Overview of Malaysia's Iron Ore Import and Export Landscape, Regardless of Blended Ore or Local Ore, the Largest Shipping Proportion Remains to China
Moreover, the proportion of iron ore concentrates has been gradually increasing in recent years.
▶ Generally, the market's first impression of Malaysia's iron ore resources is always the blending hub, a transshipment center established by Vale for the East Asian and Southeast Asian markets. Indeed, historical data shows that Malaysia's iron ore landscape is characterized by "high imports and high exports."
▶ Observing SMM shipping data, in 2024, all of Malaysia's local iron ore exports were shipped to China. In contrast, BRBF shipments were relatively dispersed, with 54% shipped to China, followed by Vietnam (36%), and the remaining 10% to countries like Indonesia and India.
▶ Due to geographical advantages, most of Malaysia's local ore is exported from Kuantan Port to major Chinese ports, including Tangshan Main Port, Shandong Main Port, Lianyungang, and Tianjin. Meanwhile, BRBF is exported from Lumut Port to Tangshan Main Port, Shandong Main Port, Fangchenggang, Zhanjiang Port, Lianyungang, Tianjin, and Fuzhou Port.
▶ Among Malaysia's iron ore exports to China, lump ore is the most mainstream product. Notably, in 2020, lump ore exports to China reached 1.84 million mt, accounting for half of that year's total, primarily due to the insufficient beneficiation capacity of local mines.
▶ However, in recent years, the volume and proportion of iron ore concentrates have been gradually increasing, mainly driven by the gradual deployment of beneficiation equipment by some Malaysian mines and the incremental production of concentrates by top-tier mines. In 2024, Malaysia's exports of iron ore concentrates to China reached 1.28 million mt, accounting for 43% of that year's total.
Beyond the Aura of Vale's Blending Hub, How Much Local Iron Ore Resources Does Malaysia Have Left?
▶ According to the latest annual report released by the Malaysian Chamber of Mines, the number of iron ore mines in Malaysia reached 77 in 2022 (compared to 66 in 2021), mainly distributed in Perak, Kedah, Johore, Pahang, Terengganu, and Kelantan. The iron ore products are primarily low-grade, sourced from small reserves and leased mines. Most of the iron ore is exported to China, with a small portion used in Malaysia's local cement plants and steel mills.
▶ Currently, local Malaysian mines mainly produce low-grade coarse powder and lump ore. Some domestic import traders have reported that Malaysia's low-grade ore has relatively high impurities such as silicon and aluminum, requiring blending or beneficiation upon return to China. Most of Malaysia's supply is limonite, which is challenging to beneficiate. However, it is expected that with the increased production of concentrates by top-tier enterprises and the addition of beneficiation equipment at some mines, the supply of high-grade concentrate products from Malaysia is likely to increase in the future.
Distribution of Major Iron Ore Mines in Malaysia
▶ Malaysia's operating iron ore resources are mainly concentrated in Peninsular Malaysia, with Pahang, Terengganu, and Johore being the most concentrated areas for local ore production. Pahang is the largest iron ore-producing state in Malaysia. Most of Malaysia's raw ore grades range from 30% to 50%. However, due to the late development of blast furnace ironmaking and mining and beneficiation technologies, the industry is still in the development stage, with accelerated progress in recent years.
According to the plans of major mines, Malaysia is expected to supply over 30 million mt of iron ore in the future,
High-Grade Iron Ore Concentrates Will Be the Focus of Local Mines
▶ Currently, Malaysia's iron ore supply landscape is dominated by Fortress, with numerous small-scale mines scattered across the country, resulting in low industry concentration. In the future, Fortress's new mine expansion and new beneficiation plant production line expansion will continue to drive the incremental production of concentrates in Malaysia. Additionally, with OUS Group's ongoing acquisitions and developments, SAM's transition from open-pit to underground mining, and the active development of new mines, the concentration of Malaysia's iron ore industry is expected to improve.
▶ Currently, Malaysia's high-grade iron ore suppliers are mainly Fortress, whose 65% grade concentrates are primarily derived from magnetite, while coarse powder and lump ore with grades of 55-60% come from hematite. SAM can also supply high-grade concentrates, but with the expiration of open-pit mining rights, underground mining and the commissioning of expanded mines are expected to boost Malaysia's high-grade concentrate supply.
▶ According to the current plans of Malaysia's major iron ore enterprises, over 30 million mt of iron ore resources are expected to be supplied in the future, with products still dominated by coarse powder, concentrates, and lump ore. Notably, concentrates are expected to increase by over 1 million mt based on the existing supply.
Malaysia's Iron Ore Resources for Sale and Pricing
▶ The aforementioned resources are sold in the form of futures. If needed, they can be shipped at any time, with delivery within 45 days after signing the contract and paying a 15% deposit. These resources are coarse powder located in the West Coast mining area of Malaysia and can be shipped from Penang Port, with a monthly supply of 50,000 mt. Pricing is based on the Platts index * discount.
▶ Additionally, some traders have reported that due to the small transaction volume of Malaysian iron ore, the domestic spot market currently references the price of low-grade Indian ore, with negotiations conducted on a case-by-case basis.
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Malaysia's iron ore mines are relatively scattered, with a total of over 70 mines. Due to space limitations, they are not listed individually in this article. If interested, feel free to contact us for more industry insights.
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