How is that iron ore price looking?

There has been a lot of talk about iron ore prices and budgets and tax revenues and the like, so I thought I’d have a look at the iron ore price since 1996. Breaking it down into the Howard government, the Rudd-Gillard government and the Abbott government periods.

Iron ore prices

So Peter Costello – who we used to criticise as being a big-spender – was able to balance the budget with an iron ore price of less than US$36.

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135 Responses to How is that iron ore price looking?

  1. Infidel Tiger

    Imagine a government spending chart that looked like that.

  2. .

    This is truly damning. Spending must be cut.

  3. Gab

    Have a look at coal prices too, Sinclair. I believe it’s a similar picture.

    And then look at one for Australia’s terms of trade over the same period.

  4. Token

    How long before a leftard states that the low price is good as it will mean we are saving the planet by selling less?

  5. H B Bear

    Iron ore is basically dirt. Until the Chinese came along, iron ore price negotiations with the Japanese consisted of flying up there to be told how much the price would be reduced for the following year.

    This will be ugly.

  6. Infidel Tiger

    What kind of demented Treasury assumed that prices would stay that high after the greatest investment in production and exploration in human history?

  7. Sinclair Davidson

    Gab – I have looked at the terms of trade over a similar period – Hockey has to stop making excuses.

  8. Gab

    Hockey has to stop making excuses.

    We are in total agreement.

  9. Gab

    And Hockey et al need to stop with the stupid “fair share” of tax nonsense. Quantify what “fair share” means, you slack-jawed Liberals in name only.

  10. Infidel Tiger

    Hockey has to stop making excuses.

    If he spent as much time on policy as he does defending his terrible reputation he might not be derided as such a carnival clown.

  11. Trader Perth

    We’ve got Hockey who doesn’t know his arse from his elbow , Abbott who wont get involved in the GST debate and will leave it up to the states to resolve , Atlas Iron closing up shop , FMG laying off workers and contractors , Rio and BHP laying off contractors , the West Aust govt. inheriting unpaid for iron ore ports and the debate in Canberra in ..’looking for tax increases’. I see trouble looming.

  12. JC

    What kind of demented Treasury assumed that prices would stay that high after the greatest investment in production and exploration in human history?

    Dunno, but I reckon Twiggy is going to go bust.. rather I reckon the firm will.

  13. caveman

    Would be good to see it in a candlestick chart.
    looks like a head and shoulder pattern breach atb $100 looks like $40 target. Must be a gap somewhere there to fill.

  14. Bruce of Newcastle

    Other metal prices are variable. Lead and zinc are pretty reasonable. Copper is middling. Nickel is atrocious. Clive’s refinery in Townsville will be hanging on for dear life.

    The double irony is Henry recommended a mining tax model which took windfall taxes in the good years and gave money to the miners in the bad years. Could you imagine if that was in law today? Hockey would be writing eleven figure cheques to BHP and Rio.

    Hockey is hopeless but Swan and Henry were in a little league of their very own.

  15. Infidel Tiger

    Dunno, but I reckon Twiggy is going to go bust.. rather I reckon the firm will.

    That’s what Rio and BHP are desperately trying to do.

    It’ll be just them and Vale in a year or two and then they can go back to their old ways.

  16. Trader Perth

    JC …Twiggy has $1 Bill. in cash in the bank and at todays production of 120 mill. tonne and making a loss of $10 on every tonne FMG seems to have 10 months left.

  17. harrys on the boat

    When will it dawn on the fat useless imbecile that he just needs to get spending back to where it was before the RGR clusterfuck?

  18. Gab

    Trader Perth also add to that list all the businesses that supply goods and services to the mining industry that are also laying off people, or putting a halt on trade such as McAleese.

    It feels like we are already in a recession and getting worse.

  19. JC

    I’ve heard some absolute horror stories. A well known mining tycoon demanded that his senior execs borrow money and buy stock in the company for which he would go guarantor. They’ve lost everything including their homes.

