COLUMN-Will the Big 3 iron ore miners have enough time to win price war?: Russell
- Clyde Russell is a Reuters columnist. The views expressed are his own.-
By Clyde Russell
LAUNCESTON, Australia, Sept 24 (Reuters) - The recent debate over iron ore has tended to be whether the three mining giants who dominate seaborne supply will win their massive bet that they can drive high-cost producers out of the market.
But a more relevant question is whether they will have the time to achieve their aims.
The Anglo-Australian pair of Rio Tinto and BHP Billiton, as well as Brazil's Vale have flooded the market with their low-cost iron ore, with supply from Western Australia ramping up dramatically in the past year.
This has led to a collapse in the Asian spot price .IO62-CNI=SI to a five-year low of $79.40 a tonne on Tuesday, down 41 percent from the end of last year and 58 percent from the record $191.90 a tonne reached in February 2011.
The main question for the big three is not whether they can drive higher-cost competitors to the wall, but how long their own investors will tolerate the lower earnings as a result of the weak iron ore price.
While the chief executives of the big three haven't exactly said so in public, they are clearly hoping for a relatively short war and a quick victory, after which iron ore prices will once again rise and stabilise at a higher level. Continuación...