BHP, Rio & Fortescue rejoice with iron ore price spike
A massive spike in the iron ore spot price brought a glimmer of confidence back to struggling WA miners, with the price hitting above $US70 a tonne. It’s been a long 15 months since iron ore was trading at this price.
What this means to iron ore mining companies like Rio Tinto, Fortescue and BHP is a relief from the previous squeeze on operating expenses, where a sub $40 a tonne was the norm. Thousands of mining jobs have been stripped from the Pilbara mining operations over the last 2 years as the reality that the Chinese boom had passed.
The benchmark price for iron shipped to China`s Qingdao port jumped $US5.69 to $US70.46 a tonne when the price was fixed, the first time it has traded above $US70/t since mid-January last year.
It could also not come at a better time for the WA Government, which relies heavily on iron ore royalties from the three Pilbara mining companies to fill its pockets with much needed cash.
Even though the Australian dollar, which last night was worth US78.10¢, has held back some of iron ore`s gains in local currency terms, the recovery is nothing short of incredible. Analysts have attributed the commodity`s run to higher Chinese steel prices, low iron ore stockpiles, and official data suggesting a rebound in China’s construction sector activity.