EXECUTIVE SUMMARY AND OUTLOOK

摘要

Production of iron ore requires the extraction, processing and transport of a bulk material. These costs are strongly affected by the natural circumstances of the ore (quantities of rock to be moved, the degree of processing required to release the mineral from surrounding waste) and the infrastructure requirements for transport and handling. Each of these consumes varying amounts of energy and the costs of production are sensitive to changes in the price energy. In the first quarter of 2013 rising prices of energy drove up the production costs for iron ore by about 10%. Prices of iron ore also rose during the quarter and more than offset the increases in costs. The surge in buying early in the year was not sustained towards the end of the quarter and the market is current subdued. In Q2 2013 we expect that costs will stabilise, while iron ore prices may also remain broadly flat. Any upturn in prices will depend on the level of steel demand in China, which remains below the market's expectations early in the year.