Make no mistake, the slowing Chinese economy is bad news for Australia and Aussie mining stocks. And as we see it, it’s only set to get worse, according to Kris Sayce of MoneyMorning ref Will Fortescue ‘Break the Buck’? 5 September 2012.
Iron ore prices have fallen to $US89/t in the past nine weeks. According to Sayce hedge fund managers believe that Fortescue could struggle to repay its debt if iron prices fell below $US100. He also predicts that the Chinese economy is collapsing and there is absolutely no guarantee the iron ore price will ever return to $US120.
The cost of doing business in iron ore (delivered to China) for some of our biggest miners:
- Rio Tinto $US38/t
- BHP Billiton $US41/t
- Fortescue Metals Group $US63/t
- Atlas Iron $83/t
Ref: North West Telegraph, 12 Sept 2012, p.27