MGX Discount to cash, page-121

There is no doubt that magnetite will increasingly become an important mix in hot metal production. DSO, particularly fines which is the highest volume aust IO export, needs a lot of coal/coke to agglomerate for use in a blast furnace. That’s a lot of pollution for a country like China that’s struggling with air quality.

One way to overcome this is to ensure some of that pollution is emitted elsewhere. Magnetite production needs access to lots of low cost power to produce a high Fe grade product. It attracts a good price, but costs considerably more to produce than DSO IO.

Any miner with access to DSO is unlikely to prefer to turn to magnetite production. Is it a good investment? Going by CITIC’s and Gindalbie’s loss making magnetite operations, possibly not in Australia. With the right metrics, however (low cost power, soft ore, easy liberation, good infrastructure access, etc) it could be.