Fe

Carantoc said..
I do not know, and this is only rumours I hear, it is probably not true so don't use this for financial advice or publishing in the West Australian and you can probably work this out probably from the companies financial reports - but :

In 2010 it cost FMG $70 / tonne to get ore to the end of the ship loader, plus $15/ tonne in finance repayments so $85/ tonne equivalent spot price. Since then the Solomon Mine will have reduced their overall ore costs and they have repaid a lot of debt and re-financed the rest at a lower rate. So I figure they survive now at maybe around $70 / tonne

BHP and Rio have both cut costs and are reportedly around the $45/tonne (Rio slightly less, BHP slightly more) operating costs, plus they don't have the finance costs of the minors but they probably have some. So maybe they survive around the $60 / tonne mark average and much less for some individual mines.

Roy Hill will produce 55M tonne a year with a 330km rail line. At 55M tonne the rail line will be running at about 50% capacity, although they will obviously have fewer trains. Roy Hill are also building wash plants at the mine (apparently). The others generally dig dirt, crush it, ship it. There are a few BHP / Rio mines that wash ore, but for about the last 10 years they could sell more than they could mine and of any quality so they just turned the wash plants off to increase profit. I assume Roy Hill has a lot of clay in the ore (like FMG Christmas Creek who tried to use surface miners to address the issue) so they have to wash the clay out as it clogs the blast furnaces, which must add to the cost fairly significantly. Current situation is probably that you can't get away with poor quality ore. Spot price at $70 / tonne is for Pilbara blend at about 63% FE. Poorer quality ore presumably gets a lower price.

I have no idea but I can't see Roy Hill having an all in cost of much less than $80 - $85/tonne for several years. Eventually that will drop (less finance, less overburden to strip, turn all the dials up to 11, screw the truck drivers etc.) but they have to get there first.

The minors who are all trucking ore >100km to Headland must have costs significantly more than $85/tonne. But they can probably turn off and turn on for much less cost than the big guys. Some could probably go into care and maintenance for a while and survive on the cash in the bank from when the price was $120 / tonne.

I would bet that some individual Rio and BHP iron ore mines are not profitable at $70/tonne. BMA is currently closing smaller, older and poorer quality individual Qld coal mines on the same basis.