Iron ore is one of the most abundant of all
minerals throughout the world. Deposits are well distributed
geographically with vast reserves found on all continents.
Although quantitative estimates are not available, much evidence
supports the conclusion that the elasticity of supply of iron
ore traded internationally is high; that~iS~ a small increase ,.;.
in price will call forth large additional quantities of ore.,.
The Japanese import iron ore from Australia, Brazil, and
Canada, mostly under medium- or long-term contracts. In recent
years they have become involved in the development of new mines.
Ste~l producers in Western Europe make a substantial proportion
of thei r or e purchases under shor t-term (usually one year) contracts,
and the rest under long-term arrangements. United
States producers tend to own their own mines and to operate
them pr incipally for their own use. (See the appendix to this
chapter. )
The United States is a net importer of iron ore (table
:3
2.10). About 70 percent of the iron ore consumed by the U.S.
steel industry comes from domestic sources; of the imported
supplies, about one-half comes from Canada and most of the
remainder from Latin America. U. S. dependence on foreign
,iron ore was necessitated by the diminution of quality domestic
ores. The major sources of U. s. iron ore in 1972 are shown
in table 2.11.
Large iron ore mines that were developed by Amer ican steel
companies have been nationalized in Chile, Venezuela, and Peru.
Venezuela, the second largest ore exporter to the United States,
expropriated the Orinoco Mining co., a wholly-owned subsidiary
of United States Steel Corp., and the Iron Mines Co. of
Venezuela, a wholly-owned subsidiary of Bethlehem Steel Corp. I:.:,;
Both companies secured long-term contracts for the continued
delivery of ore from the now nationalized companies. These
were the only major steel companies to import iron ore from
Venezuela. U. S. companies are increasingly hesitant about
becoming reliant on foreign supplies and have tended to avoid
further overseas ventufes (except in Canada) in favor of
developing and upgrad iig the large, lower grade u. S. resources.
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Another potential problem concerning the supply of iron
ore from foreign sources stems from the fact that ten countries
agreed to form an Association of Iron Ore Exporting Countries
(AlEC). The producing countries included in the pact are
Algeria, Australia, Chile, India, Mauritania, Peru, Sierra
Leone, Sweden, Tunisia, and Venezuela. The organization was
set up to act as a clear ing house for information on pr ices
and markets. To date, these countries hav~not established a
unified price for iron ore, nor is an attempt to fix prices
expected to be successful in the future. Such an event should
have a significant impact on steel producers in Europe and
Japan. Excepting the imports from Canada,
the United States
depends on the world market for only a relatively small portion
of its iron ore needs.
The domestic supply of iron ore is rather elastic because
of the vast potential stocks of taconite that could be exploited
if foreign iron ore prices were to rise substantially. Taconite
is already being used in large quantities by steel firms in the
Uni ted States. The development of taconite in the United States
gives u.s. producers the bargaining power necessary to defend
their own and the Nation's interest in obtaining adequate supplies
of iron ore. If necessary, iron ore requirements could be met
entirely from domestic resources. Vast quantities of taconite
are found in the United States, most of them in the Mesabi Range
of Minnesota, and the Marquette Range of Michigan, thus having
the advantage of close proximity to much of our steelmaking
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capacity. Low-grade ores must be upgraded through pelletization
for use in blast furnaces. In the event that international
iron ore prices should be forced up dramatically by méans of,
cartel action, American steel producers will probably have
little difficulty expanding the mining and beneficiation of ~""
low-grade taconite ores and the output of their operations in
Canada.
