Perth Mining Financier Sees Lower Iron Ore Contract Prices Ahead
Perth mining financier sees lower iron ore contract prices ahead
One of the leading figures in mid-tier iron ore production in Western Australia, George Jones, believes the big price pushes by the big three ' Rio Tinto Ltd, BHP Billiton and Vale ' will see a new order over the next 12 months ' with contracts being negotiated with the Chinese (cnmining) at lower prices.
The announcement by major Pilbara iron ore exporter Rio Tinto that it would be cutting its production by 10% is expected to be a forerunner of tougher negotiations with Chinese and other Asian steel mills taking the lead.
George Jones who was involved with eastern wheatbelt iron ore miner Portman Mining - taken over by American iron and steel company Cliffs Mining - and now is chairman of Gindalbie Metals Ltd. Earlier this month Gindalbie (ASX: GBG) announced it would raise $A162 million ($US112.5 M) through its joint venture partner AnSteel of China to complete project development financing for the Karara iron ore-magnetite project in Western Australia's mid north. This would involve a placement of 190,658,824 shares at A85c/share, a 105% premium to the last October quoted price. The last ASX trade today was at A44¢.
On ABC television news tonight Jones said in a brief interview that the high prices sought and gained in the past two years by the majors were now rebounding.
Also today, Australia's third largest miner OZ Minerals Ltd (ASX: OZL) warned that it was undertaking a "thorough review of all capital and operational expenditures."
While the company was now commissioning the big Prominent Hill copper-gold mine in South Australia's far north and is preparing to commission its second autoclave for the Sepon copper plant in Laos "the timing and structure of all other projects is under review.
Managing Director Andrew Michelmore said: "OZ Minerals is in the fortunate position of having a healthy balance sheet, a good cash position and an enviable suite of projects that underwrite the future growth of the Company."
The picture being painted in the business media in Australia is getting more sobering by the day. This morning's The Australian newspaper cited reported sackings since early August and the indications in Perth's stockbroking quarters and the mining hub of West Perth shows job fallout has been more substantial.
The reported job culls include 150 by laterite nickel-cobalt miner and refiner Minara Resources Ltd (ASX: MRE) with another 50 to go, Perilya Ltd (ASX: PEM) cut 440 jobs in Broken Hill, Mt Gibson Iron Ltd (ASX: MGX) will drop one-third of its workforce on iron ore operations in WA, the now European-controlled, Consolidated Minerals has cut jobs at its nickel mining operations at Kambalda and late last week CBH Resources Ltd (ASX: CBH) added 118 job cuts to the 220 dropped in June at its Endeavour lead-zinc-silver mine near Cobar in New South Wales.
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