Assore full year profit doubles on higher iron ore prices

Sunday, 28 Aug 2011

Assore Ltd, a South African owner of mines, said that its full year profit more than doubled on increasing demand and higher prices for iron ore.

The company, based in Johannesburg, reported net income of ZAR 3.2 billion (USD 440 million) in the year ended June 30, compared with ZAR 1.5 billion a year earlier. Sales gained 47.8% to ZAR 11.2 billion.

Assore, joint owner of manganese producer Assmang Ltd with African Rainbow Minerals Ltd spent ZAR 2.8 billion to develop infrastructure at the Khumani Iron Ore Mine and raise output to 16 million tonnes a year by mid-2012, from 10 million tonnes. While demand in the iron ore market is tight, a recovery in manganese and chrome ore and alloy prices is unlikely.

Power and other costs in South Africa are hurting smelters. Mr Desmond Sacco chairman of Assore said that “We expect challenging economic and trading conditions for the year ahead.”

(sourced from Bloomberg)

Vale sees iron-ore above $150/t next five years

Thu, 7 July,2011

SINGAPORE - Brazil's Vale , the world's top iron-ore miner, expects prices of the steelmaking raw material to remain above $150/t for at least the next five years on tight global supplies, the Financial Times reported on Thursday.

Vale's CEO Guilherme Cavalcanti , said miners would struggle to meet booming Asian demand, according to the newspaper.

Spot iron-ore prices are trading near $170/t, slightly above three-month lows hit last month as steel demand in top buyer China normally slows during the seasonally weak summer season.

But Cavalcanti told Reuters earlier this week that Vale expects iron ore demand to pick up and for prices to stabilise for the rest of the year with the worst of the monetary tightening campaign in China already done.

China on Wednesday raised interest rates for a third time this year but analysts think Beijing was close to, or even at the end, of a cycle of rate rises. (By Reuters)

BHP CEO sees high iron ore price for up to 2 years

Sat Feb 19, 2011 11:30pm GMT

MELBOURNE Feb 20 (Reuters) - Top global miner BHP Billiton's (BHP.AX: Quote)(BLT.L: Quote) chief executive sees iron ore prices staying strong for as long as two years, and is confident the company's profit margins will remain robust, even as costs escalate.

Marius Kloppers was bullish on the near-term outlook for iron ore prices due to supply constraints, with India not exporting and rivals having held back investment in new capacity during the global financial crisis.

"But what I can say is there are certain products in our portfolio, particularly in iron ore...which looks very, very good over the next three, six and nine months," Kloppers said on Australian television in an interview recorded after the company reported a record first-half profit of $10.7 billion.

"Simply put, over the next 12, 18 months, perhaps two years, there's not a substantial amount of new capacity coming on, and it's more an issue of the supply side rather than the demand side," he said.

His counterpart at rival Rio Tinto (RIO.AX: Quote)(RIO.L: Quote) was more specific a week ago, forecasting that tight supplies would keep iron ore prices high in the near term, but prices would fall below $100 a tonne from current record highs around $190 a tonne when mine expansions are completed in 2014 and 2015. [ID:nL3E7DA0K8]

BHP announced this week it would spend $80 billion on mine developments and expansions over the next five years, and Kloppers said based on expected returns on those projects, it should be able to post compound growth of 5-6 percent a year for "many many years".

"For us it's a question of where cost structures go, but I feel very comfortable that we're going to have healthy margins going forward," Kloppers said on Australian Broadcasting Corp's Inside Business show, aired on Sunday.

BHP had a 44 percent profit margin in the first half of this financial year.

Kloppers played down talk that the company had put acquisitions on the backburner in favour of investing in its own projects, saying while takeover targets were expensive now based on lofty commodity prices, that may not last long.

Asked if mergers and acquisitions were off the agenda, he said: "No. Cycles change."

"In six months' time or a year's time, something else may come up, the situation may change."

After being forced to kill three mega-deals since 2008 due mainly to regulatory and political obstacles, Kloppers said the company would clearly run into problems if it chased an iron ore acquisition, like its abandoned bid for no.2 iron ore miner Rio Tinto.

But he saw no such obstacles for deals in products where BHP was less dominant, including potash, copper, and oil and gas, as industry experts have speculated.

"And obviously, the oil and gas market is a very large one where there may be opportunities going forward," he said.

Speculation has focused on BHP chasing Anadarko Petroleum (APC.N: Quote) for its assets in the Gulf of Mexico.

Kloppers deflected questions about diplomatic cables released by WikiLeaks, which showed he had offered to trade intelligence on China with Washington, as he was concerned about Chinese spying on BHP. [ID:nL3E7DE27I]

"I certainly don't remember offering anything," he said.

Did he have any secrets to offer? "Not that I know of," he said.
(Reporting by Sonali Paul, sourced:Thomson Reuters)