The plummeting iron ore price has wiped $74 billion from the value of Australia’s key iron ore mining stocks since January 2014, and analysts expect share prices to continue their decline as the price for the commodity slides.
Investors that held on to the stocks while the price for iron ore sank during the past 15 months are now nursing losses in value of as much as 92 per cent.
Together, BHP Billiton, Rio Tinto, Fortescue Metals Group, Mount Gibson Iron, Atlas Iron, BC Iron, Arrium and Grange Resources suffered enormously as ore prices slumped 60 per cent from $US134 a tonne in January 2014 to $US50.93 a tonne on Friday.
A combined $73.7 billion, or 22 per cent of value, has been erased from their market capitalisations since January 2, 2014.
Excluding the diversified big miners, BHP Billiton and Rio Tinto, the combined market value of the six remaining companies has declined 71 per cent or $17.2 billion.
Junior Pilbara producers BC Iron and Atlas Iron have been hit the hardest by the market’s reaction to the crashing price.
Atlas’ market capitalisation has shed more than $900 million to hover near $110 million, and BC Iron has lost about 92 per cent of its market capitalisation in the past 15 months and is now valued about $51 million.
The two producers have been cutting costs in line with the falling price but for Atlas, the hard work has not been enough to keep it in production. Burdened by $327 million in gross debt, Atlas plans to gradually mothball its three mines this month to curb cash burn as it conducts a review of its business. Its shares have been suspended from trading since April 7.
Hartleys analyst Trent Barnett said the iron ore players had been savaged by the market.
“With the smaller players like BC and Atlas, there really isn’t much market cap left to disappear,” Mr Barnett said.
However, Goldman Sachs expects the market pain to continue for Fortescue. A swath of analysts took a knife to their iron ore price forecasts last week, and Goldman was among the most bearish.
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