Gina Rinehart: Government to Blame for High Mining Costs
The price of iron ore has lost more than two-thirds of its value since its peak in 2011. It is currently priced at less than $50 a ton, and according to some economists, it hasn’t even hit rock bottom. By that time, “bankruptcy” will be writ large on many a small miners’ walls. It will also have given Gina Rinehart indigestion.
Until recently, Rinehart was considered the richest woman in the world with $20 billion in her bank account. The plummeting of iron ore’s price has now wiped out about 36 percent of her wealth, leaving her with less than $15 billion, as reported by the Australian Broadcasting Corporation (ABC).
Rinehart, an Australian, is the heiress of Lang Hancock, her father, who built up Hancock Prospecting. Interviewed by ABC, historian David Lee explained, "Lang Hancock's main fortune was built on royalty deals. He wasn't able to bring to culmination some of the more ambitious ventures in his own right to establish a mine.”
According to ABC, “After a ten-year struggle, Gina Rinehart negotiated a $7.9 billion debt deal using a combination of multiple export credit agencies and commercial banks.” Rinehart would use this investment as leverage to began building the Roy Hill mine, in Pilbara, Western Australia, for $10 billion. If the dream had escaped dad it was not going to slip out of the daughter’s hands. In the process, Rinehart would gain respect among her peers as a businessperson in her own right.
The Roy Hill mine is about two-thirds finished. By the time it’s fully operational its capacity will be 55 million tons per year. 80 percent of its production has already been contracted. The drop in iron ore’s value, however, means that Roy Hill will be lucky if it breaks even.
Rinehart has taken out her misfortune on the Australian state and federal government, claiming that building costs have affected Roy Hill, not the drop in the price of iron ore. Quoted in the Sydney Morning Herald, Rinehart says, "What affects the project is high costs...As I have said so many times it is really important government cost burdens are lowered. We have regulations; be it approval processes, be it permits, be it licences, be it the checks that have to go on after those compliances."
"They have to cut these government cost burdens because our costs are incredible," Mrs Rinehart said.
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.