Last Updated : 24 April 2012 at 16:35 IST
Iron ore prices to crash from $150/tonne to $80/tonne
Iron ore prices are poised for a heavy crash, a latest report funded by the Federal Department of Resources, Tourism and Energy states. Iron ore prices are currently trading around $150/tonne and it could easily fall to $80/tonne by 2019, thanks to fresh supplies from Africa.
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NEW YORK (Commodity Online): Iron ore prices are poised for a heavy crash, a latest report funded by the Federal Department of Resources, Tourism and Energy states. Iron ore prices are currently trading around $150/tonne and it could easily fall to $80/tonne by 2019, thanks to fresh supplies from Africa.
In the report, author Luke Hurst states that even the price of $80/tonne is only conservative. In fact, Iron ore prices could fall to as low as $60/tonne if African supplies come in more than expected. And Hurst does not seem to be alone. Some analysts have argued that iron ore prices will start falling by 2014 due to increased supplies from the world market.
Ian Ashby, BHP Billiton's departing boss seems to disagree. In a report published in The Age, Ashby argues that Africa does not have sufficient port and rail infrastructure to ensure massive quantities of iron ore supplies. "Projects that were far from the coast would particularly struggle... Political instability would also undermine the region's prospects”
Africa is home to huge iron ore reserves, matching those of Australia in terms of quality. Currently, about 200 iron ore projects are estimated to be in contemplation across the continent.
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