Mining giants may hoard cash as iron ore prices sag
* Iron ore prices at 5-year lows reduces flexibility
* BHP, Rio best-placed to withstand weak prices
* Anglo American, Atlas, Cliffs under pressure - S&P
By Sonali Paul
MELBOURNE, Sept 17 (Reuters) - Sagging iron ore prices raise the prospect the world's biggest miners will shelve plans to return excess cash to shareholders in February, despite promises to investors who had hoped to reap the benefits of two years of austerity.
Stung by slower growth in China, global miners have reined in expansion plans and brought in new management to sell assets and drive their mines harder, raising hopes that BHP Billiton alone could hand back up to $8 billion to investors.
In the August reporting season, Glencore kicked off the expected party with a $1 billion share buyback, world No. 2 iron ore miner Rio Tinto flagged it would be in a strong position to return capital in February, and BHP said a move was "close".
But iron ore prices have collapsed to five-year lows since then, thanks to the major miners flooding the market with new supply and high-cost miners in China continuing to produce, defying expectations the market would bottom around $90 a tonne.
If prices remain below $90 for the rest of the year, BHP and Rio, both looking to keep their single 'A' credit ratings, would be hard-pressed to return capital to shareholders, beyond raising their dividends, debt and equity analysts said. Continuación...