RPT-Iron ore price drop now testing mettle of mega miners
(Repeats story published late Tuesday; no changes to text)
By James Regan
SYDNEY Dec 16 (Reuters) - Tumbling iron ore prices have already forced smaller miners to close, but forecasts of further deterioration could test the staying power of even the lowest-cost, mega-miners still turning a profit.
Iron ore .IO62-CNI=SI stood at $37.50 a tonne, according to The Steel Index (TSI). It touched $37 on Friday, the weakest since TSI began compiling data in 2008.
"We could easily see the price to go to $30 a tonne," said MineLife analyst Gavin Wendt.
Top producer Vale has a break-even price of $33.40 a tonne, according to Citi, while the next biggest, Rio Tinto and BHP Billiton BLT.L> stand at $29.20 and $29.40, respectively.
The other large producer, Fortescue Metals Group, has put its break-even costs at around $37 a tonne, dangerously close to the current price.
"At least the big three, are making an all-in net cash margin of $5-9 per tonne," Citi said in a note. "FMG (Fortescue) is just about breakeven and everybody else is burning cash." Continuación...