The World Bank has joined the chorus of bearish iron ore forecasts with a senior economist at the international lender suggesting the supply glut and price rout could last for up to two years. Slowing demand from China, a weak global economy and the big players boosting output has dragged the price of the steel making commodity down to just below $US60.
As the run of earnings results is slowing Australia’s largest company BHP Billiton has reported a steep interim profit drop but lifted its dividend. Shares in OceanaGold gained as it posted a net profit of $US111 million and Wesfarmers has secured the New South Wales Government’s approval allowing the Bengalla mine to continue mining until 2038.
Economics News
As the biggest iron ore players push output to record highs the Brazilian giant Vale has had a win on news its immense Valemax iron ore ships might be given access to Chinese ports. The ships can carry up to 400,000 tonnes of ore, such scale helps Brazilian producers compete with the low cost ore out of the Pilbara.
The ban was implemented some three years ago but as demand for Brazilian ore grows there are indications the ships will be granted access.
Mixed bag of results
Australia’s largest company BHP Billiton Limited
(ASX:BHP) has reported a steep interim profit drop but lifted its dividend. The diversified mining giant’s net profit slumped 47.4 per cent to $US4.26 billion in the first half of the 2015 financial year. On an underlying basis the company’s profit declined 31 per cent to $US5.35 billion and revenue dropped 12 per cent to $US29.9 billion.
Shares in Fortescue Metals Group Limited
(ASX:FMG) fell almost 5 per cent after unveiling its results for the first half of the 2015 financial year. The Pilbara focussed iron ore miner’s interim net profit sank 81 per cent to $US331 million from $US1.7 billion the year before.
Mineral Resources Limited
(ASX:MIN) has finished the first half with a $30 million net loss despite a slight uptick in export volumes. The mining goods and services company says lower iron ore prices saw operational earnings dip by 5 per cent for the half as expected.
Shares in Iluka Resources Limited
(ASX:ILU) rose after its annual result was not as bad as expected and its dividend was bigger than expected. The mineral sands miner booked a net loss of $62.5 million in 2014, down from a profit of $18.5 million the year before.
Shares in OceanaGold Corporation
(ASX:OGC) gained as it posted a net profit of $US111 million as well as record revenues for the 2014 full year despite lower gold and copper prices. The company achieved record gold production for the last quarter of the year hitting 34,783 ounces.
Developments and growth
Wesfarmers Limited
(ASX:WES) has secured the New South Wales Government’s approval allowing the Bengalla mine to continue mining until 2038. Wesfarmers Resources Managing Director Stewart Butel says the approval secures the long term future for the mine and its workforce. The new development consent also provides the potential to increase employment in the future, should a decision be made to expand production.
Fortescue Metals Group Limited
(ASX:FMG) has unveiled a $US2.5 billion senior secured notes issue. The iron ore miner also intends to extend its existing $US4.9 billion senior secured credit facility, resulting in the majority of its debt maturing beyond mid 2021.
