Fortescue CEO Points Finger at Rio Tinto, BHP Billiton for Low Iron Ore Prices
As iron ore prices slip further into the abyss, Fortescue Metals Group CEO Nev Power believes the relentless expansion projects by Rio Tinto and BHP Billiton are to blame.
“The low iron ore price is not benefiting anybody,” Power said yesterday while delivering the company’s first quarter results. “It has drained an enormous amount from the economy, from the West Australian economy and the (iron ore) industry in general.”
The CEO said the continual move to add supply to an already depressed iron ore market is hindering smaller miners and creating a hole through government budgets.
“As we know in the iron ore business there has been plenty of talk about what projects will come on but they have been delayed and not come on as forecast, but this apprehension of excess supply is influencing the price,” Power said.
The accusations come as no surprise.
Fortescue’s first half profits fell 81 percent, dropping to $331 million for the six months to December. For the same period a year earlier, the miner posted $1.7 billion.
Last year, West Australian Premier Colin Barnett directly accused the two miners of “working in a concert way.”
“This seeming strategy of the two major producers to flood the market (with supply) and force the price down, I mean, remember who your landlord is that’s hurting Western Australia,” Barnett said.
"I will just make the point, you can have your corporate strategy, but there's also a sense of corporate social responsibility.
"And while you are pursuing your business strategy - which I tend to think is flawed - you are actually hurting the host State, the State that provides the iron ore and generates most of the wealth of Rio Tinto and BHP at a world scale."
The price of iron ore has fallen nearly 50 percent over the past year, settling at a five year low. The steelmaking ingredient fetches roughly $66 per ton, compared to $124 per ton a few years back.
Copper production from top ten companies to increase by 3.8%
Copper production from the world’s top companies is set to increase by up to 3.8% this year, following a fall of 0.2% in 2020, GlobalData analysis reveals. Last year’s marginal slump saw production drop to 11.76 million tonnes (Mt).
The initial impact of the COVID-19 pandemic on mining operations was immense, however, six of the ten largest copper producers succeeded in increasing output last year. In 2021, copper production from the top ten copper companies is expected to bounce back, rising by up to 3.8%, to reach 12.2Mt, according to GlobalData, a leading data and analytics company.
The highest increase in copper production was by Canada’s First Quantum, which, despite all the challenges, reported 10.4% growth in 2020. The company’s Sentinel mine in Zambia and Cobre Panama were key contributors to this growth. While the latter remained under care and maintenance between April and August 2020, it delivered record production levels during the subsequent months.
Codelco, the world’s largest producer of the red metal used in electric vehicles, also bucked the trend.
Vinneth Bajaj, Associate Project Manager at GlobalData, commented: “Despite Codelco reporting over 3,400 active cases during July 2020, the company achieved 1.2% growth in its production in 2020. The company implemented a four-phase plan, as part of the COVID-19 measures, to ensure the health and safety of its employees, while also avoiding any significant impact to its copper output.”
Although the overall impact was minimal, declines in production were observed from Glencore (8.2%), Antofagasta (4.7%), BHP (3.9%) and Freeport McMoRan (1.3%). Reduced operational workforces due to COVID-19 measures, lower ore grades and production halts due to maintenance were the key disruptors to output during 2020.
The move towards electric vehicles and clean energy from renewables sources such as solar panels and wind turbines has driven the copper price to all-time highs. Copper has been among the best performers over the last month where metals ranging from aluminum to iron ore have surged to their highest prices in years. The rally is being fueled by stimulus measures, near-zero interest rates and signs that economies are recovering from the global pandemic.