WA mining companies happy with iron ore price rise

WA mining companies happy as iron ore prices increase

Mining companies like BHP Billiton, Rio Tinto and Fortescue Metals Group ride out the iron ore price roller coaster

WA mining companies breath a sign of relief as iron ore prices edge upwards.

Iron ore mining in Australia has been hit hard over the last 12 month. Despite technology investment and a new approach to increasing productivity and throughput, iron ore mining companies in Australia still face the uphill battle of a faltering iron ore price.

Big WA mining companies like BHP Billiton, Rio Tinto and Fortescue Metals Group have created a ‘buffer zone’ around themselves to reduce the impact of lower commodity prices. They have achieved this as we said before, by re-investing their mining profits back into the business to create a more efficient operational model. However, some of the smaller ‘junior’ miners have not been so fortunate and have struggled to maintain breaking even, let alone show a profit.

The slight increase in the price of Australian iron ore has been welcomed by everyone, from mine managers to every day workers alike.

The iron ore price has dropped 13 per cent over the last month, but a surprise recovery in Chinese steel prices, created a 4 per cent gain this week to $US85 a tonne.

Hot on the tail of the increase in the iron ore price, the big Australian iron ore producers, BHP, RIO and FMG all did very well and managed to lift their share price once again.

Even the West Australian junior mining companies managed to crack a smile as investors in their  businesses showed them support. Western Australian miners Atlas Iron, BC Iron and Mount Gibson were all benefactors and managed slight increases in their share price.

Smaller WA mining companies with mining operations in the iron ore-rich Pilbara region are more susceptible to weakening prices, although it is more common for some of the smaller miners to ‘piggy-back’ on the established infrastructure of the larger mining companies in order to keep operating costs to the barest minimum.

Iron ore mining in Australia continues to wrestle with challenging prices and increased global competition. However, with the big 3 mining companies and also the rise of Gina Rinehart’s Roy Hill mine in the Pilbara, iron ore mining in Australia is here to stay.

US based Goldman Sachs has come out with a bold statement pointing out that 2014 will be where new production capacity catches up with the growth in demand. Some analysts are pointing to 100 million tonnes of capacity in 2015 with an average price of $US80 a tonne.

The other indicator of growth in steel production is the price of coking coal which is the prime ingredient to fire up the iron ore creation process. At present the price of coking coal is around $US120 a tonne and at this point in time in Sept 2014,  the price appears to have stabilised for the time being.

Other, well respected organisations, are predicting signs of new growth in China as it begins to level out and the property market is turning itself around.

It’s envisaged the stabilisation of Chinese growth could fire up the steel mills once more, with a strengthening of demand likely to meet with the supply adjustment that is being rumoured. Given this view, it comes into play that the notion of an over-supply is not permanent – merely temporary.

Keep up to date with iron ore mining in Australia by subscribing to iMINCO Project News.

iMINCO Project News Western Australia

0 Comments

Leave a reply

Your email address will not be published. Required fields are marked *

*