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September, 24th 2017

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JUN 29
14:06

Iron ore surge continues, FMG warns on gas

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Seaborne iron ore prices increased again on Thursday even though buying slowed slightly after a spurt on Wednesday. FMG is looking to the longer term however, and warning of a cost spike in energy costs for miners in the coming years.

The Kallanish index for 62% Fe Australian fines gained another $1.65/tonne to $62.35/dry metric ton cfr Qingdao. 170,000 tonnes of PB fines sold in tender at $62.81/t with a laycan in 21 July-1 August. On the Dalian Commodity Exchange September iron ore settled at CNY 471/t ($69.27/t), up CNY 14.5/t, while on the Singapore Exchange July 62% Fe futures settled $1.18/t up at $63.03/t.

FMG meanwhile is moving on to securing its low-cost status for the future. In addition to plans to automate more of its mining vehicles, on Thursday it presented its views on natural gas. Mining is an energy-intensive business and costs can easily be pushed about by fuel prices.

The miner is concerned that, unless more domestic gas fields are developed, there could be a shortage in gas supply from 2021 onwards which could push up Australian mining costs.