Push to flood iron ore market crushes smaller suppliers

lunes 28 de julio de 2014 17:00 GYT

* Iron ore majors accelerating expansion projects

* Strategy to boost output winning market share

* Higher-cost, less competitive suppliers in trouble

* By 2015 top producers to account for over 80 pct of world iron ore trade

By James Regan

SYDNEY, July 29 (Reuters) - A faster-than-expected increase in iron ore production by the world's biggest miners in Australia and Brazil this year is pushing less efficient smaller suppliers of the steel-making raw material to the edge.

From Europe to Australia to the Middle East, smaller miners in the once-lucrative iron ore business are cutting output or shutting altogether despite rising demand, while a few mega miners are taking a bigger share of the $130 billion seaborne iron ore market.

Big miners such as Vale, Rio Tinto and BHP Billiton are flooding the world with hundreds of millions of tonnes of cheaply mined ore, driving down prices by almost a third this year.

The price fall is squeezing higher-cost producers, while the big miners are feeling less pain due to ever-lower costs of production from economies of scale and increased sales. Barriers to entry are also increasing, shutting out all but those with access to the biggest ore deposits.   Continuación...