In this guide to iron ore, we explore the value of iron ore by understanding how this commodity plays a role in various industries and the global economy.
Read on to learn about iron ore production, how iron ore is extracted and refined, and how it’s used in manufacturing as well as what experts say about the future of this commodity.
We also list the top iron ore producing countries and reserves, along with the main uses of iron ore.
Looking for information on trading iron ore? See our full guide, or if you want to get started trading iron-ore and other metals right now, here are options available in to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Why Is Iron Ore Valuable?
Iron ore is a rock from which the metal iron is extracted. About 98% of the world’s iron is used to produce steel.
Pure iron is an element and a soft grayish-white metal. Other than meteorites that fall from the sky, iron is never found by itself in nature.
Most iron is part of minerals that contain other elements. Iron oxide is the most common of these minerals.
Rocks that contain high concentrations of iron minerals are generally found near the surface of the earth. Commercial producers mine and process those minerals for their iron content.
Historical Use Of Iron Ore
Historians believe the ancient Egyptians may have worked with small amounts of iron found in meteorites. However, the first successful mining of the metal probably occurred with the Hittite culture around 1,500 BC.
Until this time, ancient peoples constructed metals from bronze. The Hittites perfected stronger iron weaponry, which led to successful military campaigns and ushered in the Iron Age.
Although early civilizations in China, India, and Japan produced weaponry and implements from iron, Europeans didn’t perfect ironworking until the 1700s.
The reasons for this time lag were regional differences in the way iron was mined and a lack of understanding of its chemical properties.
What Is Wrought Iron?
Specifically, early Asian and Middle Eastern iron contained carbon, which gave the metal its hardness. When Europeans began working the metal, their processing methods removed the element.
The result was a soft metal that could be shaped, or wrought by hammering. This came to be known as wrought iron.
Iron Alloy and Steel Production
In 1740, a breakthrough by English inventor Benjamin Huntsman led to the production of a stronger iron alloy.
Huntsman used charcoal to introduce carbon to the production process, and in doing so, discovered one of the most important advances in modern steel production.
Today mines worldwide produce more than 2.2 billion metric tons of usable iron ore, which contains about 1.4 billion metric tons of iron.
With steel being a critical material in buildings, infrastructure, mechanical equipment, and automobiles, iron ore is an important global commodity.
Main Uses of Iron Ore
In addition to steel, iron ore plays an important role in the creation of several products.
|Steel||About 98% of iron ore production goes to making steel. Tools, automobile parts, buildings, bridges and ships are a few of the many items made from steel.|
|Iron Chloride||Iron chloride is an important compound in many applications:
|Iron Sulfate||Uses for this iron compound include treating anemia and treating sewage particles in water tanks.|
|Iron Hydroxide||This iron compound is found in water purification systems.|
|Iron Arsenate ||This important iron compound is used to make insecticides.|
How Is Iron Ore Produced?
Iron derives primarily from ores containing iron oxide. Examples of these iron ores include magnetite, hematite, and limonite, although other ores also may contain iron.
The iron contained in these ores can range from between 20% to as much as 70%. These iron yields are important in determining how profitable mining is.
Statistics on iron production generally break out the usable iron ore and iron content into separate categories.
The production of iron takes place in three steps:
Iron Ore Extraction
Most iron ore mining takes place in surface or open-pit mines. Usually, heavy machinery removes the top layer of the ground over a wide area and exposes the iron ores.
In some cases, miners dig shafts into the earth with side tunnels that allow them to follow the layer of ore.
Miners load the crude ore into trucks and dump the material into pit crushers.
Refining Iron Ore
Pit-crushing machines pulverize the ore and separate the iron from impurities such as sand and clay. The best grades of ore contain close to 70% iron and usually require less processing.
Lower-grade ores may require further refining methods known as beneficiation:
- Further crushing and washing the ores to remove more sand and clay
- Magnetic separation of the iron from sand and clay
- Pelletizing – a process of converting iron into pellets
- Sintering – a process of heating iron ores into a semi-molten mass
As more of the global iron ore supply gets depleted, beneficiation becomes more critical for obtaining higher purities of iron.
Trains or ships transport refined ore to blasting furnace sites.
Manufacturing With Iron Ore
Iron manufacturing takes place in tower-shaped, brick-lined steel structures called blast furnaces.
Iron ore, coke, sinter, and limestone are poured into the top of the furnace, and hot air is blasted into the bottom of the furnace.
Hot air reacts with the carbon in the coke to produce carbon monoxide. The carbon monoxide then reacts with the iron ore to produce pure iron and carbon dioxide.
Melted iron sinks to the bottom of the furnace, while slag formed from limestone reacting with the remaining impurities in the ore floats to the top. The iron and slag are removed separately from the furnace.
Casting Into Alloys and Ingots
The melted iron is either alloyed with other metals or cast into ingots called pigs, while the slag is discarded.
The hot gases remaining in the furnace are drawn off, cleaned, scrubbed, and returned to the furnace.
Blast furnaces typically operate around-the-clock for several years before they require maintenance.
Top Iron Ore Producing Countries
The US Geological Survey (USGS) collects statistics for both usable iron ore production and actual iron content. In recent years, some sources listed China as the largest producer of iron ore.
However, this calculation was based on crude iron ore production. Since much of this crude ore production is low-grade and not usable, reliable sources discount it.
As a result, China is the third-largest producer of usable iron ore.
|Rank||Flag||Country||Millions of Metric Tons|
Biggest Iron Ore Reserves in The World
These are the reserves of crude iron ore for each country as reported by the USGS:
|Rank||Flag||Country||Millions of Metric Tons|
What Do Experts Think About Iron Ore?
Many analysts agree that demand from China ultimately determines iron ore prices. One analyst sees the country’s insatiable demand for the commodity in steel production as a reason for optimism.
Steel output continues to be on the rise, which will boost consumption of iron ore. Mills are making chunky profits, so they’re firing up production.Zhao Chaoyue, Analyst at China Merchants Futures Co.
However, another leading iron ore analyst sees reasons for caution. He believes that cheap supplies of iron ore from Australia and Brazil are likely to overwhelm Chinese demand:
It is all about supply, the supply of ore in the seaborne trade from both Australia and Brazil, as well as some of the smaller producers, continues to grow and as such, will continue to enter the Chinese markets…rather than suggesting that demand for imported ore is strong, I would argue to suggest that supply is growing again.Justin Smirk, Senior Economist at Westpac Banking
Where Can I Trade Iron Ore?
Read our full guide to trading iron ore, or start your research with reviews of these regulated brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
- Aluminum production and its price drivers
- What makes lead a valuable metal
- How tin is produced in 2021
- Expert opinions on steel as a commodity