Anyone listening to this ought to run a mile, Ken Brinsden of Atlas Mining at the AGM, via AFR:
“In some respects, we don’t see them [the majors] as our competition… for us to deliver iron ore to the ship for $20 a tonne, that would be ludicrous. But if we can do it for $45 a tonne, who isn’t to say that that might be incredibly competitive in a global context.”
Well…me. In its most recent quarter, Atlas produced at C1 costs of $48 A $3 reduction would take its all-in breakeven to roughly $64 per tonne. However, it sells iron ore that is heavily discounted to benchmark (for instance it received roughly $69/tonne in the last quarter with spot averaging $90). With spot at $80 it will be in trouble. At my forecast of $60-65 it will be gone.
The AFR goes on:
Mr Brinsden has a hopeful outlook for the market and told reporters on the sidelines of the meeting that he expected an imminent price recovery based on growing demand from Asia, especially in India.
In celebrating Atlas’s tenth year, chairman David Flanagan, who founded the company in 2004, said few businesses in the iron ore space made it from a listing through to their 10-year milestone.
Mr Flanagan said the industry was now too pessimistic about the iron ore price.
There’s no recovery coming from India now or ever. Although imports are rising as the bureaucracy destroys yesteryear’s mining boom, the net result will be zero as Goan iron ore returns to seaborne markets. Long term, outside of select sectors, India is a basket case.
As Mr Flanagan illustrates, the industry is still far too optimistic about the iron ore price, I’m afraid.
