Iron ore is a mineral substance occurring in layers of rock, called iron ore deposits. The main types of iron ore deposits are found in the crust of the Earth in sedimentary, metamorphic, and igneous rocks.
Quick Overview of Iron Ore
✔️An overview of iron ore
✔️The production of iron ore
✔️Trading iron ore as a commodity
Price drivers of iron ore
The uses of iron ore
An overview of iron ore
The two most common types of iron ore deposits are:
- Hematite, also spelled haematite, is one of the most abundant minerals in the shallow crust of the Earth’s surface. It contains almost 70 percent iron.
The name of the mineral is derived from the Greek word hema, meaning blood, because of the red streak appearing in some of the rocks.
- Magnetite is also a commonly mined iron ore, containing 72.4 percent iron. The colour of magnetite is black. Previously, magnetite has been called ferrous-ferric oxide.
Other types of iron ore deposits are limonite, also referred to as bog-iron ore, siderite, titanomagnetite, and pisolitic ironstone.
Typically, the colour of iron ores varies between black, dark grey, bright yellow, brown, deep purple, rusty red, and red.
Iron is one of the most abundant of all metals, comprising almost 5 percent of the earth’s crust.
Iron is indicated on the periodic table of elements with the chemical symbol ‘Fe,’ an abbreviation deriving from the Latin for iron, namely ‘Ferrum.’
Historians estimate that humans have been working with iron in various forms and capacities as far back as 3200 BCE. Although, the widespread production of iron started around 1200 BCE in ancient Mesopotamia.
Europeans only started to master ironworking during the 1700s.
The production of iron ore
Countries with the largest iron ore reserves in the world, as of 2025
Australia is the country with the largest reserves of iron ore in the world. Most of the country’s iron ore reserves are located in the state of Western Australia in the Pilbara region.
The following figures are obtained from Statista:
| Rank | Country | Reserves (In metric tonnes) | Reserves amount translated to iron content (Metric tonnes) |
|---|---|---|---|
| 1 | Australia | 51 billion | 25 billion |
| 2 | Brazil | 34 billion | 15 billion |
| 3 | Russia | 25 billion | 14 billion |
| 4 | China | 20 billion | 6.5 billion |
| 5 | India | 5.5 billion | 3.4 billion |
| 6 | Ukraine | 6.5 billion | 2.3 billion |
| 7 | Canada | 6 billion | 2.3 billion |
| 8 | Iran | 2.7 billion | 1.5 billion |
| 9 | Peru | 2.6 billion | 1.5 billion |
| 10 | USA | 3 billion | 1 billion |
The ranking is in terms of reserves amounts translated to iron content.
Ten major global producers of usable iron ore
The term ‘usable iron ore’ is used in the steel industry, referring to high-grade iron which can be used in blast furnaces or other processing plants.
According to Investing News, the following countries are the major producers of usable iron ore in the world in 2025:
- Australia: 900 million metric tonnes (MT)
- Brazil: 380 million MT
- China: 360 million MT
- India: 240 million MT
- Russia: 100 million MT
- Ukraine: 81 million MT
- Canada: 68 million MT
- Kazakhstan: 64 million MT
- South Africa: 61 million MT
- Iran: 50 million MT
Interestingly, two countries, Kazakhstan, and South Africa, listed above do not appear in the list of the top ten countries with the largest iron ore reserves. Furthermore, Peru and the USA, listed as number nine and ten on the list of countries with the largest iron ore reserves, are not among the top ten global producers of usable iron ore.
Mining and processing of iron ore
The mining of iron ore starts with geological exploration, comprising the following steps:
- The use of drilling to determine the best iron ore prospects for mining operations.
- Modelling of the mineral resources that have been found.
- Planning of the mining process, enabling the mining company to extract as much of the iron ore as possible.
Once the most suitable location to mine the iron ore has been found, the mining operations start. Firstly, the surface rock and soil, also called the overburden, are removed to reach the iron ore.
Most iron ore mining operations use the ‘open pit’ method, also called the surface method, where the ore is drilled and blasted with explosives. Next, huge excavators also referred to as earthmovers, gather the loosened ore and load it into massive haul trucks for transportation to a primary crusher for processing.
The extremely large haul trucks can take as much as 450 metric tonnes of ore and can have wheels with diameters measuring almost four metres.
Once transported to the crusher, the iron ore is firstly screened and then crushed. Screening involves the diverting of fine particles, which makes the crusher less efficient. Hence, screening and diverting the fine particles significantly increases the efficiency of the crusher.