    Tread carefully with commodity plays. Always. It’s lesson that every generation learns the hard way.

    The biggest long side player in commods was Shane Wand. That stupid, nasty little fuck bet the ranch. What a moron.

    The other huge moron was the wombat whisperer who described the rise in commodities as a secular move upward. Wombat whisperer should be sent to ISIS.

    Fme, what a bunch of idiots.

  20. JC

    Buy airline stocks with ears pinned back. 🙂

  21. Gab

    All this talk by Hockey/Abbott/Frydenburg about increasing existing taxes and introducing new ones is nothing short of nationalizing organisations by stealth. At least the Commies were upfront about their ambitions.

  22. Rabz

    I really miss the glory days when we had various self proclaimed economic geniuses creating stupendous pieces of public policy such as the RSPT.

    Bluddee legends.

  23. Pedro the Ignorant

    Another interesting pointer to the near future of the iron ore industry is the residential real estate markets of WA’s Pilbara towns of Karratha and Port Hedland.

    A one bedroom apartment that sold for $400K a year ago is on the market for less than half that price.

    A year ago you couldn’t buy a residential investment property for love or money, now the seller’s boards are crammed with them at bargain prices.

    Not an encouraging outlook for the North West.

  24. JC

    Lord I fucking despise Abbott and Stapled Stomach. When you think about it they’re no better that Shane Wand in terms of betting the ranch. Abbott signed off on every single Liars party spending crap. Every single one. He too was betting that Commods would hold up, so in a fashion he’s long of iron ore at a ridiculous price too. In fact Shane Wand sold him the ore at 150 bucks a ton.

  25. JC

    I really miss the glory days when we had various self proclaimed economic geniuses creating stupendous pieces of public policy such as the RSPT.

    Bluddee legends.

    Rabz, I kid you not… A mining dude told me that the Wombat Whisperer was going around the big end of town telling all and sundry that high commod prices were here to stay for a generation.

    If we had that policy still in place the Treasury would be dolling out cheques to the miners around about now. Just when our budget could really handle forking our big ticket cheques. Crucifixion is not good enough for him.

  26. Infidel Tiger

    The morons listened to Treasury.

    Day 1 they should have assembled a green screen and a firing squad at all exits of that building.

  27. mundi

    But but but the IMF said Howard pissed away all the mining boom money, at least according to the ABC

  28. Infidel Tiger

    Rabz, I kid you not… A mining dude told me that the Wombat Whisperer was going around the big end of town telling all and sundry that high commod prices were here to stay for a generation.

    Yep. They convinced themselves it was a structural change locked in for eternity.

  29. H B Bear

    I really miss the glory days when we had various self proclaimed economic geniuses creating stupendous pieces of public policy such as the RSPT.

    The appearance of the Wombat Whisperer at Senate Estimates telling people how to suck eggs should be on continuous loop at the Museum of Democracy in old Parliament House to remind people how fallible the public sector really is.

    Treasury officials should be locked in a room for 20 minutes and made to watch it before starting work each day.

  30. Rabz

    telling all and sundry that high commod prices were here to stay for a generation

    Truly stupendous idiocy.

    Take a bow, Wombat. Your reputation as the single most destructive Australian bureaucrat since that malignant, bigoted garden gnome Coombs is assured.

  31. Lem

    You can add Queensland’s woes to WA. The local economy has been tanking here for ages, unemployment has doubled in Mackay, and we have net movement out of the state. Interesting website here.

    Things are grim.

  32. Grigory M

    Don’t want to rain on the parade here – I have many times said unkind things about Joe Hockey’s abilities as Treasurer – but, Sinc’s graph shows only iron ore prices over time. It doesn’t show production volumes and/or the revenues flowing to government (both State and Federal). Maybe they would show a different situation.

