Iron ore price, page-42

When Twiggy Forrest says relax, you listen

The man who made a cool $5.3 billion last year thanks to the skyrocketing iron ore price says he expects the commodity to “trim down”, but investors shouldn’t be alarmed.


Andrew ‘Twiggy’ Forrest, chairman and founder of Fortescue.
Fortescue Metals chairman and one-third stakeholder Andrew Forrest is now Australia’s third-richest person following an unprecedented 390 per cent rise in the company’s shares in the last 11 months. But all good things must come to an end, as the billionaire business leader outlined in an interview in Jakarta.

“In the iron ore industry, in the steel industry and in particular the developing countries like Indonesia, India and China, we mustn’t fear low iron ore prices,” Mr Forrest said, according to Bloomberg. “I would say the iron price is more likely to trim down.”

Fortescue, a pure-play iron ore miner, left the market stunned as its shares exploded in 2016 as the price of iron ore more than doubled from below $US40 a tonne in December 2015 to almost $US95 in late February 2017. The commodity has been slipping for the last two weeks but saw a rare bounce overnight to trade at $US88.26.

Investors have applauded Fortescue as it more-than halved its cost of production over the last two years, aggressively paid down debt and issued juicy record dividends.

Mr Forrest reiterated he has no plans to raise production levels and remains aware of the problems that can come with an iron ore price over $US100.

“I can turn a key and increase our production if I wish to, but I’m not going to do it,” Forrest said, Bloomberg reports. “I’m very happy with 170-175 million tons and we’re going to keep cantering on that.”

“Anything around $US100 a ton is going to kick new investment into the iron ore industry and may even see the startup of unsafe or underground mines,” Bloomberg writes.