Timing the 'Big Three' Iron Miners

Here's the bad news: Over the next five years, Australia's Bureau of Resources and Energy Economics projects that the Australian port price of iron ore will fall to $96 a metric ton from a $119 a metric ton in 2013.

And the good news? Even at $96 a metric ton, the Big Three companies that make up 75% of the global seaborne trade in iron ore will make a solid profit. Australian miners BHP Billiton (BHP) and Rio Tinto (RIO) can deliver ore to China, the world's biggest market for iron ore, for $50 a metric ton. Brazil's Vale (VALE), the lowest cost producer in the world at $38 a metric ton has to pay more in freight charges to send ore to China from Brazil than its Australian rivals do, but even so, my estimate is that Vale can deliver ore to China at a total cost of $53 a metric ton. (Vale's iron ore contains more iron than Australian ore so it tends to sell at a premium price.)...602 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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