  33. JC

    Gorgory

    It’s just not Rio and BHP paying taxes, you twat. There were other mining companies and more importantly there was the employees and ancillary firms providing lots of services. Rio and BHP producing far more at the lower price doesn’t go anywhere near making up for the short fall in tax receipts.

    STFU and don’t even try to sound half way smart you boring fuck.

  34. Fisky

    The double irony is Henry recommended a mining tax model which took windfall taxes in the good years and gave money to the miners in the bad years. Could you imagine if that was in law today? Hockey would be writing eleven figure cheques to BHP and Rio.

    Homer was a strong supporter of the mining tax/subsidy that would have destroyed the economy. Homer, get over here now and explain yourself!

  35. AP

    Mean reversion strikes again. When I did the exercise back in 2008, iron ore had a historical correlation with oil of about 0.8, with data available back to the 1960s. That is bcause digging iron ore out of the ground and selling it is essentially a logistics exercise, based on diesel powered plant and equipment. There is no rarity value to iron ore. There are literally billions and billions of tonnes of it sitting there.

    A moron could have told Treasury this.

  36. Infidel Tiger

    Peak Oil!
    Structural commodity price rises!

  37. JC

    Yea Fisk and so were a lot of others too.
    As I said earlier, right about now the government would be forking over billions to mining companies under the proposal they were all supporting. Just at the right time when the deficit looks really ugly.

  38. wreckage

    Mining is a fucking commodity, and it is cyclical even by commodity standards.

    R-G-R and their cheer squad were the absolute, history-making, worst investors ever to exist. They bet HUGE on a continuing upside at a historical high in a fucking commodity.

    They should be shot, their corpses burned, and their family history erased. We will be paying for this fuck up for generations.

  39. JC

    There are literally billions and billions of tonnes of it sitting there.

    It’s 5% of the earth’s crust.

  40. Grigory M

    Sweetness – if you want to sound sensible, keep your fucking dumb mouth shut. Oh – and on behalf of your hubby – keep your legs shut too.

  41. wreckage

    Don’t want to rain on the parade here – I have many times said unkind things about Joe Hockey’s abilities as Treasurer – but, Sinc’s graph shows only iron ore prices over time. It doesn’t show production volumes and/or the revenues flowing to government (both State and Federal). Maybe they would show a different situation.

    Yeah, ’cause price can fall off a fucking cliff but they’ll still make money with niche fucking marketing of boutique fucking iron ore, for the love of fuck.

    God have mercy on us, Grigory, please tell me you are not an investor.

  42. JC

    Peak Oil!
    Structural commodity price rises!

    Oh yea.. peak oil…. I always loved the peak oil one. Birdie was a peak oiler.

  43. JC

    Sweetness – if you want to sound sensible, keep your fucking dumb mouth shut. Oh – and on behalf of your hubby – keep your legs shut too.

    Fuck off, Gorogoery you twat. Go work on a real estate settlement, you crushing bore.

  44. Motelier

    God have mercy on us, Grigory, please tell me you are not an investor.

    Wreckage, I am holding my breath waiting for GM to enlighten us with the news that he has made a plunge on the comodities markets in the last 2 months or so.

  45. Grigory M

    Gorogoery

    Heh – bit shrill and foot-stampy there, old girl – but the rest is just your usual banal shit. I have much sympathy for your long-suffering hubby.

  46. Infidel Tiger

    Once FMG carks it BHP and Rio are great buys. Anything above $30 a tonne is profitable.

  47. Fisky

    Homer used to claim that Costello ran a structural deficit, even though there was a $20 billion surplus, while Swan ran a structural surplus despite the $40 billion deficit. Crocodile ran that line too I believe.

  48. JC

    IT

    BHP is going to $75 billion market cap. It’s $154 billion now. It’s the only level that makes sense to have a go.

