The miners led the Australian Stock Exchange to fresh 5-year highs yesterday and as the Chinese growth engine rolls on, so too does investment in mining.
The Australian reports this morning that “The iron ore investment boom in Western Australia is set to roll on with more than $US 10 billion in new investment” by BHP and Rio Tinto.
Key here is that the crash in iron prices to below $100 tonne last year and expectations that they would stay depressed has been, so far, incorrect with iron ore prices back in the $130 tonne region.
Which means the metrics of investing in the Pilbara work.
The Australian noted:
“Resilient prices and iron ore boss Jimmy Wilson’s successful sweating of existing assets are likely to give the board (BHP) confidence to press the button on an expansion sooner rather than later, despite the recent focus on capital discipline”
This is good news for the Australian economy and economic performance, although it won’t help the economy rebalance.
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