China’s mega dam unleashes ‘flurry’ of bullish iron ore trades Alex Gluyas Markets reporter Jul 22, 2025 https://www.afr.com/markets/commodi...urry-of-fresh-iron-ore-trades-20250722-p5mgsv China’s plan to build a mega dam in Tibet has revived hopes that Beijing is targeting steel-intensive projects to drive growth, triggering a spike in iron ore trades as the market positions for more stimulus measures in the weeks ahead. As Chinese Premier Li Qiang announced the country was proceeding with a 1.2 trillion yuan ($256.2 billion) hydroelectric project on the Yarlung Tsangpo River, futures in Singapore jumped as much as 4 per cent on Monday to a four-month high of $US104 a tonne. A decommissioned steel mill at Shougang Park. China is hoping to bolster unprofitable mills by cracking down on excess production. Bloomberg Barrenjoey’s commodity desk has reported a “flurry of fresh trades” that centred around medium-grade iron ore fines, which are a crucial component in the steel-making process. Futures for reinforcement bar in Shanghai surged to the highest level since March. “Fresh trading activity during the day reflected the bullishness in the market,” said Barrenjoey’s head of resources Glyn Lawcock. “Commencement of the hydropower project was seized by Chinese markets as proof of economic stimulus.” Iron ore futures gained a further 1.5 per cent to $US105.10 a tonne on Tuesday, extending a run of four straight weekly gains that lifted prices more than 11 per cent from their June lows. propelled this month’s rotation into ASX mining stocks, helping lift Rio Tinto another 2.6 per cent to $117.40 on Tuesday. BHP added 2.1 per cent to $41.32 and Fortescue climbed 2.5 per cent to $17.68. Shares in the mining giants are up more than 15 per cent each over the past month. Comparative performance (%) BHP Rio Tinto Fortescue 29June6July13200246810121416182022 Source: Bloomberg The project “promises to deliver a positive economic boost for construction materials such as concrete and steel”, said ANZ senior commodity strategist Daniel Hynes. “It also triggered hopes that the government is returning to its old handbook of fiscal stimulus measures to support economic growth.” Iron ore markets have burst back to life in recent weeks amid Beijing’s renewed push to curb so-called involution, where intense competition and overcapacity has crushed margins across several industries. The reforms have already shown signs of working – margins at steel mills have jumped to the highest level since September, when authorities unleashed stimulus to ensure China’s economy expanded at its annual target of about 5 per cent. Last year’s measures, which targeted the property sector, equity market and local government debt, sent iron ore prices surging from below $US90 a tonne in September to nearly $US110 a tonne in October. “The lift in China’s steel mill margins in the absence of any substantial stimulus policy underscores how effective China’s anti‑involution campaign has been,” said Commonwealth Bank commodity analyst Vivek Dhar. “When demand lies at the heart of a rise in steel mill margins, the case for higher iron ore prices is undeniable as steel mills look to procure iron ore to boost steel production.” Iron ore price ($US/tonne) Jun 23Jun 26Jun 30Jul 3Jul 7Jul 9Jul 12Jul 16Jul 1892949698100102104106 Source: Bloomberg Iron ore traders are also hopeful that authorities will unveil fresh stimulus at China’s politburo meeting later this month, though CBA said there was less urgency to roll out large-scale policy measures given the economy grew above the government’s 5 per cent target in the first half of the year. “That said, the Politburo meeting may still hint at the government’s appetite for additional stimulus,” said CBA currency strategist Carol Kong. “Further piecemeal policy support is also possible.” Red flags as China stockpiles iron ore Commodity strategists remain concerned about Beijing’s aggressive cuts to steel output, which typically weigh on iron ore demand. Indeed, the country’s steel production contracted by 6.9 per cent in May and 9.2 per cent in June compared to the prior year. Both figures came in well below forecasts by Westpac’s iron ore specialist Robert Rennie, who warned that China has been building up vast stockpiles of iron ore to capitalise on relatively lower prices. “There is no way of knowing when that will stop, though we suspect that once we get closer to first iron ore from Simandou that will be the case,” Rennie said, referring to a massive iron ore project in Guinea. Rio Tinto confirmed last week it had accelerated the start of production from the SimFer mine, which is part of Simandou, to around November. The guidance implies shipments will be 500,000 to 1 million tonnes this year, with supply ramping up over 30 months to full capacity of 60 million tonnes each year. “Once we start to see evidence of that supply, we expect to see prices down to and through $US90,” Rennie said. With Bloomberg