  49. Peewhit

    Lesson one. No one learns the lessons of history.
    Lesson two. Every boom comes with a built in bust.
    Lesson three. The bigger the boom, the bigger the bust.
    I feel sure I have seen three mining booms in my lifetime, and all of them have ended, in guess what.
    Lesson four. The moment someone says “this time it’s different”, head for the exit. The bust is well in sight.

  50. Fisky

    News.com.au staffers will run stories claiming the boom has just started. Take out a mortgage in Mackay and double your money, they will urge.

  51. AP

    Further, no other mineral commodity exhibited that level of correlation to the oil price, not even thermal coal. In fact no two commodities showed that level of correlation. Iron ore is a pure logistics exercise.

  52. Token

    R-G-R and their cheer squad were the absolute, history-making, worst investors ever to exist. They bet HUGE on a continuing upside at a historical high in a fucking commodity.

    They should be shot, their corpses burned, and their family history erased. We will be paying for this fuck up for generations.

    The same people were cheering the scheme to drown brown people by the hundreds What you suggest is too good for them.

  53. Fisky

    There was a strong correlation between claiming iron ore was rising forever, supporting the Rudd-Gillard border chaos policy, and carbon austerity. These stupidities were a package deal and I have still yet to meet someone who supports one and not the others. Harry Clarke might be an exception.

  54. Lem

    More bad news for WA. And the list hasn’t mentioned that Sinosteel is shutting up shop in the Bluehills mine.

  55. JC

    Yea, there was nothing there Harry didn’t buy, Fisky. Harry wanted to paint all roofs white so the reflection could be sent back into space in order to reduce warming and was very afraid of cow farts.
    He was also buying into 200 year economic projections from a Harvard bod caught stealing his neighbor’s manure. Ikid you not.

    This is what was going on during the Earwax/slapper era.

  56. Fisky

    It’s a shame Twiggy didn’t sell everything a year and a half ago to a consortium run by Ken Henry, Stephen Koukalas, John Kwiggan, Paul Kelly and Mark Bahnisch. They are peerless at picking trends and have more business acumen than the rest of corporate Australia combined.

  57. Infidel Tiger

    The Kouk is spruiking iron ore as a great investment on Twitter.

  58. JC

    Actually fisk… it’s not a bad idea. Traders refer to such people as reverse indicators. It’s like in the old days when Time Magazine ran a story about some economic trend. The moment story was on the front page cover it was the end of the trend. You could actually trade on it at times. Time ran with the story about the death of equities in the late 70’s. We’re still going higher.

  59. JC

    The Kouk is spruiking iron ore as a great investment on Twitter.

    Is he. Ask the idiot if he’s bought the miners?

  60. wreckage

    It’s almost like there’s something profoundly wrong with the entire green-left conception of reality.

    A stunning notion, I’m sure, but one we will now have to give serious consideration to.

    What if they’re always wrong?

    *shiver*

    That would just be SPOOKY.

  61. Fisky

    Barry Jones was a classic reverse indicator. He wrote a book about technology but didn’t know how to use his office phone.

  62. Peewhit

    Lesson five. Buy in gloom sell in boom. But don’t be greedy, prices trend up and fall off a cliff.

  63. JC

    Stephen Koukoulas [email protected] 3h3 hours ago

    Iron ore prices surging… Ok – it is from a low base but US$35 is now 30% away! The improving news on the economy keeps rolling out.

    @TheKouk So you’ve bought the miners then, right?

  64. JC

    The dude is really an idiot.

    Stephen Koukoulas [email protected] 7h7 hours ago

    Since end-2004:
    The price of men’s clothing is down 4.0%; women’s clothing down 13.4%.
    I am not sure what to make of this. #uselessfacts

    @TheKouk The exchange rate perhaps?

  65. Motelier

    Sinclair,

    I would love to see a graphy of “spendings” for the same period of time overlaid over that graph. My guess is that the graph would be continually on the up are the 2007 election without any chance of a downturn.

    How big is Australia’s credit card?

