Small Brazilian iron ore miners soldier on amid low prices

miércoles 12 de noviembre de 2014 11:24 GYT

(widens distribution)

By Stephen Eisenhammer and Marta Nogueira

RIO DE JANEIRO Nov 12 (Reuters) - Small Brazilian iron ore miners are proving resilient in the face of low global prices, pushing ahead with expansion projects even as that reduces the chance of a quick rebound in prices.

Interviews with five iron ore "juniors" operating in Brazil showed players in this section of the industry, helped by cheap development bank loans and the flexibility to sell locally or abroad, are not being forced out of business at the pace larger rivals hope.

The price of iron ore has fallen 40 percent this year as new capacity from major Australian mining companies entered the market just as Chinese demand growth slowed.

The "big three" in iron ore, Brazil's Vale, Australia's BHP Billiton and Rio Tinto, argue the self-inflicted price drop will drive higher-cost producers out of the market, making it possible to retrieve market share and for the price to rise.

But such a process is complicated. Many predicted a similar process when coal prices dropped last year, but coal mines have been slow to close, keeping prices down.

"It took them (smaller producers) 8-10 years to build the mine, so they're not going to shut it down at the first sign of price weakness," said Andreas Bokkenheuser, analyst at UBS.

"Also in many cases it costs more to shut it down than to operate it in the short term," he added.   Continuación...