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Iron ore price jump a boost for junior to mid-tier WA miners: analyst

Wednesday, 9 Mar 2016 10:10:58 | Sarah Taillier

Small to mid-tier iron ore producers have welcomed the commodity price rise.

A record-breaking surge in the iron ore price is a significant turnaround for many producers in Western Australia, a market analyst says.

Following positive growth and economic news from China, the iron ore spot price had its biggest one-day gain on Monday, jumping 19 per cent to almost $US64 a tonne.

That was the largest same-day surge in the price since records began in 2008.

The iron ore price has largely held onto Monday's gains and is still trading above $US60 a tonne.

Bell Potter Securities' market analyst Heather Zampatti said the price jump was a welcome boost for the iron ore sector.

"At these sorts of levels, the miners are starting to make money and good money again too," she said.

"So it's a significant improvement in their position."

While it was still a long way below the historic highs of nearly $US190 a tonne set five years ago, Ms Zampatti said the latest price improvement would help junior and mid-tier miners especially, who had struggled to profitably produce the steel-making ingredient.

Ms Zampatti said Western Australia's two main miners, BHP Billiton and Rio Tinto, could still make money when the iron ore price was at $US40 a tonne, but for many smaller operations that was not sustainable.

"But at this sort of level ... then we're starting to see the small, mid-caps starting to make money there too," she said.

"So it's a significant turnaround for them and indeed they'll be feeling a lot happier."

AustraliaPlus


 

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