 104.99 nA Minera del Pacifico Societe Anonyme (el romeral) Fines 93.65 67.24
India:

Minerals and Metals Trading Corporation (Bailadila) Lump ore 198.68 110.33

Do. Fines 141.12 94.62 Peru, Shougang Hierro Peru S.A.A. Pellet feed 92.47 66.39
South Africa:

Kumba resources Limited (Iscor) Lump ore 165.89 92.12 Assmang Limited do. 163.92 91.02

Do. Fines 108.05 72.45 Venezuela, Corporación Venezolana de Guayana 2 Pellet feed 94.28 67.69 Do., do. Ditto. nA not available.

1 Free on board shipping port basis.

2 Cents per dry metric ton unit.

3 Blast furnace grade pellets.

Sources: Trust Fund Project on Iron ore Information, Iron ore Statistics–october 2010. The TeX report, Iron ore Manual 2009.39.20 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009Country520052006200720082009e20052006200720082009eAlgeria1,5792,3401,9822,0772,000800e1,1801,000e1,0501,040Australia262,000275,000299,000342,000394,000163,000171,000r194,000r209,000228,000Austria2,0482,093r2,1532,033r1,500665r669r689r650r480Azerbaijan71118r28r--64e6e9e14r, e--Bosnia and Herzegovina3,1773,4402,9442,667r2,6001,5001,4501,2401,200r, e1,100Brazil281,462317,800354,674351,246r300,000p, 6186,891211,020235,504r233,200r199,200p, 6Canada730,38733,54332,74431,27331,70019,33321,34120,80019,700e19,700Chile7,8628,6288,8189,3168,24264,7075,2355,3795,6705,0066Chinae, 8420,000601,000707,000824,000880,000138,000198,000233,000270,000280,000Colombia608644624475r500325351350200r200egypte1,5901,6002,18561,81161,8008008001,100910900Germany9362412422455r35038444448r, e37Greecee, 101,5001,5001,5001,5001,500575575575575570Guatemala11731r(11)r567r, e5r, e20r, e(11)r, e4Indiae152,000181,000202,000220,000245,00097,500117,000129,000142,000157,000Indonesia32886165e6318503537e36Irane, 1219,00026,244631,538632,00033,0009,00013,00015,00015,00016,000Kazakhstan19,47122,26323,83422,700e22,290611,10012,70013,60013,000e12,800Kenyae(11)6(11)(11)(11)(11)(11)6(11)(11)(11)(11)Korea, northe5,0005,0405,1305,136r, 65,0001,4001,4001,4001,488r, 61,400Korea, republic of213227291366r3606119155163205r200Macedoniae1010----6--66----6--Malaysia950667802982r950541e380e457e560r, e532Mauritania11,13310,65811,81711,200r10,40067,240r7,250r7,700r7,280r6,760Mexico1311,68710,98310,91611,68811,6007,0126,5906,5507,0137,000Mongolia1681802651,3871,000109116170888600Moroccoe101010101055555new Zealand142,2702,1461,7232,020r2,0001,260e1,220e982e1,200r, e1,200nigeriae60886586626502232212316norway620620620668r7116420420400e430e460Pakistan15501302072502702565104125e135Peru6,8107,138r7,614r7,823r6,69864,638r4,862r5,186r5,244r4,4906Portugale, 1614141414r1410101010r10romania26512345--r--694011--r--See footnotes at end of table.TABLe 17Iron ore: WorLD ProDUCTIon, BY CoUnTrY1, 2(Thousand metric tons)Gross weight3Metal content4Iron O re—2009 [ADVA N C E RE L E AS E ] 39.21Country520052006200720082009e20052006200720082009erussia96,764102,000105,00099,90092,000656,100e59,100e60,800e57,800e53,200Slovakia534583570392390182198194133130South Africa1739,54241,32642,083r48,98355,313625,000e26,100e26,600e31,000e35,600Swedene23,30023,30024,70023,800617,70015,30015,00016,00014,280r, 611,500Thailand2312641,5551,710r1,700116132779r855r855Tunisia206214180r108r110108e112e9456r57Turkey4,5983,7854,8494,700e4,0002,4502,000e2,6002,500e2,100Ukraine68,57074,00077,90072,700e66,476637,700e40,700e42,800e40,000r, e36,500United Kingdom(11)(11)(11)e(11)--(11)(11)(11)e(11)--United