Whats the beef about iron ore prices?
Rio Tinto’s supposedly big cut in benchmark iron ore contract prices leaves numbers still well higher than those seen in 2007; super profits will continue for the three senior members of one of the world’s best franchises. Author: Barry Sergeant Posted: Wednesday , 27 May 2009 JOHANNESBURG – This week’s news that Rio Tinto, the No 2 name in seaborne iron ore – after Brazilian supergroup Vale, and ahead of No 3 in BHP Billiton – has applied apparently deep cuts to contract iron ore prices, has in practice put prices back to levels seen in 2007, and, indeed, higher than those levels. The world’s three, and totally dominant, seaborne iron names were already turning in super profits from iron ore during 2006, followed by further rounds of such profits in 2007 and 2008, with good signs of more to come. BHP Billiton’s iron ore division EBIT (earnings before interest and tax) for 2007 was USD 2.7bn, on turnover for that division of USD 5.5bn, for an astonishing EBIT margin of 49.4%. With the
