Iron Ore Price, page-1312

Billcan,

Rio Tinto now claims it is producing ore in the Pilbara mines of West Australia for as little as $US17 per tonne.

Pull the other leg, that is just the cost of production, FMG's is $25.00mt on an apples to apples basis.

The $17.0mt & $25.0mt do not include, administration, overheads, royalties,interest costs & sustaining capital.

The headline amount $17.0mt is impressive, but it is a half truth and furphy. Read their reports.

Unlike FMG, RIO is able to hide its true costs as it operates multi commodity divisions, they owe billions, how are they appotioning interest charges, administration and overheads???

If 93.00% of earnings are from IO, and they well over $20.0b, the $17.0mt definitely does not include interest costs , also what about depreciation??


Proves my argument that big players still spending up big on capex and that's why they are now forced to utilise the additional production capacity, resulting in this vicious cycle, more supply, stagnant demand = lower & lower IOP = less profitability and less revenue.

Simple as that.

As the price of iron ore continues to plummet, capital expenditure among the world's top 10 mining companies is expected to fall to around $US64bn this year, down from almost $US80.1bn two years ago when the industry really started to wake up to the scale of the slowdown in commodities demand, especially in Asia.

Big mining groups such as BHP Billiton and Rio Tinto have also rejected calls from their smaller rivals to place caps on production to support prices.