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Iron ore price drop has miners uneasy

Reported by AAP
Tuesday, June 17, 2014
Topics in this article:
Aquila Resources,Bhp Billiton,Rio Tinto
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The head of BC Iron concedes the industry is apprehensive after iron ore prices fell to 2012 levels of $US89 per tonne.

"The mood in Perth is apprehensive but pragmatic," managing director Morgan Ball told reporters after a tour of the company's Nullagine operations in the Pilbara.

"We're all in a cyclical industry so we're used to downturns."

He said BC Iron was set up to ride out such a downturn.

"I'm pretty comfortable," Mr Ball said.

The company's all-in cash costs are set to fall between $60 to $70 per tonne, depending on currency fluctuations, he said.

Further iron ore price falls could trigger discussions with contractors about reducing operational services as well as cuts to exploration and business development, he said.

But Mr Ball is confident there will be no job losses at the company's joint venture operations.

Shares in iron ore miners have fallen heavily, including BC Iron, which dropped 10 cents to $2.97.

Mr Ball predicts the iron price will return to around US$100 to US$120 per tonne.

"We are looking at growth opportunities but it would have to be a pretty compelling one to consider in the iron ore space at the moment," he said.

A potential takeover battle for Aquila Resources between Mineral Resources and the partnership of Baosteel and Aurizon was positive for the Pilbara, and could open up projects for other junior iron ore players, Mr Ball added.

The $1.4 billion bid from Baosteel and Aurizon came as a kickstart to the stalled $10 billion West Pilbara Iron Ore Project.

Baosteel's inclusion showed China as "not all doom and gloom," Mr Ball said.

But he conceded the west Pilbara, where a potential rail line could be built, was mostly controlled by big iron players such as BHP Billiton and Rio Tinto.

30/08/2014 12:13Sydney, Australia. 30 August,2014
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