Australian iron ore producers are maintaining their realised ore prices during a period of declining ore grades by shifting sales from iron ore fines to lumps.
Four of the country's largest iron ore miners — BHP, Rio Tinto, Fortescue, and Mineral Resources — have faced ore grade challenges over recent years.
Fortescue in late-October announced plans to replace its 60pc Fe West Pilbara Fines product with a 55pc Fe ore product in the 2026-27 financial year to 30 June. Rio Tinto similarly adjusted the iron content specification of its Pilbara Blend ore from 61.6pc Fe to 60.8pc Fe in May.
But Australian producers' reported iron ore prices have remained stable — relative to market prices — over the last year, partly because of their shift towards iron ore lumps over fines.
Iron ore lumps tend to trade above similarly graded fines products, because they require less processing. Argus' iron ore lump 62pc Fe cfr Qingdao price has traded $7.45/t-$12.40/t above its iron ore fines 62pc Fe (ICX) cfr Qingdao price.
Mineral Resources
Mineral Resources' ore from the Pilbara Hub complex had an average grade of 56.9pc Fe over July-September, down from 57.3pc a year earlier. Its share of lump sales, on the other hand, rose from 28pc to 37pc over the same period. Its lump share of sales previously rose over January-June (see table).
Mineral Resources' rapid increase in lump sales fully offset its falling ore grade, lifting its average realised Pilbara Hub price to 98pc of Argus' 58pc Fe fines cfr Qingdao over July-September 2025, from 93pc a year earlier.
Even Australia's largest iron ore miner is maintaining its average realised ore price by increasing its lump sales.
Rio Tinto
Rio Tinto's SP10 fines sales — which comes from low-grade orebodies in Pilbara — rose by 37pc on the year over January-June, to 24mn t from 17mn t a year earlier, while its higher-grade Pilbara Blend fines sales fell by 16pc.
But company's average, fob-basis realised iron ore price fell by just 1pc point — relative to Argus' 62pc Fe fines cfr Qingdao price — from 90pc to 89pc, over the same period. Rio Tinto's average realised ore price held up because its lump sales rose on the year, while its fines sales fell (see table).
Rio Tinto's shift towards lower-graded lumps over higher-graded fines continued over July-September, likely supporting its average realised ore price. Its iron ore lump sales rose by 3.7pc and its fines sales fell by 3.5pc over the same period, as it started selling downgraded Pilbara Blend products.
Other companies have dealt with ore grade declines in similar ways.
BHP
BHP's typical ore grades have declined to below 62pc Fe over recent years, but its lump share of sales has grown quarter-over-quarter since July-September 2024. The company's lump shipments accounted for 32pc of its total shipments over July-September 2025, up from 30pc a year earlier. Its lump share of sales also rose over January-June (see table).
The company's shift towards lumps over 2025 pushed up its average realised iron ore price by 5pc on the year over July-September, from $80.10/wet metric tonne (wmt) to $84.04/wmt, as Argus' average iron ore fines 62pc Fe cfr Qingdao price rose 2pc on the year in the quarter.
New mines
Australian producers are also trying to hold up their realised prices and grades by developing new mines, both domestically and abroad.
BHP's iron ore production growth over July-September came exclusively from its developing 65-67pc Fe Samarco project in Brazil. Rio Tinto is also developing a similarly graded Simandou mine in Guinea.
Domestically, Rio Tinto has invested in a raft of Australian mine replacement and expansion projects. It will lift its production capacity by 130mn t/yr over time, though this will not translate into a production boost. The company plans to use its new mines to hold ore grades and production levels steady, as older mines close.
Building new mines may be more sustainable than shifting towards lump sales.
Australian producers' recent move towards lumps has not been exclusively driven by supply-side factors. Chinese steelmakers have begun to favour lower-grade lump products over recent months, partly because of concerns about sintering restrictions. But this is not guaranteed to continue, creating a need for higher grade ore.
| Iron Ore analysis | |||
| Jan - June '25 | Jan - June '24 | Change (%) | |
| Rio Tinto Shipments | |||
| Lumps (mn t) | 40 | 37 | 7.0 |
| Fines (mn t) | 89 | 95 | -6.3 |
| Lump Share (%) | 31 | 28 | 9.8 |
| Fines Share (%) | 69 | 72 | -3.9 |
| Rio Tinto Prices | |||
| Average Realised Price ($/t) | 90 | 106 | -15 |
| Argus' Average Realised Price ($/t) | 100 | 118 | -15 |
| Average realised price, relative to Argus (%) | 89 | 90 | -0.6 |
| Mineral Resources Shipments | |||
| Lumps (mn t) | 1.4 | 1.0 | 41 |
| Fines (mn t) | 3.4 | 2.8 | 21 |
| Lump Share (%) | 30 | 27 | 12 |
| Fines Share (%) | 70 | 73 | -4 |
| Average Realised Grade (%) | 57 | 58 | -1 |
| BHP Shipments | |||
| Lumps (mn t) | 40 | 38 | 5.4 |
| Fines (mn t) | 87 | 84 | 3.4 |
| Lump Share (%) | 32 | 31 | 1.3 |
| Fines Share (%) | 68 | 69 | -0.6 |
| BHP, Rio Tinto, Mineral Resources, Argus | |||
