Shelved Expansion Plans Reignites

http://blackhawk-mining.com/2013/01/07/shelved-expansion-plans-reignites/


Many shelved expansion plans reignited after bottoming three months ago iron ore prices bounced back. China’s vast demand for resources like iron ore which occurs only once in a century mining boom sustained Australia’s economy.

Speculations were assumed that the mining boom was over after iron ore prices
dropped to a three-year low in September. It reached for as low as or even below
$US90 a tonne.

According to commodity analyst Jonathan Barratt, who runs Barratt’s Bulletin, “I think
it was a lot of concerns obviously with what was happening in the [United] States,
concerns about the Chinese economy, concerns about more supply coming onto the
market. There was just an overall general amount of nervousness.”

With the Purchasing Managers’ Index coming in at 51.5 last month, it only proves that
China is picking up. And according to the latest survey of the Chinese manufacturing
industry by HSBC shows it is picking up. As China’s economy picks, iron ore prices
have also surged back to $US145 a tonne. Since may 2011 this has been the best
result. This shows that the industry is expanding modestly

Jonathan Barratt says the Chinese economy appears to have bottomed.

He then observed, “We’ve had a changeover in government, and the new leaders of the
Chinese Community Party have an expansionist view.”

“China believes that it’s got to expand in order to placate its people, and obviously by
expanding it requires primary imports.” He added.

He says developments in India are also driving the iron ore price.

“We’ve actually seen 93 mines actually shut. The Supreme Court of India actually shut
the mines due to the fact that they were contaminating ground water. Now that in itself

has caused a supply restriction to the market, which has certainly helped the market,”
he observed.
“Now that was a bit of a surprise, so we will probably will see a little bit more lift in the
price of iron ore.”

And over December, iron ore prices have jumped by around 25 per cent.

That has seen iron miners, kick-start mothballed operations, although miners are also
keeping a close eye on rising costs. Every company must also try to remember to
prevent scam.

Jonathan Barratt expects prices to stay high because big miners like Rio Tinto and BHP
Billiton have shelved some expansion plans.

“We found it quite incredible that a lot of the big miners actually pulled back on their
projects, where they actually shelved a lot of expansionary views, which in my mind was
very short-sighted,” he said.

“Because effectively what they’re going to do is they’re going to also cause a crimp in
supply, because they’re not going to meet market expectations and that should further
sustain prices at these levels.

“So you’re going to see the economies pick up. They’re going to demand and they’re not
going to see the supply out there to meet that demand, so prices will continue to trade
higher.”

Prevent scam in mining, this also costs money and is also as frustrating as price hikes.