The tight iron ore concentrate and pellet market is expected to continue into 2021 as more steel producers requiring high-grade, low impurity pellets increase production and global supply constraints persist, says Rio Tinto.

The firm’s iron ore segment gross product sales rose 14% on-year in 2020 to $27.5 billion and underlying earnings were up 18% to $11.4 billion. This helped boost group consolidated revenue by 3% to $44.6 billion and net profit by 49% to $10.4 billion.

Rio Tinto took advantage of the rising price environment for high-quality iron ore products last year. This price strength was driven by buoyant demand from China and constraints in global seaborne supply.

Iron ore production and shipments rose 2% and 1% respectively in 2020 to 333.4 million tonnes and 330.6mt (see Kallanish passim). The firm continues to ramp up port sales in China, with 5.5mt of sales in 2020.

The company’s iron ore shipment guidance for 2021 is 325-340mt. Iron Ore Company of Canada pellet and concentrate guidance is 10.5-12mt.

In 2021, Rio Tinto expects Pilbara iron ore unit cash costs to increase to $16.7-17.7/tonne. This mainly reflects a forecasted 12% strengthening of the Australian dollar.

At the Simandou iron ore project in Guinea, Rio Tinto expects to complete the first phase of technical optimisation work on the infrastructure components in the first half of 2021. Activity at the mine area has commenced and an update of the Social and Environmental Impact Assessment is underway.

The $2.6 billion Gudai-Darri replacement iron ore mine in Western Australia is progressing, with production ramp-up on track for early 2022. This first phase of Gudai-Darri will have a 43m t/year capacity, which could be expanded to 70m t/y in a second phase.

First ore from the other iron ore sustaining production projects – the Robe River Joint Venture and Western Turner Syncline phase 2 mine – is on track for 2021.

The company has also announced a reduction in ore reserves for its Pilbara iron ore deposits to 3.05 billion tonnes in 2020 from 3.33 billion tonnes in 2019.

The mining giant inked an agreement this week with Paul Wurth and SHS-Stahl-Holding-Saar to develop low-carbon steel feedstock in Canada (see Kallanish passim).