poor twiggy lost millions, page-11

From today's Oz.
Before reading article i reckon RIO's chief is delusional trying to predict statistics out as far as 2022!!!. Simply confirms these A type personalities have tunnel vision. Will FMG stay above $9.00 short term? With all the current hype it's very likely. But estimating what will happen medium term i.e. 18-36 months out is where the profit is. In theory the stockmarket is 6 months ahead of actual events.
Ask yrself this. What is likely to send RIO et al thru the roof? A certain USA recession, a European doldrum, a massive increase in Indian productivity?? Rather ask yrself... what do we already know.... could this cause a serious drop in world economy? I have learnt to seldom trust CEO's who hype despite the evidence.
MM
PS RIO says it costs $220 to produce 'margin ore.' BHP disputes this. Yet FMG sold their first big shipment yesterday at $68/ton. Think it through.
MM

'RIO Tinto chief executive Tom Albanese has ramped up the pressure on the Chinese steel mills to cave in on iron ore pricing, saying the rising production costs for marginal producers is supporting record spot prices.

And he warned that rising iron ore prices may still have further to run, with supplies of Indian iron ore set to fall as the country uses more of its ore for its own steel production. In speech notes delivered at Merrill Lynch's mining and metals conference overnight in Florida, Mr Albanese said it was "much too early to call the end of the iron ore price cycle".

Rio and rival BHP Billiton are believed to be pushing for a rise of about 85 per cent in 2008-09 benchmark iron ore prices in defiance of the 65-71 per cent rise agreed to by Brazilian mining rival Vale. The two Australians are threatening to increasingly divert production into premium-priced spot markets unless they secure a higher price to reflect the attractiveness of Australian ore given the higher cost of freight into China from Brazil.

But with the Chinese still holding out and their mills able to rely, at least in the short term, on local production, there is speculation that it will be the Japanese steel mills that will cave in before the Chinese.

In Mr Albanese's slide presentation, Rio suggests that the marginal cash cost of production delivered into China is up at more than $US220 a tonne, compared with delivered spot prices in China last month of about $US177 a tonne. The slide put Rio's own costs down at less than $US50 a tonne.

"Costs have risen for all suppliers but the relative position of Rio Tinto has improved -- well positioned towards the bottom of the cost curve," he said. With BHP boss Marius Kloppers due to address the same conference, Mr Albanese kept the fight up against BHP's hostile takeover bid, expanding on Rio's volume growth projection to 2015 that it said would double the rate of BHP's growth outlook. Rio is forecasting average volume growth of 8.6 per cent a year.

Breaking down that growth, Mr Albanese is forecasting aluminium volumes to grow by 7.6 per cent on average, iron ore by 9.4 per cent, combined coal and uranium by 11.6 per cent and base metals by 8.4 per cent.

"Strong demand growth will lead to a continuation of current momentum, meaning a doubling of the current size of the markets for our three key products of iron ore, aluminium and copper between now an 2022," Mr Albanese said.