Interfax-China reported that about half of China iron ore miners – mainly small and medium-sized firms – have suspended production in the face of dwindling profit margins due to the low price of imported ore.
Zhao Peng industry consultant told Interfax iron ore grading 66%in Tangshan is priced around CNY 950 per ton at present, but domestic miners need a price of about CNY 1,000 to break even.
Over the weekend Reuters reported Rio Tinto chief executive Tom Albanese said “assumptions that the floor price would not go much below $120 a tonne might be valid next year but not long beyond that.”
The less than optimistic outlook from the world’s number two miner comes at the end of a week which saw iron ore prices drop more than 10%, almost wiping out the gains witnessed since October, when iron ore gave up $60/tonne signalling a sea change in the market.
MINING.com reported in September China plans to dramatically consolidate the number of mines in its country, according to Caterpillar (NYSE:CAT) and a study by MCCM. And China also wants its mines to be a lot more productive. In 2004 China had 25,000 operating mines. By the end of 2013 China wants to get that number down to 4,000 mines. A minimum production of 300,000 tonnes per annum will be required for mine approval.