Roy Hill

Gina has put up US$10bn Todd  estimates project to cost 2-3bn at $46/ton delivered to china.(Todds figures)
Miners are working hard to reduce cost to adjust to new market conditions, Isn't that what mgt is meant to do to max returns??

Gina Rinehart's Hancock Prospecting tips iron ore price recovery

Date
July 27, 2015 - 4:48AM

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Perry Williams

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Gina Rinehart's Roy Hill iron ore mine is scheduled to begin production in October. Photo: Philip Gostelow
Gina Rinehart's most trusted lieutenant expects the price of iron ore will recover to $US80 a tonne despite surging supply and has flagged that the $US10 billion ($13.7 billion) Roy Hill project will start shipping ore in early October, later than scheduled.
Hancock Prospecting executive director Tad Watroba said the long-term fundamentals for the iron ore industry remained solid despite the price falling to a six-year low of $US44 a tonne in early July.
"It will go back to $US80 a tonne in my view," Mr Watroba told Fairfax Media. "You're seeing some price volatility at the moment but some of that high-cost supply will come off and in terms of China demand still remains strong."
Record demand from China sent the price of iron ore soaring to $US190 a tonne during the mining boom in 2011.
However, a flood of supply from large producers Rio Tinto, BHP Billiton and Brazil's Vale and easing demand has pushed the price back to historic lows. Iron ore was trading at $US51 a tonne on Friday.
Roy Hill Holdings, 70 per cent-owned by Ms Rinehart's Hancock Prospecting, had initially expected to begin production in September.
However, Mr Watroba said because of weather conditions and safety incidents the timetable had slipped slightly, until the second week of October.
The Roy Hill mine will eventually ship 55 million tonnes of ore a year, adding to record supplies from Australian shores of the raw material used for making steel.
On track

BHP confirmed last week it was on track to produce 270 million tonnes of iron ore in 2015, while Australia's largest producer Rio Tinto expects to supply 340 million tonnes.
Australia's third-largest iron ore miner, Fortescue Metals Group, beat its own forecasts on Friday to ship 165 million tonnes of iron ore for the year to June, a 33 per cent rise on the 2013-14 year.
BHP and Rio remain positive on the long-term outlook, given their belief China's steel production will peak at more than 1 billion tonnes in the years after 2025, before flattening off.
However, recent forecasts by the China Iron and Steel Association said Chinese steel production might have peaked with the 823 million tonnes produced in 2014.
Mr Watroba agreed and said steel demand in China had stabilised at about 800 million tonnes a year.
"That is still healthy demand and we expect that to continue for many years to come," he said.
Citi has predicted that Roy Hill's scheduled 30-month build-up to full production was "conservative", given what other miners in the Pilbara had achieved.
Roy Hill chief executive Barry Fitzgerald has also described the 30-month timeline as "far too long" and said his team expected to reach the mine's production capacity of 55 million tonnes a year in 15 to 18 months.
Stockpiled

Earlier in July Mr Fitzgerald said 13.5 million tonnes of ore had been stockpiled and mining was running ahead of the life-of-mine plan, positioning the project well for an accelerated increase.
Ms Rinehart's consortium of investors in the project include Korean steel giant POSCO, which owns 12.5 per cent, Japan's Marubeni Corporation (15 per cent) and China Steel Corporation (2.5 per cent).

While Mr Watroba would not comment on the break-even price for Roy Hill – the price at which it is not making or losing cash – Credit Suisse analyst Paul McTaggart has estimated previously a cost of $US40 a tonne.
That compares with Fortescue, which said last week it could maintain its new break-even price of $US39 a tonne this financial year.
"It's another 50 million tonnes that will add to the overall surplus, which ultimately means high-cost production has to give way for it. But that won't happen overnight – we've seen how sticky some of that production has been so far," Mr McTaggart said in May.
Mr Fitzgerald said in July media coverage of the company's safety issues has been disproportionate to the number of actual incidents that had occurred at the $US10 billion iron ore project.

Read more: http://www.smh.com.au/business/gina-rineharts-hancock-prospecting-tips-iron-ore-price-recovery-20150726-gik0o5.html#ixzz3h4o4GGTd​