LAUNCESTON, Australia – Oct 23 (Reuters) – There is now no doubt that the big three global iron ore miners are producing record amounts in their bid to dominate the industry. The question remains, what will happen if they succeed?
Anglo-Australian giants Rio Tinto and BHP Billiton both reported record output in their latest quarterly reports, and affirmed they were on track to boost production even further.
Top producer, Brazil’s Vale is also increasing output, with Brazilian trade figures showing iron ore exports rose 16.7 percent in September from August to 33 million tonnes.
These figures show that the output side of the plan to dominate global seaborne iron ore trade is going quite well for the big three.
In the case of BHP and Rio Tinto, they are well-placed to continue to put pressure on competitors based in their home turf of Western Australia state, as well as those in other parts of the world.
With the lowest cash costs, in the region between $20 to $30 a tonne, and plans to strip out even more costs, they can survive and prosper even if iron ore prices remain weak.
Vale’s costs are believed to be higher than the Australian majors, but the Brazilian miner will also be able to withstand weaker iron ore prices for longer than virtually everybody else, other than BHP and Rio Tinto.
With the production and costs part of the equation working for the big three, how are they doing on the other parts of the plan to dominate global iron ore?
The spot price in Asia is down 39 percent so far this year, but at $81.50 a tonne on Wednesday, it has recovered somewhat from the five-year low of $77.50, hit in late September.
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