“They will hardly want to shoot themselves in the foot and flooding the market with products. ”
The words belong LKAB’s CEO Lars Eric Aaro. The year was 2012 and the Swedish mining industry had been hit by a virus that spread naivety among business leaders. How could the world’s three largest iron ore producers not mind a little competition?
Today we know better.
The three iron ore giants Rio Tinto, BHP Billiton and Vale fighting to keep their market share through to overwhelm the market with iron ore. The price has halved in twelve months and the current $ 74 per ton is far below the threshold of pain for many mining companies.
The last week did the mining company Northland and its new president Johan Balck really anything to survive. But Northlands investors saw it as useless to save a mining company which lack other income and is completely dependent on high iron ore prices, when the price plummeted from $ 135 per tonne to just over 70 dollars in just one year.
There are many losers at Northlands bankruptcy. Peab writing of its claims on the Northland and takes the blast of a quarter of a billion in the fourth quarter. The Finnish engineering company Metso is the biggest loser: 944 million has gone up in smoke on the mining venture outside Pajala.
The euphoric small savers who was carried away in the Klondike atmosphere that prevailed in Sweden lost heavily to invest in Northland. On 21 January 2011 accounted share price of nearly 2 000 SEK. Today, the slaughtering fact. The last deal with Northlands shares was made on the Oslo Stock Exchange on Friday at 9:56, a record of ten shares for SEK 0.66 per share.
It is not the first time a mining company leaves Pajala . In the 70s interrupted LKAB plans to mine iron ore in Kaunisvaara, “beautiful mountain”. And now, in 2014, the Northland leaving for the same reason: It is not profitable to invest in ore in the Swedish soil.
The question then becomes how Swedish mining industry to compete globally when the three iron ore giants can blow away the competition in one breath.
Mining question was strangely absent in the election campaign for the elections in September. Now the politicians another chance. There are probably one or two who are hoping for a more passionate political debate about what is required for a vibrant and thriving Swedish countryside – and how mines will avoid bankruptcy.
“I would say that we talk about the price, in principle, be halved for something like this to happen. It would lead to many other mines with lower margins would close before, which would mean that the demand for our iron ore would increase. “
The words belong Northland Resources now kicked CEO Mr. Waplan. The year was 2012 and he answers the question about what it takes to Northland no longer be viable.
Think how fast it can swing.
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