Well not quite the same. Even if FMG goes into administration Twiggy still has the dividends he's got out of it over the years (and any shares he sold when FMG was still riding high).
Iron ore dropping
- Thread starter blackenator
- Start date
Well not quite the same. Even if FMG goes into administration Twiggy still has the dividends he's got out of it over the years (and any shares he sold when FMG was still riding high).
The point I was trying to make there is don't assume prices never fall by big percentages and therefore load up on debt and that includes Australian Property.
In all the above examples people/companies got into lot of trouble because of their high gearing and their assumptions that their assets would never fall that much in value. People/companies with low gearing survived much better.
Cheers,
Oracle.
that article was a bit naff.
we signed up to the WTO - that's not a LAW, but an agreement. So our obligation, not legal requirement, is to not allow cartel behaviour at a national level.
You can expect that if we rescind on our international obligations to others, it will likely be reciprocated.
Which is interesting, because APEC and OPEC are a cartel by WTO definition. Do we need an "ARC" to get out of gaol free?
we signed up to the WTO - that's not a LAW, but an agreement. So our obligation, not legal requirement, is to not allow cartel behaviour at a national level.
You can expect that if we rescind on our international obligations to others, it will likely be reciprocated.
Which is interesting, because APEC and OPEC are a cartel by WTO definition. Do we need an "ARC" to get out of gaol free?
OPEC may be a cartel but APEC is not...
Sorry - APEC is about developing nations.
I was just prattling off acronyms there.
I was just prattling off acronyms there.
most of my property fell 25-40% in the GFC, so been there done that
It isn't a nice feeling Ausprop. But it can only make you stronger and wiser going forward.
Good luck!
Cheers,
Oracle.
Atlas Iron shares suspended as iron ore crash forces review of business
Atlas Iron shares suspended as iron ore crash forces review of business
Looks like the first one to bite the dust.
Atlas Iron shares suspended as iron ore crash forces review of business
Looks like the first one to bite the dust.
Don't think it's that simple it has implications nationally
The dropping IO price will have massive implications for ALL Australians.
Some more than others. WA is in massive strife and the IO fall has only just started. These prices are here for years to come...
WA in massive strife!!. Most of the wealth was stripped away from WA and shipped over East. Percentage of GST take given to WA was a joke. All this will now change and I suspect it will have a huge impact on all the other states. Personally I don't think the downturn in mining has had a huge impact on Perth. Property prices are holding up, employment seems relatively strong. I have not felt a huge amount of negative sentiment.
The mining boom is still years away from bust. While you may see clear skies at the moment don't think we are over the worst of it. It hasn't even started yet... Global production is still ramping up with Roy Hill yet to start it's contribution to the world oversupply. This is only the start of the apocalyptic decline of IO. Seems like Aus is not different after all...
let me get this straight.
coal price collapses - no one bats an eye lid and we all just say "oh poor Qld - another cyclone - what about our bananas?".
iron ore price collapses and the bitterness comes out, the fox and the grapes story plays out for everyone to read.
why - why - would two publicly listed companies and Gina Rinehart decide "hmm, lets collapse global ore prices on purpose to hurt our share holders, dividends and future prospects forever".....?
all i see is a bunch of armchair economists packing up their keys and phones and papers long before the session is finished.
well, sit back down, unpack and get ready again.
coal price collapses - no one bats an eye lid and we all just say "oh poor Qld - another cyclone - what about our bananas?".
iron ore price collapses and the bitterness comes out, the fox and the grapes story plays out for everyone to read.
why - why - would two publicly listed companies and Gina Rinehart decide "hmm, lets collapse global ore prices on purpose to hurt our share holders, dividends and future prospects forever".....?
all i see is a bunch of armchair economists packing up their keys and phones and papers long before the session is finished.
well, sit back down, unpack and get ready again.
But if their strategy works, it's not 'forever'. Kill off all the weaker competition and then pick up where you left off (hopefully).
The price of iron ore peaked in early 2011, so its been declining for 4 years already. Roy Hill is a minnow and won't make a dent to global supply. They will start producing in the red.
The problem is that market economics aren't playing out how they normally would. As the price decreases, marginal high cost producers should be exiting the market. Except a lot of the high cost producers are in China, and the chinese government are maintaining production since iron ore is such a strategic commodity.
Expect the spot price to drop below $40 pretty quickly. FMG will put some mines on care and maintenance; and BHPB will make a takeover bid. They will reduce unit cost by extracting synergies with their existing pilbara operations. Rio may try to make a bid, but will be blocked as they are the largest pilbara producer.
I agree with this although I don't agree that Rio would be blocked by the ACCC. Why would they care when there are no Australian customers and the global market is so much bigger than these two? If the Colesworth duopoly is OK then this should romp it in.
I think BHPBIO will be the buyer because there are so many more synergies with their operations in the East Pilbara. Rio Tinto has the West Pilbara sown up so it makes logical sense for BHP to take the East Pilbara. If these prices continue (and they may well do), then Roy Hill will be up for sale as well in a few years - before its debt comes due.
I can remember when I was working on Outer Harbour projects and someone commented that it would be cheaper for BHP to buy FMG than build Outer Harbour - and that was at FMG's old valuation. To put it simply, FMG should be worth more to BHPBIO than anyone else.
