Here in action is the point I’ve been making about Fortescue and the Australian iron ore juniors battle for survival versus Brazil. From Platts:
Mineracao Usiminas, the mining arm of Brazilian steelmaker Usiminas, hopes for “lucrative exports” of iron ore in the fourth quarter, after a third quarter without exports, the company said Wednesday.
“There will be an opportunity for profitable exports,” Wilfred Bruijn, executive director, said during a conference call with investors.
That possibility is mainly due to the recent devaluation of Brazilian real compared to the US dollar, the company has said. The real has fallen from Real 2.26/$1 at the start of June to a range of Real 2.40/$1-Real 2.50/$1, according to Brazil’s central bank.
Besides the drop in the real, Musa is working on to become competitive in a 62% Fe iron ore price scenario of $80/mt CFR North China, reducing costs up to 25%, Bruijn said.
Musa has started a project to cut iron ore extraction expenses by $5-$10/mt, a 20%-25% reduction of current FOB mining costs.
And here’s the chart that has Brazil laughing all the way to China:
In US dollar (and therefore Chinese yuan) terms, Australian competitiveness versus Brazil is getting absolutely flogged.
