There may be some consolidation between the smaller players - and how this pans out depends on which have cash. How the industry shakes out from here depends on which of the smaller players are attractive to those looking for a cheap entry and the agenda of the buyers. It was the iron ore plaything of hotel billionaire Bruce Mathieson, and had plenty of high-profile directors on the board - with loads of experience across business. ![]() Western Desert Resources, a company unknown to most, became the canary in the coal mine last week when it had receivers appointed to it. How much longer can they last and is this the start of a wave of consolidation? The immediate focus for the Australian iron ore industry has been the health of the smaller mining companies with cash costs close or in excess of the current iron ore prices. While we can't blame everything on oversupply, given there are seasonal demand factors from the Chinese customers that come into play - the latest of which is that country's weak property market - the fact remains that the Australian producers in particular have been pumping out enormous volumes of iron ore into the seaborn market. To date the large mining companies in Australia have been able to offset last year's lower commodity prices for iron ore and coal by undertaking major cost cutting drives and efficiency initiatives.īut if prices continue to fall and much of the low hanging fruit has been harvested, revenues and profits will be under pressure. ![]() It has major ramifications for the country's exports and governments' tax revenue and thus the broader economy. ![]() The ripple effect of the continuing fall of the iron ore price is an issue that is now becoming mainstream.
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