Iron ore prices look set to be stronger for longer, potentially delivering windfall profits for West Australia’s big miners for the next two years.
As the iron ore price hit a five-year high of US$107.50/t this week, analysts have begun scrambling to revise their estimates as they start to digest the impact of supply disruptions out of Brazil and how long the outages could linger.
Iron ore giant Vale has been forced to close mines in Brazil, representing about 90 million tons of annual product, after a tailing dam disaster in January which killed hundreds. The company is facing another dam failure at one of its inactive mines and its 30mtpa Brucutu mine remains closed with lingering uncertainty as to when it can reopen.
Shares in Rio Tinto hit an 11-year high on Monday before closing up more than 2% after Goldman Sachs placed a buy recommendation on the stock, warning that the global supply deficit could last well into 2020.
This month, Rio revealed it received US$ 2 billion in additional free cash-flow for every US$10/t rise in the iron ore price.
For the rest of this article: https://en.mercopress.com/2019/05/29/brazil-s-iron-ore-industry-misery-a-boom-for-australian-big-miners