BHP Billiton’s new boss of its Australian mining operations, Mike Henry, says the rebound in iron ore prices to 10-month highs cannot last and the forces underpinning the surge will last a few months at best.
Mr Henry also had a message for Canberra: get moving on workplace reform. Claiming the call for reform was “election-cycle agnostic”, Mr Henry said reform was needed “to allow us to continue to grow, not just the industry, but the economy’’.
Iron ore has soared $US25 a tonne, or 63 per cent, from a low of $US39.30 a tonne on January 13 to $US64.77, fuelling massive share price recoveries and prompting thoughts of a tax boost for Canberra. But Mr Henry said that as much as he would like to see the higher prices sustained (they are now comfortably up on last year’s average of $US56 a tonne), the current level is not baked on.
“I wish I could say this is going to be sustained over a large period of time, but I don’t think it will be,” Mr Henry told a 660-strong crowd at a Melbourne Mining Club luncheon. He said strong restocking and construction demand in China might not be sustainable and that there was more iron ore supply coming on.
“I think we will see this for a few months but then things will start to come back,” he said. While the sharp rise in Chinese steel prices has been the major factor in iron ore’s rebound, production cuts and the forced shutdown at the BHP and Vale-owned Samarco operation has helped sentiment.
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