Global iron ore production will grow from 2,896mnt in 2019 to 3,147mnt by 2029, Fitch forecasts. This represents an average annual growth rate of 0.8% during 2020-2029, which is a significant slowdown from an average growth rate of 3.0% during 2010-2019.

Fitch forecasts iron ore production in Australia to grow minimally over 2020-2029, averaging an annual 0.7% growth, compared with 8.7% growth over the previous 10-year period. This is due to mothballing of mines from junior miners, while major players will stick to their production growth targets to crowd out high cost producers.

Supply growth will be primarily driven by India and Brazil, where Vale is planning to expand output to 390-400mnt by 2022. Fitch says Vale’s supply will continue to dominate global output, but miners in China, which operate at the higher end of the iron ore cost curve, will be forced to cut output due to falling ore grades.

Majors continue to decrease costs and increase production in the longer term. In June 2018 BHP approved the A$2.9 billion development of its South Flank iron ore project in Western Australia to replace existing mines. The world’s number one miner expects production to start in 2021 at the project.

In the same month, Rio Tinto announced plans to start developing its Koodaideri iron ore mine in Western Australia’s Pilbara region in 2019, claiming it is one of the most technologically advanced in the world. The company will mine its first tonnes from the project in 2021. In May 2018, Fortescue Metals Group approved the development of a A$1.3 billion iron ore project, Eliwana, which will come online this year.

Remaining cost-competitive will be a focus for iron ore miners in a long-term weak price environment, with top firms investing in technology to maintain an edge, Fitch maintains.