Nice to be backing a low cost producer - and as the volumes...

Nice to be backing a low cost producer - and as the volumes increase the costs will drop further.

FMG can endure $US70/t ore price: Power
July 25, 2011 - 12:29PM


Fortescue Metals Group will remain profitable if the iron ore price slumps by $US100 a tonne, new chief executive Neville Power says.

The price of the steel making commodity is currently near historical highs at about $US176 per tonne.

Mr Power agrees with consensus among analysts that the iron ore price should fall when planned new supply around the world comes on stream around 2014/15.

But Fortescue could endure a price as low as $US70 a tonne, he said.

"We are making sure our business is capable of surviving in those sorts of environments," Mr Power told AAP at a mine site visit on Monday.

"There are lots of people who won't survive a $US70 a tonne ore price."

Mr Power said strong iron ore demand looked set to continue for some time, but prices would fall when China puts the brakes on its surging economy.

China still had a phase of growing consumerism ahead following years of urbanisation, India was next in line, and after that, the Middle East.

Grades were falling at Brazilian iron ore mines and costs were high at many Chinese operations, so Australian producers of the bulk commodity were well placed.

? 2011 AAP
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