  66. Entropy

    Grigory M
    #1656091, posted on April 14, 2015 at 7:30 pm
    Don’t want to rain on the parade here – I have many times said unkind things about Joe Hockey’s abilities as Treasurer – but, Sinc’s graph shows only iron ore prices over time. It doesn’t show production volumes and/or the revenues flowing to government (both State and Federal). Maybe they would show a different situation.

    Seriously Grigory just spend five seconds thinking about how production has changed over the chart’s time period and realise it would make Costello lok even better!

  67. Motelier

    Sinclair,

    That should be “after” the 2007 election.

    IPaditus. Sorry

  68. Gab

    The price of men’s clothing is down 4.0%; women’s clothing down 13.4%.
    I am not sure what to make of this. #uselessfacts

    [email protected] The exchange rate perhaps?

    Is this Kouk person supposed to be an economist?

  69. JC

    Is this Kouk person supposed to be an economist?

    It’s fucking incredible, Gab. He ought to be embarrassed to say he’s an economist but stuck on the fact that we import nearly all our apparel and since 2004 the Aussie went from 75 cents to a high of 1.10. But gee apparel prices fell? How could that possibly happen.

    No fucking wonder the Slapper was shocking at economics.

  70. Lem

    Interesting that the Kouk is commenting on deflation in clothing prices. Many of my patients I have noticed are looking decidedly shabbier as compared to the previous decade when it was Louis Vuitton all around.

    We actually had something in those giddy days of the noughties we referred to as the “shoe index”, a crude economic indicator perhaps, but we did notice that as the foot wear was kicked off before jumping on the exam couch that there was a definite trend upwards to haute de gamme, as the decade rolled on. Of course in the last 12 months or so the trend has decidedly reversed. Often it is as good as rubber thongs. (Leave that alone Infidel Tiger).

    I notice just now on Le Figaro that Salvatore Ferragamo (whom I didn’t realise were a listed company) have posted a share price drop. Unintended consequences of the drop in iron price (notwithstanding QE)? Not sure. I will continue my research and report back.

  71. Bruce of Newcastle

    What if they’re always wrong?

    Er, wreckage, I’ve never known them to be right about anything so far in the last thirty years. Admittedly extrapolating a trend line is hazardous, but we’re talking about Greens here.

    As for investments now, the pundits never consider that ordinary people look at where they can get enough money from investments. Many superannuants still invest in term deposits, but in the last year or so there has been audible screams of pain as they are winkled out by low interest rates and plunge one by one into the cold waters of the sharemarket. Where they buy the banks and Telstra for yield. I love it.

    So if the US doesn’t faceplant (which it could well do) the relative yield of dividends over term deposits are going to keep forcing the ASX up because all those risk adverse people are having medium hot fires lit under them. To make as much as the pension you need a million in a term deposit – and that is taxable. You can earn twice that in bank shares even with CBA near a C and Westpac bouncing off of forty bucks.

  72. Andrew

    It’s fucking incredible, Gab. He ought to be embarrassed to say he’s an economist but stuck on the fact that we import nearly all our apparel and since 2004 the Aussie went from 75 cents to a high of 1.10. But gee apparel prices fell? How could that possibly happen.

    No fucking wonder the Slapper was shocking at economics.

    I’ve met him at an event before and have heard him talk about the Y=C+I+G tosh to those who didn’t know better. In hindsight it was quite amusing how rudimentary his analysis of issues was considering the company he was in at the particular event.

  73. Lem

    So if the US doesn’t faceplant

    ….

    China doesn’t intend to faceplant, Russia intends the US to face plant, and so we have some interesting geopolitics playing out, it is said.

  74. mc

    Amazing graph. Looks like the Labor Party are great for iron ore prices… When is the next election, it might be worth investing.
    MC

  75. Infidel Tiger

    Mc – they’ll be back in government next year. Load up!

  76. Lem

    Amazing graph. Looks like the Labor Party are great for iron ore prices… When is the next election, it might be worth investing.
    MC

    Excellent! Go for it MC! I see you have a good grip on your fundamentals.
    But make sure you put all your super in.