Two towns face jobless wave as miner warns it may halt operations About 17,000 jobs are in jeopardy as Swiss miner Glencore reveals it is considering shutting down two operations. Harrison Christian July 23, 2025 https://www.news.com.au/finance/bus...s/news-story/951e9761fb3ab6161c795c94bbb07376 North Queensland locals have been left on edge as Swiss miner Glencore reveals it is considering shutting down two operations, placing thousands of jobs in jeopardy. The Mount Isa copper smelter and Townsville copper refinery directly employ 550 people, with 500 jobs also threatened at Dyno Nobel’s Phosphate Hill operations, but lobby group Townsville Enterprise estimates 17,000 jobs are connected to the downstream copper assets. Without government assistance, the company will have to place the Mount Isa and Townsville operations into care and maintenance, according to an internal memo to staff from Glencore’s interim chief operating officer on Wednesday morning. Roland Lobegeiger, a field services manager for Isadraulics, which services hydraulic component systems, told news.com.au the move would be a “significant loss” not just for his company, but the town of Mount Isa. “Without it, the town’s not going to be here,” Mr Lobegeiger said. “There are other mines – there would be other work in the area, but would the town recover? It’s hard to say. “It would be a significant change for a lot of businesses, homes, house prices – you name it. “It’s definitely a bit of a dark cloud over the area. Everyone’s still optimistic that they won’t shut it down, but no one knows.” There are fears for the future of Mount Isa if its copper smelter shuts down. A worker at the at the Glencore Copper Smelter in Mount Isa. Picture: NewsWire / Dan Peled Mr Wilson’s internal memo painted a grim picture of the company’s position in North Queensland. “To date Glencore has been absorbing losses hopeful that a viable solution could be found,” he wrote, according to the Townsville Bulletin. “However, we are fast reaching the point at which Glencore cannot continue to absorb these losses. “We need to know in the coming weeks whether there is a viable solution on the table from governments. “Glencore is genuinely disappointed at the prospect of placing the smelter and refinery into care and maintenance if we do not receive adequate government support.” Talks between Glencore and the Queensland and federal governments have yet to reach a solution, with the miner on track to lose billions of dollars from the two operations over the next seven years. Senior Glencore executive Suresh Vadnagra said the company remained open to taxpayers taking a big equity stake in the refinery and smelter. “Time is running out,” Mr Vadnagre told The Australian. “We have been engaging with government for the past five months. “We need to know in the coming weeks whether there is a viable solution on the table from governments or whether we start to planning to transition the copper smelter and refinery into care and maintenance.” Workers at Glencore’s copper smelter in Mount Isa. Picture: Supplied It comes as smelters and refineries are struggling to operate across Australia. The country’s biggest aluminium producer, the Rio Tinto-owned Tomago, has requested billions of dollars from the federal and NSW governments amid high power prices and competition with China. The Labor government has held out the possibility of providing loans and taxpayer funds to prop up Australian smelters. “The truth is, if these facilities didn’t exist, governments would be trying to build them,” Industry Minister Tim Ayres told The Australian Financial Review.
I wrote this before, Australia is a heavily unionized nation, akin to Scandinavian nations more than the UK. Salaries and benefits in the mining industry are significant, no doubt contributing to high inflation in the regions they operate in. Global mining companies measure profitability against their global operations and the industry as a whole, and I suspect Australia is among the costliest. Blaming unions is what I love to do but I'm fully aware that non union corporate jobs are adjusted to compete with union payrolls so everyone is benefiting from union power. The consequences of Glencore's shakedown of state and federal governments to take a share of the payroll burden is essentially socializing their activity while retaining profits. Like its Scandinavian models, Australia should have long ago created a sovereign fund, nationalizing the land, bid out operations to private actors and get a cut of profits. That fund would today rival Norway's sovereign fund and benefited all Australians rather than the industry's narrow ecosystem. If miners cannot be competitive in Australia, they should pull out. The government should take a hard look at the various options they have to become competitive without taxing all Australians to maintain the bloated payrolls of a few.