Peru's iron ore exports to jump nearly 500% by 2016

New iron ore projects and an expansion at Peru's only iron ore mine, operated by Shougang Hierro Perú, will increase the country's productionin 2016 by approximately 460% compared to current levels of around 10Mt/y, almost entirely destined for foreign markets. Although sector players have suggested production could be absorbed by the local steel sector, BCP analyst María Teresa Sarmiento expects iron ore production to continue to be exported. "At the moment, the production systems used by both steel producers in Peru [Aceros Arequipa and Siderperú] don't really depend on iron ore production," Sarmiento said in an interview with BNamericas. Therefore, until Peru's steel producers' change their production systems, or new producers enter the scene, iron ore will continue to be exported, she said. American-Chinese CDII Minerals has shown interest in operating new steel projects in Peru that would source local iron ore production, but CDII VP Ross Friedman told BNamericas that such plans will not developed for at least another 5-10 years. Shougang's US$1.2bn expansion expects to double production at its Marcona mine to 20Mt/y by mid-2014, and it will remain Peru's only iron ore miner until 2015 when a stream of new producers look to enter the scene. Chinese Ninjinzhao Group's US$3.3bn Pampa de Pongo project in Arequipa region will add 15Mt/y production in 2015, followed by an additional 1.4Mt/y in 2016 predicted to come from joint projects between CDII Minerals and Peruvian miner Mapsa. Additionally, Strike Resources' (ASX: SRK) US$2.3bn Hierro Apurímac project estimates annual output of 20Mt, but has yet to determine when production would begin. In 2012, Chinese-owned Shougang put out 6.68Mt of iron ore, down 4.66% from the previous year. The full interview with María Teresa Sarmiento will be published in this week's Metals Perspectives, for subscribers only.