  77. mc

    Thanks for support IT and Lem. If my family fortune wasn’t already safely committed to ethical renewable energy stocks I would be in like Flynn.

    Anyway, it is a moot point, if Labor are returned I don’t need to worry about money. The government will give me anything I need.

    MC

  78. Token

    Excellent! Go for it MC! I see you have a good grip on your fundamentals.
    But make sure you put all your super in.

    Will the Wombat Whisperer be part of the package deal? If he cuts another deal like the MRT the stocks may just recover and Twiggy may keep his company.

  79. Fisky

    mc, I’m doubling my mortgage to put it all on “hot rocks”. I hear there’s a fortune to be made in any sector headed up by Tim Flannery.

  80. Lem

    If my family fortune wasn’t already safely committed to ethical renewable energy stocks I would be in like Flynn.

    LOL. So many ways to lose money, so little time.

  81. Lem

    MC…are you channelling…the Hamster???

  82. Token

    MC…are you channelling…the Hamster???

    Didn’t Jaycee wait until the third day to rise again?

    The other Jaycee.

  83. Lem

    Yes indeed Token.

    However, if my hypothesis is correct, and MC is channelling Hammy, this is excellent news, especially after what Kerry (may the organising principle rest his soul) Packer said after his cardiac arrest:

    I’ve been to the other side, and let me tell you, son, there’s f*cking nothing there.

  84. Makka

    The outlook is grim. It’s not just the collapse in i/o and coal prices we are dealing with. Tens of thousands of jobs in the last decade in resources were in the construction sector , including in LNG. Those highly paid jobs in i/0, coal and LNG infrastructure ( ports, railways, processing plants, pipelines ,loading facilities etc) are all drying up almost simultaneously. Add those jobs to the many resource production jobs disappearing in Qld and WA as well as the off site engineering, fabrication, catering, services, utilities and design jobs. All very highly paid and disappearing, these are a massive drag on the economy.

    This is why the ABS figures are rubbish IMO. They dramatically understate the true nature of UE in Australia. And here we have a CINO Govt that fully intends to tax those that still have an income even more! I’m no economist but you have to be seriously brain dead (Looking at YOU Hockey) to think that the course this Govt is on will end in anything but an economic fking disaster.

  85. AP

    I’ve found another oxymoron: “ethical renewable energy stocks”.

  86. .

    Grigory M
    #1656091, posted on April 14, 2015 at 7:30 pm
    Don’t want to rain on the parade here – I have many times said unkind things about Joe Hockey’s abilities as Treasurer – but, Sinc’s graph shows only iron ore prices over time. It doesn’t show production volumes and/or the revenues flowing to government (both State and Federal). Maybe they would show a different situation.

    Err yes Grigory – you think when the price went up, volumes fell as well?

    No wonder you find economics hard.

    Here’s a tip champ – iron ore is not rare or precious.

  87. Hydra

    Wait. So the mining boom was during the RGR years?

    I know BHP ans RIO have to look after their cash flow etc, but flooding the marker with excess supply when they are the worlds largest auppliers surely makes them their own worst enemy.

  88. .

    Hydra

    You can’t corner the market in iron ore. A dollar now is worth more than a dollar tomorrow too.

  89. mc

    Sorry Lem. Not channelling Hammy, just minor sarcasm. I could not hope to maintain such an alter ego for so long, reminds me of Alene Composta.

    MC

  90. Infidel Tiger

    I know BHP ans RIO have to look after their cash flow etc, but flooding the marker with excess supply when they are the worlds largest auppliers surely makes them their own worst enemy.

    Perfect opportunity for them to destro all thei competition. It’s working a treat too. In 12 months it’ll just be them and Vale left. Then they can go back to their slovenly ways of buying overpriced assets and destroying shareholder value.

