quarterly update, page-6

Underlying demand story augurs well for BSIOP.

Blind Freddy could stitch a funding deal up under these conditions particularly no that all approvals are in place..........Message to management - time is money - so giddyup.

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Iron ore revenue hits a high on Chinese demand
Matt Chambers From: The Australian February 04, 2011 12:00AM

THE nation's monthly iron ore revenue surged to an all-time high of $4.97 billion in December, as Chinese demand forced prices higher and Rio Tinto and BHP Billiton ran their huge Pilbara region iron ore mines, railways and ports in Western Australia at record rates.

The figures, released yesterday by the Bureau of Statistics, show that despite a surging Australian dollar, the nation's biggest export commodity is on track for a record 2010-11 and is likely to easily break government revenue forecasts of $50bn.

Australian iron ore miners are enjoying much better prices than they did during the boom before the financial crisis because of a BHP-led move from annually negotiated prices to quarterly prices based on spot price averages.

December's iron ore revenue was up from $4.36bn in November, bringing 2010-11 sales to date to $28.4bn.

This is already not far off 2009-10's total of $35bn.

December-quarter iron ore prices were about $US127 a tonne at Pilbara ports and have risen to about $US134 for this quarter.

This is well below implied spot prices of $US180 a tonne, which are expected to be captured in June-quarter pricing.

This, plus continued production increases, should push national iron ore revenues beyond $60bn this financial year.

Yesterday Goldman Sachs analysts boosted their 2011 average forecast for iron ore at Chinese ports from $US153 a tonne to $US174.

"We expect a strong recovery in Chinese buying from mid-February as mills ramp up production in a rising steel market," Goldman Sachs analyst Malcolm Southwood said. Spot prices were expected to peak at $US190 a tonne next quarter.

Goldman Sachs believes the seaborne iron ore market will move into oversupply from 2013, pushing prices back down to around $US80 a tonne into China.

December coal revenue was buoyant, rising 4 per cent to $3.71bn from a rain-affected November.

While coal production was hit from October, the real damage to production did not come until January, when railways and pits were flooded.

December exports of both Queensland and NSW thermal and coking coal were buoyed by miners running down stockpiles when they had to stop mining because of the rain.