Iron ore crashed again last night, with the December 62% fe futures reversing all of the last two days gains $1.88 a tonne lower to $77.67.
But, while many watch the daily machinations of price movements of iron ore, a dose of reality of how long the “glut” in iron ore, and by implication how long the weakness in prices may last, has been delivered by Mitsui Australia head Yasushi Takahashi.
Takahasi told The AFR that the fall in the price of iron ore and coal this year had been faster and deeper than they expected but added that Mitsui’s forecasts were that the market would head into a “more balanced tighter supply and situation” later this decade. He said this might be as “early” as 2017!
This of course fits neatly with the larger miners’ current objective of pressuring the higher cost producers but Takahasi also had a message for Australian miners who he believes are overpaid.
He said labour made up 25% of on-site mine costs in Australia compared to 10-15% in countries like the USA, Indonesia and South Africa. Australian miners on average earned $US122,000 which is more than double the earnings of US miners.
“That is a good thing – we are seeing high wages in the most liveable country in the world,” he said. If that’s sustainable that’s fine. But one concern is, is it really sustainable?”
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