Glencore Xstrata quits Aussie iron ore


From Reuters:

Glencore Xstrata Plc said it will halt production of iron ore in Australia next month, citing deteriorating market conditions and ending a two-year experiment to gain a toehold in the sector.

The company has been producing 1 million tonnes of iron ore concentrate a year for Asian customers as a by-product from its Ernest Henry copper mine in north eastern Australia since mid-2011. Glencore’s iron ore output is very small compared to that of Anglo-Australian miners Rio Tinto and BHP Billiton .

This is really not a big deal. A small and isolated magnetite ore deposit in deep North Western QLD hardly offers critical mass.

Likewise, I would not conclude that this means GX wants out of Australian iron ore. With this behemoth now out of the market, I’m quite sure it would like to pick up some much more juicy Pilbara assets when the time is right.

David Llewellyn-Smith
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  1. Glencore Xtrata’s recent Brazilian IO forays will keep them busy for a while – why bother with the small cheese – Icahn wants something meatier.

  2. Of course it’s not a big deal to you… You are bearish in all aspects.

    This is only the beginning if prod cuts and smaller players leaving the mkt. it’s very bullish.

  3. Actually H&H, this probably is a big deal for Gladstone – if Xtrata consider mining magnetite in QLD uneconomical at present, the future of the proposed Boulder steel mill at Gladstone – being fed from a magnetite deposit within the region and supposedly exporting finished steel to Asia – looks increasingly unlikely to me.