False Dawn: The Bulk Commodity Mining Rally Will Prove Short-Lived
Bulk commodity miners are overvalued. Shares of iron ore and met coal miners have rallied to levels not seen since 2014, when Chinese steel demand peaked. In effect, the market appears to be extrapolating the 2016 Chinese demand growth trajectory far into the future. We’ve updated our forecasts to account for greater supply disruptions, lower Chinese supply, and higher freight and maintenance capital costs, but we expect roughly 50% downside from recent iron ore prices around USD 80 per tonne to...Fortescue Metals Group is an iron ore producer. As of June 30 2016, Co.'s operations had four mine sites in the Pilbara. The Chichester Hub, which includes the Cloudbreak and Christmas Creek mines, is located in the Chichester Ranges and the Solomon Hub, in the Hamersley Ranges, includes the Firetail and Kings Valley mines. Co. owns and operates an integrated supply chain including its Herb Elliott Port in Port Hedland and a heavy haul railway with over 620km of track. As of June 30 2016, Co.'s total hematite ore proved and probable reserves were 2.17 billion tonnes. Also, as of June 30 2016, Co.'s total magnetite ore proved and probable reserves were 705.0 million tonnes.
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