Moscow. December 16. The fall in iron ore prices has put producers of this raw material on the edge of survival, said chief Executive officer of Rio Tinto Sam Walsh in an interview with Bloomberg. According to him, many producers leave the market soon, as they are already holding on by a thread.
Prices gelrode this year fell by 45%, forcing the company with the highest production costs to leave the market. While large producers such as Vale SA, Rio Tinto and BHP Billiton boost production in an effort to increase their market share, further price drop.
The cost gelrode last week fell below $39 per ton, updating the minimum since 2009. For comparison: the price of this raw material climbed to nearly $190 per tonne in 2011 due to strong demand in China.
“I am sure that with the price of $39 per ton there are those who suffer greatly, says Walsh. Sooner or later there will be an adaptation of the market.”
Lower prices for gerudo and other raw materials negatively affects the stock prices of mining companies, the Rio Tinto since the beginning of 2015 dropped by 28%, BHP shares fell by 40%, Vale is 49%.
Many experts criticized Rio Tinto and its competitors because these companies follow a policy of expansion of deposits, low extraction costs of raw materials during the period of excess gelrode on the market. Rio Tinto and BHP “live in an imaginary world”, as their strategy is hurting them as seriously as their competitors, says Lorenzo Goncalves, the head of Cliffs Natural Resources Inc, the largest U.S. manufacturer gelrode.
Prices below $50 per ton “is not comfortable for anybody,” he says.
Walsh believes that few companies will be able to withstand in the face of falling prices gelrode to $30 per ton. “A stable price of $30 per ton just physically impossible, he said. – Many manufacturers will not be able to pass the test at this price”.
According to him, Rio Tinto will continue to pay dividends despite the fall in the price gerudo reduces the profit of the company and is forcing its competitors to refuse payment of dividends to shareholders. “We have a good position, a powerful balance sheet, minimal debt among comparable companies. The payment of dividends is very, very important,” stressed Walsh.
Contracts for ore with 62% content of iron delivery to the Chinese port of Qingdao on Wednesday fell 0.5% to $39,18 per ton, according to Metal Bulletin.