  91. wreckage

    Well, with a huge drop in demand for labour, and an IR model that prefers unemployment over a wage drop with the fervor – and the eviscerating outcome – of a Samurai craving death before dishonour…

    … what could possibly go wrong?

    The Green Left, after all, say we will peacefully transition to a renewable energy model with free energy from the sun, and jobs for all.

    Oh…. oh shit.

  92. wreckage

    MC, with investing advice like that, you should be PM, Treasurer, Treasury, and a major investment bank.

  93. Infidel Tiger

    The unemployment rate won’t go up much. Watch the disability pension rate though. Lots of “miner’s back” and FIFO depression.

  94. Lem

    Then they can go back to their slovenly ways of buying overpriced assets and destroying shareholder value.

    Speaking of which, I see that Nokia is making moves to acquire Alcatel (with their consent). This has necessarily led Francois Hollande to have both CEO’s in his office as we type, according to Le Figaro. He is concerned about the future of Alcatel’s 6000 or so employees.

    He perhaps senses he cannot pay France’s pensions with the taxes of the remaining 1000 private sector employees that remain in The Republic? I jest. Still, when was the last time an Australian PM had the audacity to do such a thing.

    Still, you have to give Nokia kudos for having the balls to buy Alcatel.

  95. Infidel Tiger

    I thought Nokia and Alcatel had folded a decade ago!

  96. Hydra

    A dollar now is worth more than a dollar tomorrow too.

    Thats an overly simplistic way of looking at the situation. Time value of money in short term is irrelevant when the price fluctuates at $5/day.

    No doubt cornering the market is impossible but wouldve thought if anyone can do it its these guys.

  97. Leigh Lowe

    Perfect opportunity for them to destro all thei competition.

    Well, yes.
    Australia’s greatest entrepreneur and benefactor to the brudders, Twiggy, has just decided the Gummint needs to get involved and step on the supply hose to push the price up.
    Sounds like FMG’s cost of production might be well north of the current spot price.

  98. Lem

    I thought Nokia and Alcatel had folded a decade ago!

    The power of Quantitative Easing! Raises everything from the dead!

  99. Leigh Lowe

    I thought Nokia and Alcatel had folded a decade ago!

    Nah.
    Alcatel were still handing brown paper bags around in Sth America until quite recently.
    But Mr Quigley had nuffink to do with it, I believe.

  100. Hydra

    The power of Quantitative Easing! Raises everything from the dead!

    Careful, MC might believe you.

  101. Makka

    Sounds like FMG’s cost of production might be well north of the current spot price.”

    At least $7 pt. At least.

  102. Lem

    In more good news for the finance sector, Silvio Berlusconi (aged 78) has just been let out of prison after serving his 10 month term for fraud. He’s not allowed to be president anymore though. Still, I’d say there might be some pretty interesting parties tonight in Italy. Lock up your daughters!

  103. .

    I remember a long time ago FMG said/implied their cost of production was 30% of the price then increased to 40% of the price.

    If only I could remember when, and if it was the spot price or not!

  104. mc

    Fair go Hydra. Whats wrong with auantative easing. How can more money for everyone be bad?

  105. Lem

    Fair go Hydra. Whats wrong with auantative easing. How can more money for everyone be bad?

    Depends how big your wheel barrow is, MC.

  106. .

    mc – eventual currency collapse and in turn, destruction of the banking system as well as international trade and domestic trade reverting back to barter in the short to medium term.

  107. mc

    So I should be investing in a stall at the farmers market then dot?

  108. Lem

    No no no Dot. That’s not how to explain it.

    MC, what happens is everybody needs bigger and bigger wheelbarrows, then a tip truck, until eventually you need one of those big doozies they drive around in the mines (that my be why you should buy iron ore stocks?) just to go to the shop with your cash. Eventually there isn’t a receptacle big enough for all the money you need to buy your tofu (if such a things is still available) and the currency collapses, resulting in the need for a system of barter which in your families case will be either solar panels or wind turbines.

