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These iron ore producers may get shafted: Goldman

Posted on 20 April 2015

Iron ore’s price plunge is likely to start claiming corporate casualties among the industry’s smaller players, Goldman Sachs said. “Tier-one producers have no alternative but to reduce unit costs and to exploit their asset base more efficiently; their production volumes are not at risk from a lower iron ore price,” Goldman said in a note last week. “However, the rest of the industry is now facing an existential challenge.”
It expects the tier-one producers — Vale, Rio Tinto and BHP Billiton assets in Australia and Brazil — will continue to expand. “We lump every other producer into the tier-two category,” Goldman said, estimating up to 50 percent of the tier-two production capacity is at risk through 2019. Australia’s Atlas Iron has already announced it suspended all mining operations, it noted……………………………………Full Article: Source


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