From Comrade Colin late yesterday:
Mr Barnett said flooding the market with iron ore is “one of the dumbest corporate plays I’ve ever seen”.
“I must say the big iron ore producers have got this dramatically wrong,” he told ABC Radio.
“The two big ones in Western Australia [Rio and BHP] and the Brazilians have been putting too much iron ore into the market and they’ve precipitated a continuing downward trend in iron ore prices.”
Sigh. The RIO and BHP expansions are dumb. They assumed endless demand in China and are now paying the price for that shortsightedness.
However, the current expansions were approved many years ago so now they have little choice but to proceed, not least because Anglo, Sino, Roy Hill and Vale are doing the same.
Let’s recall as well that it was only a few short months ago that Comrade Colin was himself investing considerable time getting Ankatell Port investment going, which would have opened up an entire new district of iron ore production in West Pilbara adding just as much as RIO and BHP are doing over two years. From the ABC:
Dampier Port Authority chief executive Steve Lewis told ABC Rural the port would encompass 4,300 hectares of land and eventually include eight berths.
…”Iron ore is such a rich resource up there that will continue to have decades of demand from the world.”
…”The Premier has been very active in organising and seeking funding for the port and that will follow its own course,” he said.
This was more competition for the majors, egging on their expansions.
Comrade Colin has also been sending handouts to failing miners ensuring supply doesn’t close even as he issues Budget forecasts with outlandish iron ore price forecasts.
It’s capitalism that’s killing the iron ore price. Comrade Colin might acquaint himself with it.
