Yesterday’s iron ore price rose 0.3% to $US136.40 per tonne. 12 month swaps are up a bit too at $117.02 and rebar average was flat.
News today is all about Rio Tinto last night delivering on Pilbara 360:
Under the plan, Rio’s iron ore production is expected to hit 290 million tonnes a year by the end of the first half of 2014, where it is then forecast to rise by more than 60 million tonnes between 2014 and 2017.
Most of the growth will be delivered in the next two years with mine production expected to hit more than 330 million tonnes in 2015.
The extra tonnes will come from the development of a number of existing mines including Brockman 2 and 4; Yandicoogina, Paraburdoo and West Angelas.
…Combining brownfield and productivity across the operations improvements, Rio estimates it can deliver the expansion $3 billion cheaper than the previously estimated $4.9 billion.
Two greenfields expansions are now on hold at Silvergrass and Koodaideri. Very sensible and a nice balancing act to keep pressure on opponents and at least ease the supply deluge. Analysts are still worried. From the FT:
Analysts at Citi said Rio’s guidelines for the so-called “capital intensity” of the expansion project, at between $120 and $130 per tonne of capacity, was lower than their $145 forecast and would also ramp up faster than they had expected.
Liberum analysts suggested the capital spending from Rio would now likely be about $2bn. “The faster than anticipated ramp up makes us more cautious around iron ore [prices] in 2015,” they said.
I don’t see it having much choice. It can’t leave its shipping investments idle and let others take market share.
