The iron-ore industries in Brazil and India are set to drive the modest global production growth of the commodity as output declines in China, a new report by Fitch Solutions Macro Research indicates.

Global iron-ore production will grow at a marginal 0.8% from 2 896-million tonnes in 2019 to 3 147-million tonnes by 2029, the latest ‘Industry Trend Analysis – Global Iron Ore Mining Outlook’ report highlights.

This is a significant slowdown from an average growth rate of 3% during the preceding decade – 2010 to 2019.

The report indicates that supply growth will be primarily driven by increasing output from India and mine expansions in Brazil, where major miner Vale is planning to expand output to between 390-million tonnes and 400-million tonnes by 2022.

Brazil’s iron-ore production growth will rebound after 2019, owing to low operating costs and a solid project pipeline.

The South American country will also benefit from producing the high-quality iron-ore increasingly favoured by Chinese steel producers, comments Fitch Solutions Macro Research.

“We forecast Brazil’s iron-ore production to increase from 465-million tonnes in 2020 to 573-million tonnes by 2029, [attaining] 2.6% average yearly growth,” it says.

Meanwhile, India’s iron-ore output growth will be supported by the removal of export taxes in the Budget for low-grade ores and the Mines and Minerals Development and Regulation (MMDR) Act, which will streamline licensing and reopen closed mines.

“Although the MMDR Act will support ore output growth, the royalties included in the Act will limit the sector’s overall growth potential. As part of India’s 2016 Budget, export duties for iron-ore lumps and fines below 58% iron content were reduced to nil from 30% and 10% respectively,” the company points out.

In line with this, India’s iron-ore output is expected to grow 0.6% from 219-million tonnes in 2020 to 243-million tonnes in 2029.

However, miners in China are cutting output on the back of falling ore grades and the high costs of production.

“In the long term, China’s iron-ore production will edge lower over the coming years, as weak iron-ore prices – we forecast multi-year declines in prices up to 2024 – and tightening environmental regulations force higher-cost operations offline,” says Fitch Solutions Macro Research.

China’s output is expected to dip marginally from 860-million tonnes in 2020 to 810-million tonnes by 2029, with imports slowing over the coming years, in line with slowing steel production.

“While we expect the overall volume growth of China’s iron-ore imports to decelerate, the country’s tightening environmental standards will keep demand for high-grade iron-ore relatively strong, putting a premium on prices.”