SINGAPORE (May 9): Prices of iron ore are expected to remain higher this year, off the back of the January mining tragedy in Brazil, which saw over 200 people dead when an iron ore dam suffered a failure.

At the Singapore Iron Ore Forum 2019, former Chief Executive Officer of Anglo American PLC, a British mining company, Cynthia Carroll, said prices will hover in the low 80’s in dollar-per-tonne, before moderating to about US$60 to US$65 per tonne.

“While we have seen prices surge due to the dam breaking incident, this is a short term market reaction. General consensus is that prices will remain higher this year, [although] there is an upside potential,” she said in her keynote address.

Iron ore traded at US$93.51 per tonne as of January 2019 after a tailings dam belonging to the mine’s operator, Vale, broke. Iron mining waste of mud and water flooded and devastated the nearby offices, causing 237 deaths. Vale is the world’s largest iron ore and nickel producer. In 2015, Vale and BHP were also implicated in a similar dam failure incident in Brazil, which killed 90 people.

Carroll adds, the upside potential is driven by China’s increasingly strict environmental legislation, which have dampened the industry, forcing smaller mining companies out and frequently halting mining activities due to air pollution regulations.

She also said, increasing volatility and unpredictability in global supply, tightening environmental regulations, and greater scrutiny by stakeholders and regulators are the biggest challenges for the iron ore industry today.

In light of the greater spotlight shone on the environmental impact of iron ore mining, Carroll also urged all iron ore industry players to actively pursue a "zero harm" policy in their operations and to adhere to Environmental and Social Governance (ESG) policies.

“Zero harm is achievable and there is no excuse for not getting there,” she said. “Furthermore, most iron ore producers operate in parts of the world where they must work to preserve the precious resources of water and energy and are now making headway. This is non-negotiable and we’re seeing consumers, communities and investors demanding a very different approach about ESG.”  She said, the days of iron ore companies just doing enough to not harm the communities where they operate, but they are now expected to take part in the development of these communities. “They are expected to do good for all, and not just do well for a few.”

Still, she says increasing innovation by mining companies in the use of autonomous vehicles, drone technology, and blockchain have gone a long way in taking the industry into the next frontier.  “Technology is the game changer, and should be considered a key part of any [company] strategy. It will not just affect productivity, efficiency and cost but it will have substantial positive impact on safety and the environment,” she says. “I am optimistic about the strength of the iron ore industry over the next decade. Iron ore is definitely a sunrise sector.”

Iron ore prices to remain high this year: Cynthia Carroll

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