cba analyst has new views on iron ore

CBA analyst Lachlan Shaw has new views on iron ore after attending the Global Iron Ore and Steel conference.

He believes there is a looming shortage of contract labour, with new iron ore, LNG and coal projects ordered by companies outside of the Tier 1 (Rio Tinto, BHP Billiton, Fortescue Mining Group) not getting built within existing time frames.

?Supply will struggle [and] under our central case of ongoing demand recovery, this a means prices might hold at historically high levels longer than we had thought.?

He adds that the costs of Chinese developers such as Metallurgical Corp Industries, which is building CITIC Pacific?s Cape Preston project, are not going to be as inexpensive as hoped, and that capital expenditure for some projects is likely to be revised higher.

Mr Shaw says West Africa is regarded as the next major high-quality ore province. ?Australia?s high capital and operating expenditure make investment in geopolitically risky West Africa more attractive, though more successful development of West Africa than we currently expect will likely slow Australian volume growth.