VALLEY OF THE KINGS, Australia – (Reuters) – A fleet of charter flights ferry thousands of workers to and from this outback mine site. The resort-like housing offers gourmet food, cheap alcohol, swimming and well-equipped gymnasiums.
Australian iron ore mining seems immune from the spending crunch afflicting other commodities as a slowdown in Chinese growth cools a decade-long mining boom.
Rio Tinto (RIO.AX), BHP Billiton (BHP.AX) and Fortescue Metals Group (FMG.AX) are bulking up in Western Australia’s iron-rich Pilbara desert as if the mining boom had never ended. A place where capital expenditure is still measured in the billions.
The miners are speeding up transformation of an area the size of Peru into a moonscape of rust-red pits linked via thousands of kilometres (miles) of rail lines to giant iron ore ports perched on the easternmost edge of the Indian Ocean.
“All this discussion about the end of the mining boom, we don’t see it,” said Fortescue Chief Executive Nev Power, before leading uniformed workers through dawn exercises at the company’s King’s mine. “We sell all we mine.”
The chief executive, who left school as a teenager to work in a copper mine, laughs and groans along with the workers through repetitions of star jumps.
Alluding to the riches below the ground, Fortescue named this area after ancient Egypt’s Valley of the Kings, where Tutankhamun’s tomb was unearthed.
Ore lies close to the surface. It is simply shovelled up and carted to rail cars.
So many trains run to and from the mines that some producers now pay farmers flat annual fees to compensate for cows killed crossing tracks.
Miners are digging so fast, it’s hard to keep up. Australia this week revised up its estimate for exports for the fiscal 2013-14 year to a record 650 million tonnes from 615 million just three months ago.
Powered by Chinese demand iron ore prices have shot up from under $87 a tonne in September 2012 to around $134.
On the other hand, copper prices have slumped 12 percent this year, while gold, nickel and aluminium offer little or no profit margins.
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