Vale iron ore deal a ‘reminder’ for Australia: Roy Hill – by Tess Ingram (Sydney Morning Post – May 22, 2015)

Roy Hill chief executive Barry Fitzgerald has said the iron ore expansion deals Brazilian miner Vale inked with China this week are a reminder Australian producers need to remain competitive in the global iron ore market.

Mr Fitzgerald, the man responsible for the development of Gina Rinehart’s $10 billion Roy Hill mine, joined majors BHP Billiton and Rio Tinto in warning of the Brazilian iron ore producer’s growing competitiveness with its Australian rivals.

“What it does remind me, and it should remind all of us, that we in the mining industry are in a competitive, international business,” Mr Fitzgerald told a Morgans Financial breakfast in Perth on Friday. “What we do needs to reflect the pressures and the actions of our competitors.”

On Tuesday, China agreed to fund Brazilian iron ore giant Vale’s major S11D expansion and invest in huge ships that will transport high-quality ore from Brazil to Asia for a lower cost.

The project, which should be finished next year, is expected to produce 90 million tonnes of high-quality iron ore at a unit cost of $US11 a tonne. Vale also announced this month it would begin shipping a blended product – Brazilian Blend fines – with an iron content of 63 per cent.

“That particular product is direct competition for both us and the two major producers in the Pilbara and that again reminds us that we are in a competitive environment and that our market share and our position in the world will be coveted by other companies, so we need to make sure we are productive and efficient,” Mr Fitzgerald said.

Earlier this week, Rio Tinto iron ore chief Andrew Harding told The Australian Financial Review that the news from Vale “underscored the seriousness of Brazil’s pursuit of global iron ore market share”, while BHP Billiton chief executive Andrew Mackenzie said the deal showed “Australia’s global competitors are stepping up their efforts”.

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