Average Cost of Domestic Iron Ore Stood at 471 yuan/mt in Q2 2021, Down 0.9% on the Quarter

SHANGHAI, Aug 9 (SMM) - Average cost of domestic iron ore stood at 471 yuan/mt (wmt, actual grade) in Q2 2021, down 0.9% on the quarter amid declining mining cost, wages, other consumables and management cost.

Mining cost fell as ROM grade increased and mining cost per tonne decreased. Decrease of concentration ratio led to a decrease in the mining cost required to produce 1 mt of concentrates.

The decrease in management and wage costs was mainly due to the decrease in amortized cost as the output rose.

The cost of other consumables decreased as the consumption of liners, belts, and water trended lower.

However, costs of power, steel ball, diesel, resource tax, tax and fee, as well as maintenance and depreciation (M&D) trended higher.

The decrease of unit consumption led to an increase of power cost. Open-pit mines must be mined mechanically in some regions due to disapproved explosives, resulting in a relatively large size of the ROM. The beneficiation plants must add a crushing process before grinding, which will lead to an increase in power consumption.

Steel ball and diesel costs increased due to price hike.

The cost of resource tax rose on the back of rising concentrate prices.

Zhangjiakou Chicheng County stipulated that exit toll has increased from 38.8 yuan/mt to 82.4 yuan/mt from April 1. Concentrates must be transported elsewhere as there is no steel plant in the local area.

M&D rose as some mines transformed from open-pit to underground mining, or deep excavation to maintain stable ROM supply.