Iron ore price recovery China resume investment

Australian mining company Fortescue Metals CEO NevPower said that China's investment in Australian iron ore resources is unlikely to recover unless the price of iron ore that has been hit hard rebounds.

Prior to this, Chinese steelmakers tried to extend the purchase of iron ore to Rio Tinto and BHP Billiton, two solid Australian miner's giants. Seven years ago, Fortescue Metal started from scratch with this background support and became the present. The world’s fourth largest iron ore manufacturer.

“There may be a spot on the iron ore market, and prices will start to rise again from this point, which will also be the point when investment interest returns to the upstream supply chain,” Power inspected the company’s mine at Chrisker Creek. Reuters said.

Analysts predict that after the surge in mine construction has brought the supply shortage to a surplus, iron ore prices may once again reach the high peak of US$200/tonne, which may be years later. The price of iron ore on Monday (IO62-CNI=SI) was around US$45 per ton.

According to Power, Fortescue has been opening its doors to Chinese investors to bid for its port and rail operations, but is no longer seeking external investment. The company’s net debt amounted to US$6.6 billion.

“The current price level is so low and China’s interest in iron ore is almost exhausted. This is reasonable,” said James Wilson, an analyst at MorgansFinancial. “For Fortescue's orbital business, this is obviously even more so.”

China's second-largest steelmaker, Hunan Hualing Iron & Steel Co., Ltd. holds approximately 14.7% of Fortescue.