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High Iron Ore Prices Are `Unsustainable' in Long Term, IMX Resources Says
IMX Resources Ltd., a mining company that’s started the first new iron ore project in South Australia in a century, said high prices for the steel-making material aren’t sustainable in the long term and will drop.
“You’d be living in a different world if you thought these prices were going to last forever,” Duncan McBain, managing director of the Perth-based company, said in an interview. “The pricing will come down.”
IMX, whose biggest shareholder is Sichuan Taifeng Group, began mining at its Cairn Hill site in May and is targeting first shipments from Pt. Adelaide in November. Contract ore prices have risen about fivefold since 2000.
“Demand will keep apace, but as far as pricing goes, the good years won’t last forever,” McBain said yesterday in a phone interview from Adelaide, capital of South Australia. “The current prices are in the longer run unsustainable.”
Credit Suisse Group AG this month cut its forecast for this year and 2011 because of a drop in demand in China, the world’s biggest buyer.
IMX closed unchanged in Sydney trading yesterday at 45 cents. OZ Minerals Ltd. owns 13 percent of the company.
The company, which also produces copper, is aiming to mine 1.7 million tons a year of low-grade magnetite ore. China’s Jilin Tonghua Iron & Steel (Group) Mining Ltd., which owns 6.3 percent of IMX, will buy as much as 1.4 million tons annually from Cairn Hill over three years. The ore will be shipped to a processing plant in Bayuquan, north eastern China.
“We’ll begin looking for other projects, things we can put in development in the reasonably near term.” McBain said.
IMX also owns the Mt. Woods iron ore, copper, gold and uranium project and the Kangaroo Dam platinum prospect, both in South Australia. It also has projects in Africa.
To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net
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