MGX has a grim message for the iron ore price

Tuesday, 17 February 2015

A couple of tables from Mount Gibson’s interim results offer an insight into just how stuffed is the iron ore price in the next few years:

MGX is in the second tier of Australian iron ore juniors in terms of costs. Cliffs, Grange, Gindalbie and Atlas are all worse off. Even so, after a terrible half of iron ore price rout, MGX has basically only got a cash burn of $15-20 dollars yet has $340 million in the bank.

Much lower prices are needed to knock out junior supply in a timely manner, let alone high cost major supply.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.