Iron is one of the world’s most common elements, making up about 5 percent of the Earth’s crust. But one place that doesn’t have nearly enough is China. So when the country’s furious urbanization took off more than a decade ago, China began to import huge quantities of iron ore to produce the steel it needed to build factories, highways and skyscrapers. Thus began an epic race to meet China’s needs, fueled by soaring prices, with metal from the furthest corners of the globe. Now that China’s economic growth is slowing, the boom is looking like a bust. Iron ore prices have collapsed, and the big producers — miners in Brazil and Australia — are squeezing out higher-cost rivals from Sweden to South Africa to Iran. In Australia, the slump has sparked a debate about whether the nation is now squandering its iron ore riches.
The price of iron ore had tumbled to less than a quarter of its 2011 peak by the end of last year, as the biggest producers pressed ahead with expansions planned when the market was soaring. While prices rebounded somewhat in early 2016 as China’s policy makers signaled they would support economic growth, several analysts predicted the bounce would be short-lived. Smaller rivals have blamed Brazil’s Vale and the two Australian giants, Rio Tinto and BHP Billiton, for exacerbating a global supply glut. With the price dipping below $40 a metric ton at the end of 2015, only a handful of producers — the largest and lowest-cost operations — are expected to survive. Some projects conceived during the go-go years are being halted or delayed. Guinea, one of the world’s poorest countries, hoped a $20 billion investment in mines, railroads and ports would transform its fortunes; now there’s doubt they will ever be built. Meanwhile China continues to consume more than two-thirds of the world’s iron ore exports and produce about half the world’s steel. Yet demand for steel inside China has peaked, many analysts say, leaving the market oversupplied. So China’s steel producers expanded exports by a fifth in 2015. That’s spurred complaints that the country’s state-owned and state-supported steel mills are illegally dumping their output on world markets below cost, a charge they deny.