Along with the uncertainties of the global economic situation increases, Brazil's CVRD, Rio Tinto of Australia, BHP Billiton This is the world's three iron ore giants for future iron ore boom is expected to gradually diverge, eventually leading to the three companies made a different strategic choice.
The Big Three, before the two major iron ore company CVRD and Rio Tinto still tend to significantly increase iron ore production, BHP Billiton became cautious up.
Big Three is now expanding a shrinking
June 27, CVRD is responsible for iron ore and strategic business executive director Jose Carlos Martins said in a conference call on Brazil's environmental protection department has preliminary approval to develop Serra Sul project, Kara Jaspers, in northern Brazil, Serra Sul and Serra Norte project is completed in 2017, the company's iron ore annual output is expected to reach 460 million tons.
The foreign media quoted with Martins and said CVRD in Brazil's north, south and southeast of mine iron ore annual output totaled 310 million tons. 2017, Serra, Sul, the project will allow the company to iron ore production capacity 90 million tons, Serra, Norte, the project will allow the company production capacity of 40 million tons.
In order to achieve the above production target, the Vale need to invest a large amount of money. Serra Sul project involves investments include: the mine and processing plant investment of about $ 8 billion rail and port infrastructure investment of $ 11.4 billion.
Rio Tinto also fear may be the arrival of the iron ore overcapacity pattern. June 20, Rio Tinto has said that although the company is taking measures to reduce and adjust the capital expenditure, but still decided to further invest $ 4.2 billion to the iron ore operations in Australia and New Guinea.
$ 4.2 billion investment is divided into two parts. Part to spend $ 3.7 billion to expand its mining operations in Western Australia, the construction of new port berths, and an extension of the railway line transporting ore. At the same time, Rio Tinto will spend about $ 501 million for its Guinea Simandou development project with construction of a railway and port facilities. This will achieve the company to increase to 353 million tons of iron ore production target by 2015. Rio Tinto iron ore production capacity of 230 million tons.
Relative to the radical of the two companies, BHP Billiton CEO Kloppers (Marius Kloppers) is very conservative. The Kloppers off the initiator of global iron ore pricing system change from annual pricing to spot pricing. Now he has to carefully consider the prospects of commodities including iron ore.
The end of last month, he visited China and accept the domestic media, said the past few years, because the iron ore supply is tight, the price is also high. But now the field of steel and iron ore period of rapid growth may be over. "
"This is not a sharp decline, but growth is slowing down, so the supply will be more relaxed, a single iron ore company will have a less better than the day." Kloppers said.
It is based on the judgment, so the market is expected to last month, announced that BHP Billiton Chairman Jacques Nasser (Jac Nasser), cut a size of up to $ 80 billion in investment spending. He believes that "the number of items has exceeded our cash in the hands of."
Iron ore oversupply era?
In the end, the iron ore market prospects? Each company choose to make this problem seem complicated and confusing.
Compared to BHP Billiton, the world's most profitable companies in the cautious, China, some domestic enterprises is ambitious - just 36 billion yuan of total assets of private enterprises in Sichuan Han Long (Group) Co., Ltd., last year announced a $ 100 billion acquisition of Australian listed companies, iron ore exploration and developers Saunders Resources Ltd. (Sundance Resources Ltd.), and this plan is still in full swing to promote.
In fact, the signs of iron ore oversupply is emerging. June 27, China's iron ore price index announced by the China Iron and Steel Association show that the iron ore price this year rose to May, more than 150 U.S. dollars / ton, it begins to enter a downward spiral last week, imports of iron ore average CIF value of less than $ 140 / t.
By the macroeconomic impact of the steel industry production overcapacity and weak demand, resulting in a continued decline in steel prices.
China Steel Association, an expert told First Financial Daily ", the long term, low steel prices, the low efficiency of steel producers and iron ore suppliers ore price, high efficiency of the distorted situation is not sustainable, late iron ore prices will continue to drop slightly.
International research institutions are not optimistic about the vision of the iron ore. Brazilian Iron and Steel Association Annual General Meeting held on June 27, the British commodities research institutions CRUGroup Analysts said the increase in market supply, in particular the increase in exports of Australia and Brazil, the possibility that iron ore prices rose sharply in quite a long time not.
CRU steel business manager Paul Scott said, in the period 2014-2016, Australian and Brazilian iron ore exports will be a substantial increase in 2016, iron ore spot prices from the currently sold in China every t nearly $ 140 level fell slightly.
Prior to an interview in a middle management in the three major mining, he said that the next few years, the pattern of iron ore oversupply to a certain stage may be the three major mining mergers over the past few years in the overseas Some investment projects phenomenon.
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