(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.”
BC Iron Ltd last week suspended its Nullagine mining joint venture with Fortescue as it could no longer mine ore for less than the selling price.
Atlas Iron Ltd <AGO,AX> temporarily stopped mining in April when the iron ore price fell to $47 a tonne, as it was losing $15 on each tonne mined. It has since established a now well out-of-the-money $50 break-even price.
For Vale, Rio and BHP, still-profitable, albeit shrinking margins, are allowing them to dig more ore - exceeding a combined 1 billion tonnes by 2017 - even as a mounting supply glut weighs on the price.
“Some pessimists are really putting the boot in and calling for $25 (per tonne),” said Eagle Mining analyst Keith Goode.
ANZ commodity analysts on Dec. 11 dropped their 2016 average price forecast by 13.6 percent to $44 a tonne.
Australia’s Department of Industry, Innovation and Science, is also expected to slash its 2016 iron ore price forecast well below last quarter’s $50 a tonne when revised figures are released on Dec 22.
Falling Chinese demand has forced many steel mills to shut operations this year. Beijing is allowing the closures in a bid to attack over capacity in steel making.
“Demand for iron ore is just getting weaker and stockpiles are building. Meanwhile, China is sidelining more steel production as it becomes evident they can’t go down the road of just exporting to compensate for a weak domestic market,” Wendt said. (Editing by Ed Davies)