Subsequently, the ore is crushed and then concentrated in various ways such as spiral gravity separation and magnetic separation.
During spiral gravity separation, centrifugal force is applied to separate the heaviest particles from finer particles. The heavy concentrate – referred to as hematite concentrate – is collected at the bottom of each spiral while the lighter particles are eliminated.
Magnetic separation is ‘the process of separating components of mixtures by using a magnet to attract magnetic substances,’ according to Wikipedia. In magnetic separation, non-magnetic substances are separated from those which are magnetic.
The iron ore concentrate created from the various concentration processes is thereupon converted into metallic iron through a process called ‘reducing.’ In this process, oxygen and impurities are removed from the iron ore concentrate. The reducing process can be done either in the blast furnace or by the direct reduced iron (DRI) process.
The National Iron and Steel Heritage Museum in Pennsylvania in USA describes the blast furnace process as follows: ‘Iron ore, coke (processed coal), and limestone (the charge) are poured into a vessel lined with refractory (heat-resistant brick). When heated, the coke reacts with oxygen and the limestone combines with impurities and removes them from the ore. What remains is liquid iron, which is then used to form a workable metal.’ (Accentuations in the quotation are by the article writer.)
In the DRI process, oxygen is removed from iron ore without melting, as in the blast furnace. The reducing agents are carbon monoxide and hydrogen, deriving from reformed natural gas or coal. Similar to the blast furnace process, the result is liquid iron, also referred to as molten iron.
The molten iron is then transported in submarine ladles to steel mills to manufacture steel. The liquid iron is sometimes cast into iron ingots, also called pig iron, for later use or resale.
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Trading iron ore as a commodity
To gain exposure to iron ore as a commodity, an investor can buy shares of publicly traded companies that have exposure to iron ore mining and processing. Examples of such companies are:
- Rio Tinto, a United Kingdom (UK) metals company, is listed on the New York Stock Exchange (NYSE), the London Stock Exchange (LSE), and the Australian Securities Exchange (ASX) located in Sydney, Australia.
- BHP, an Australian multinational mining company, traded on the NYSE and the LSE.
Furthermore, a person who is keen to trade iron ore as a commodity will need the guidance, services, and trading platform of a trusted, regulated, and registered commodity broker.
Such a broker will also help to determine the risk appetite of a trader/investor and provide information about trading instruments, such as iron ore futures, iron ore options on futures, iron ore exchange-traded funds (ETFs), and iron ore contracts for difference (CFDs).
Price drivers of iron ore
Some of the price drivers of iron are:
- Economy of China
China, the world’s top iron ore importing country, imported more than 1 billion metric tonnes of iron ore in 2019, mainly to support the country’s steel industry.
The health of China’s economy is strongly linked to the prices of iron ore. Environmental concerns in China and regulations to control the Covid 19 pandemic have impeded the demand for iron ore in the country. Subsequently, steel production has waned, and so has the demand for iron ore, resulting in lower iron ore prices.
- Oversupply of steel scrap and iron scrap
Alternative sources, like steel scrap and iron scrap, compete with iron ore for the manufacturing of steel. Hence, the cost and availability of scrap metal – mainly obtained from vehicle wrecks – can significantly affect the demand for iron ore, impacting the price of iron ore negatively.
- Global steel demand
The construction industry and the automotive industry are the two biggest users of steel. Furthermore, about 98 percent of iron production is used in the making of steel.
These two industries are extremely sensitive to macroeconomic factors in the global economy. Hence, when the global economy is healthy and strong, the demand for steel is strong which enhances the demand for iron ore, increasing the price of iron. Unfortunately, the opposite is also true.
- Costs to mine and process iron ore
Iron ore mining and processing are energy-intensive activities that require large amounts of fuel and electricity. Increases in the input costs of these activities can influence the price of iron ore negatively.
The uses of iron ore
Almost 98 percent of iron produced is used in the manufacturing of steel, which is used to make parts for vehicles, bridges, ships, beams used in buildings, furniture, paper clips, and numerous other things.
The iron compound, iron hydroxide, is used in water systems to purify the water.
Iron sulfate is used to treat sewage particles in water tanks.
The usages of iron chloride include the treatment of sewage systems, the manufacturing of circuit boards, and as colouring agent for paints.
Iron compounds are also used in medicine and cosmetics.
Note: This article does not constitute investment, financial, or trading advice. Please obtain the advice of a professional and regulated commodity broker before making trading and investment decisions.
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