No movement yesterday in the iron ore complex.
The big news today is Rio’s earnings release (find it below) which confirms that the company is a ragingly successful iron ore company buried under a huge pile of…overmatter…to make it appear diversified and unattractive to suiters. The iron ore division contributed 44% of group revenue but…wait for it…90.1% of net earnings (excluding all of those nasty write downs). Fortescue is probably less exposed based upon interest on its cash.
Not sure why anyone would own this thing if they are remotely persuaded by either the thesis of a looming oversupply in iron ore or the China will slow argument. If a wet paper bag were not made of iron ore, Rio could not mine its way out of it.
And of course, with the aluminium debacle and mooted divestment, and an iron ore guy now in charge, further concentration seems likely.
The good news for Rio (and Australia), however, continues to flow from India:
The Supreme Court looks likely to only allow a handful of iron ore mines in Karnataka to resume production over the next year, a state mining official said, keeping a lid on output and potential exports.
India’s snail-paced approach to resolve the 18-month iron ore mining ban in Karnataka, where shipments are also barred, has allowed other producers to cash in on global prices that hit 15-month highs in January.
Only seven out of 170 mines in Karnataka have resumed operations, and the state hopes to start another 14 mines in the next fiscal year, said H.R. Srinivasa, director at the state government’s department of mines and geology.
That could mean another 14 million tonnes, bringing annual output to 15 million tonnes. That is about 10 percent of India’s expected production in the fiscal year that starts in April, based on estimates by the Federation of Indian Minerals Industries (FIMI).
“It is a very conservative figure, but achievable,” Srinivasa said, adding it will take time for the Supreme Court to give approvals for the reclamation and rehabilitation plans it has called for.
Some cite these challenging demands – which run from building fort-like walls around mines to using rain water for sanitation – for the delays in the court hearings. Others say with hundreds of cases either awaiting hearings or verdicts, the Supreme Court simply does not have enough time.
The court may eventually allow a total of 120 mines in the state to produce and has already said it wants to shut the remaining 50 mines due to illegalities, according to FIMI, which is advising the top court.
Karnataka was the first ban with Goa and Orissa following only six and three months ago. India is offline all right (thank you mutters a relieved Sam Walsh under his breath)!
