Lumina Gold secures improved Ecuador terms with Cangrejos mining permit, analyst says
The contract includes $25 million in advance royalty payments to the government split into four stages.
The Big 3 are flooding seaborne market with ore they produce for as little as $20–$30 a tonne FOB to keep out competitors and protect their oligopoly, says a new report by UBS.
Also, that’s a huge forecast price reduction.
The 40% drop this year must’ve surprised even the smart money.
"Our work in our updated incentive price analysis suggests that projects outside the majors need prices of $US90-$US100 per tonne to incentivise entry," Mr Morgan said. "But once built, these projects require about $US60-$US90 per tonne to break even."
However, UBS predicted that prices would stay too low for new projects to come on stream.
The paper, Iron ore: Game Changer, downgraded UBS’s forecasts for iron ore to between $US80 and $US85 between 2015 and 2019. They had been about $US100.
The long-term price in 2014 dollars is just $US75.
[…]
At prices between $US80 and $US85, about “a quarter of current iron ore production is loss-making”, the report said. “These producers will fight to cut costs and stay in the trade, but we believe a significant proportion will be unable to do so.”
Via Rio, BHP have 'strong incentive' for iron ore deluge, says UBS.
Comments
dakarza
Pls bring the report on . Yeah Minas Rio is totally out of profit. However Most probably UBS is trying to scare everyone to go long since the big banks did so much bond issues for the cliffs of the world. They know lower prices are the seeds of its own demise.