States54,32952,74952,48953,56026,696634,20233,27433,06833,76916,5506Venezuelae21,20022,10020,70020,650614,90014,00014,50013,60013,6009,800Vietnam1,0091,0201,060e1,000e1,000505510530e530e530Zimbabwe377104100e50e--200e52e50e25e--Total1,550,0001,840,0002,040,0002,210,000r2,240,000843,000969,0001,070,0001,130,0001,110,00014Concentrates from titaniferous magnetite beach sands.15Pakistan iron ore is based on a July-to-July fiscal year and 50% of production is used from each reported year.16Includes manganiferous iron ore.17Includes magnetite ore as follows, in thousand metric tons: 2005—2,957; 2006—3,830; 2007—3,781; 2008—3,987; and 2009—4,725.11Less than 1⁄2 unit.8China’s gross weight iron ore production figures are significantly higher than that of other countries, because China reports crude ore production only with an average iron content of 33%, whereas othercountries report production of usable ore.9Iron ore is used domestically as an additive in cement and other construction materials but is of too low a grade to use in the steel industry.10nickeliferous iron ore.12Data are for year beginning March 21 of that stated.13Gross weight calculated from reported iron content based on grade of 60% iron.imported iron ores have been excluded under the assumption that the ore from which such materials are produced has been credited as marketable ore in the country where it was mined.4Data represent actual reported weight of contained metal or are calculated from reported metal content. estimated figures are based on latest available iron content reported, except for the followingcountries for which grades are U.S. Geological Survey estimates: Azerbaijan, Kazakhstan, north Korea, and Ukraine.5In addition to the countries listed, Cuba may also produce iron ore, but definitive information on output levels, if any, is not available.6reported figure.7Series represented gross weight and metal content of usable iron ore (including byproduct ore) actually produced, natural weight.Gross weight3Metal content4eestimated.pPreliminary.rrevised. -- Zero.1estimated data and world totals are rounded to no more than three significant digits; may not add to totals shown.2Table includes data available through July 22, 2010.3Insofar as availability of sources permit, gross weight in this table represent the nonduplicative sum of marketable direct-shipping iron ores and iron ore concentrates; iron agglomerates produced fromTABLe 17—ContinuedIron ore: WorLD ProDUCTIon, BY CoUnTrY1, 2(Thousand metric tons)39.22 [ADVA N C E RE L E AS E ] U.S. G EO L O GICAL SU R V E Y MI NER ALS Y E A R B OO K—2009 TABLe 18 Iron ore: WorLD PeLLeTIZInG CAPACITY,

BY ConTInenT AnD CoUnTrY In 2009 1

rated capacity,

gross weight (million metric tons)
north America:

Canada 27.5
Mexico 15.0 e

United States 56.6

Total 99.1
South America:

Brazil 56.0 e

Chile 5.3 r

Peru 3.5
Venezuela 11.8 e

Total 76.6 europe and Central eurasia:

Kazakhstan 8.4 e

netherlands 4.4 e

russia 31.4 e

Slovakia 0.4
Sweden 21.0 Turkey 1.5
Ukraine 33.5 e

Total 100.6
Asia:

Bahrain 4.0
China 45.0 e

India 26.7 r

Iran 12.3 e Japan 3.0

Total 91.0 oceania, Australia 4.3

Grand total 371.6

e estimated. r revised.

1 Data may not add to totals shown because of independent rounding.

Sources: International Iron and Steel Institute; United nations Commission on Trade and Development, Trust Fund on Iron ore Information; U.S. Geological Survey.