The iron ore price may be down and out, but many investors are still thirsty for knowledge about what exactly iron ore is, and how the types of iron ore differ. 

Put simply, iron ore consists of rocks and minerals from which iron can be extracted. Iron ore is most often found in the form of hematite and magnetite, though goethite, limonite and siderite types are also common. Approximately 98 percent of the iron ore produced in the world is used to make steel.

Types of iron ore: Hematite

Hematite ore has the chemical formula Fe2O3 and has very high iron content of 70 percent. Its name comes from the Greek word for blood, haima, because of its reddish color. High-grade hematite ore is also often referred to as direct-shipping ore because it is mined and extracted with a fairly simple crushing and screening process before it is exported. Hematite ore is found in abundance throughout the world, but the most utilized deposits are in Brazil, Australia and Asia.

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Hematite ore has been the primary type of ore mined in Australia since the early 1960s, according to Geoscience Australia. Approximately 96 percent of the continent’s iron ore exports are high-grade hematite, and the majority of its reserves are located in the Hamersley province of Western Australia. The mountainous Hamersley Range is at the center of hematite ore exploration and development because it sits on a banded iron formation.

Brazil is another one of the world’s main sources of hematite ore. Its Carajas mine is the largest iron ore mine in existence, and is operated by Brazilian mining company Vale (NYSE:VALE). Vale is the third-largest mining company in the world and the largest producer of iron ore pellets. Vale’s headquarters are in Rio de Janeiro and its primary iron ore assets are in the Iron Quadrangle region of Minas Gerais.

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In Asia, a great deal of mining for hematite ore is done in China. Known reserves include the Tung-Yeh-Chen hematite ore deposit and the Dongye hematite ore deposit.

One of the major advantages hematite ore has over other types like magnetite ore is its high iron content. That makes the iron extraction process much less costly and time consuming. In addition, hematite ore only goes through one stage of screening and crushing, while magnetite ore has an additional round of processing.

Types of iron ore: Magnetite

With the chemical formula Fe3O4, magnetite ore has much lower iron content than hematite ore. That means it has to be concentrated before it can be used to produce steel. However, the ore’s magnetic properties help separate magnetite ore from rock during concentration.

Magnetite ore is currently mined in Minnesota and Michigan in the US, as well as in taconite deposits in Eastern Canada. A major mining site in Michigan is the Marquette Range. The deposit was discovered in 1844, and ore was first mined there in 1848, as per the Michigan government’s website. Among the four types of iron ore deposits found in this area are magnetite ore and hematite ore.

In Minnesota, magnetite ore is mined mainly in the Mesabi Range, one of the four ranges that make up the Iron Range of Minnesota. In Canada, Labrador is home to the majority of magnetite ore mining. In particular, mining companies focus exploration and development on the iron-rich Labrador Trough.

Magnetite ore’s most distinctive property is its magnetism. It is the most magnetic mineral in the world. Additionally, obtaining iron from hematite ore can produce a great deal of carbon emissions, and the process for magnetite ore is much less harmful.

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The product from magnetite ore is also of higher quality than the product from hematite ore. The former has fewer impurities, making it a premium product that can be sold to steelmakers for higher prices. In this way, the elevated cost of processing magnetite ore can be balanced out.

Cliffs Natural Resources (NYSE:CLF) is a major player in the magnetite ore mining industry, with five mines that are focused on magnetite ore. For instance, the Empire mine, located in Michigan’s Marquette Range, has a rated annual capacity of 4.5 million tons. Additionally, its Hibbing taconite mine is in Minnesota’s Mesabi Range and has an annual rate capacity of 8 million tons of magnetite ore.

The company also owns an iron ore mining complex in Western Australia.

This is an updated version of an article first published on Iron Investing News on September 5, 2013.

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