The world’s largest iron ore producers are burning through their reserve bases faster than they can replenish them, and the cost of replacing what is mined is climbing sharply, according to a new report from Wood Mackenzie.
The analysis, titled Iron Ore Reserve Depletion and Replacement Analysis and published in September 2026, examined the six largest iron ore producers globally.
It found that between FY2016 and FY2025, those companies collectively depleted 11.1 billion tonnes of marketable reserves.
Only three of the six fully replaced what they mined during that period.
Net reserve replacement ratios across the group varied widely, ranging from 28 per cent to 159 per cent, a spread Wood Mackenzie attributes to differences in reserve conversion, capital allocation and operational disruptions.
Mihir Vora, Director, Research for Metals and Mining at Wood Mackenzie, said many producers still hold substantial reserve lives, with those carrying 15 or more years of reserves retaining a meaningful buffer.
Still, he cautioned that “the direction of travel is clear: as mine lives shorten, the margin for error narrows, and each successive tonne becomes more challenging and costly to replace”.
That rising difficulty is already showing up in costs.
C1 cash costs have climbed sharply across the industry since FY2016, roughly doubling for some producers, as maturing ore bodies require more waste material to be moved for the same volume of ore extracted.
Wood Mackenzie describes this as a natural consequence of mine maturity, one that is expected to continue.
Cash margins, which peaked industry-wide in FY2021, have since been squeezed by that cost inflation, converging to approximately US$50 to $60 per tonne by FY2025.
That narrower buffer leaves producers with less room to absorb further cost increases or extended periods of weak prices without it affecting investment decisions.
Reserve quality is adding another layer of pressure.
While the overall quality of iron reserves has remained fairly stable industry-wide, the composition behind that stability is shifting.
Wood Mackenzie found reserve grades falling by as much as 1.6 percentage points among some peers since 2016, with higher grade material increasingly needed to offset depletion of lower grade ore bodies.
Impurity levels, particularly alumina, are also rising in some product streams, a development that matters because alumina carries specific penalties in blast furnace operations regardless of overall iron content.
Some producers have consequently slipped from earning a modest premium to facing a persistent discount against the 62 per cent Fe benchmark over the past five years.
Mayank Maheshwari, Senior Research Analyst, Metals and Mining at Wood Mackenzie, noted that “reserve replacement ratios tell only part of the story”, pointing to uneven quality among the tonnes producers are adding back.
Capital intensity is compounding the challenge.
Wood Mackenzie’s review of cumulative growth capital expenditure per tonne of reserve added between 2016 and 2025 found a fivefold range across the peer group, from about US$2 per tonne to roughly US$10 per tonne, reflecting differences in remaining resource quality and the operational and regulatory hurdles each producer faces.
Several major producers have committed billions of dollars to brownfield expansions and sustaining projects over the next decade, aimed at replacing depleting ore bodies and holding production broadly steady.
Wood Mackenzie characterises this spending as largely sustaining rather than expansionary, designed to offset the decline of legacy ore bodies rather than deliver a meaningful increase in supply.
Vora summarised the shift facing the sector, stating: “The main challenge for the current iron ore industry is rising costs to maintain existing production.
“As producers work through their existing reserves, replacement is becoming more capital-intensive and, in some cases, the quality of what is being added is declining.
“The industry is investing to sustain production, but it is having to work harder to stand still.”
