(Repeats story published late Tuesday; no changes to text)
By James Regan
SYDNEY, Dec 16 (Reuters) - Tumbling iron ore prices have
already forced smaller miners to close, but forecasts of further
deterioration could test the staying power of even the
lowest-cost, mega-miners still turning a profit.
Iron ore .IO62-CNI=SI stood at $37.50 a tonne, according
to The Steel Index (TSI). It touched $37 on Friday, the weakest
since TSI began compiling data in 2008.
"We could easily see the price to go to $30 a tonne," said
MineLife analyst Gavin Wendt.
Top producer Vale VALE5.SA has a break-even price of
$33.40 a tonne, according to Citi, while the next biggest, Rio
Tinto RIO.AX RIO.L and BHP Billiton (L:BLT) BHP.AX BLT.L> stand at
$29.20 and $29.40, respectively.
The other large producer, Fortescue Metals Group FMG.AX ,
has put its break-even costs at around $37 a tonne, dangerously
close to the current price.
"At least the big three, are making an all-in net cash
margin of $5-9 per tonne," Citi said in a note. "FMG (Fortescue)
is just about breakeven and everybody else is burning cash."
BC Iron Ltd BCI.AX last week suspended its Nullagine
mining joint venture with Fortescue as it could no longer mine
ore for less than the selling price.
Atlas Iron Ltd AGO,AX temporarily stopped mining in April
when the iron ore price fell to $47 a tonne, as it was losing
$15 on each tonne mined. It has since established a now well
out-of-the-money $50 break-even price.
For Vale, Rio and BHP, still-profitable, albeit shrinking
margins, are allowing them to dig more ore - exceeding a
combined 1 billion tonnes by 2017 - even as a mounting supply
glut weighs on the price.
"Some pessimists are really putting the boot in and calling
for $25 (per tonne)," said Eagle Mining analyst Keith Goode.
ANZ commodity analysts on Dec. 11 dropped their 2016 average
price forecast by 13.6 percent to $44 a tonne.
Australia's Department of Industry, Innovation and Science,
is also expected to slash its 2016 iron ore price forecast well
below last quarter's $50 a tonne when revised figures are
released on Dec 22.
Falling Chinese demand has forced many steel mills to shut
operations this year. Beijing is allowing the closures in a bid
to attack over capacity in steel making.
"Demand for iron ore is just getting weaker and stockpiles
are building. Meanwhile, China is sidelining more steel
production as it becomes evident they can't go down the road of
just exporting to compensate for a weak domestic market," Wendt
said.
(Editing by Ed Davies)