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.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.