    So no tofu for you.

  109. .

    What’s wrong with farmer’s markets? I know a few lamb producers who sell direct to market as well.

    I have a feeling mc would rather us to line up with a ration card than to buy at Aldi anyway.

  110. mc

    But Lem, Wouldn’t the bank be able to pay more taxes then?

  111. Lem

    MC, sadly no. Because the banks will be no more.

    Or that will remain… piles of rusting solar panels and wind turbines creaking eerily in the breeze.

    When they are not going full bore and rupturing peoples internal organs, the native bird population having long ago been decimated.

    🙁

  112. Andrew

    Gab – I have looked at the terms of trade over a similar period – Hockey has to stop making excuses.

    YTF does the entire meeja run the Goose’s line about Costello’s “rivers of gold” during the great once in a lifetime boom of $36 iron ore? Why don’t economists howl down that stupidity?

  113. Ray

    That iron ore may have come from the stars but diamonds are a girl’s best friend.

  114. Infidel Tiger

    Only one Treasurer got the rivers of gold and he was a complete ignoramus from Queensland.

  115. classical_hero


    This site shows the production of Iron ore, so you can see that our production has more than doubled since Costello left office and a higher price also. So when the boom was happening we had greater production and record prices, and now we are up that river without a paddle all because we spent the money we should have.

  116. classical_hero

    http://www.mining.com/australias-big-three-miners-to-regain-control-of-iron-ore-sector-90019/

    The link doesn’t show above, but what I found when I looked at the graph again, we actually now have triple the production since Costello left. The record price and production and what were we left with? Record deficits. I am wondering what we are supposed to do when bad times come, go into surplus at those times?

  117. Tel

    Lesson four. The moment someone says “this time it’s different”, head for the exit. The bust is well in sight.

    That’s what I think is happening in China, and this slump in commodity prices is driven by lack of Chinese industry. The structural changes in China are something of a world first… rapidly swinging from unproductive Maoist communism over to a high productivity semi-capitalist environment with huge injections of foreign capital and moving people off the land and into factories. In some ways it’s a reflection of the original British Industrial Revolution, but not really. At the top China is still communist, and they have been moving astoundingly fast. You have to expect a few bumpy patches on the way.

    Now they want to boost their “knowledge economy” and start designing their own technology from scratch… we will see how they go with that.

  118. Tread carefully with commodity plays. Always.

    JC, buy gold/silver physical? Keep cash?

  119. JC

    Winston

    No. I wouldn’t go near the precious “mentals”. When it’s all said and done I reckon gold is heading back to $850 and silver to $11ish.

  120. That is bcause digging iron ore out of the ground and selling it is essentially a logistics exercise, based on diesel powered plant and equipment.

    AP, in the early 00’s, I had the fortune to be talking to a bloke who was both an MD medical and a Physicist. The Uni he was working for was looking at the Paraburdoo region to use reflected heat from mirror towers to heat the iron ore and melt it into pellet size for export – reckoned they could drop the volume by 25%.
    I haven’t heard any more about it and was wondering if it was viable?

  121. feelthebern

    Iron ore up another $US1.96 last night to $US50.78.
    Nothing like S&P downgrading it or Joe Hockey giving the world his thoughts to spark a rally.
    Its like washing the car.
    Expect rain immediately.

  122. .

    This is why I think you cannot corner the market in iron ore:

    http://www.steelonthenet.com/plant.html

  123. J.H.

    Cutting spending is only half the job…. Without eradicating onerous regulation on private enterprise, think ecofascist regulations involving things like the Great Barrier Reef, land clearing, water allocation, land use, building restrictions…. the list of over regulation is legion.

    Without repealing most of that and cutting taxes, the welfare cattle herd has nothing to become enterprising with…… Which is why the Socialists and their government regulators locked it all up to begin with.

    … and to be honest, I don’t think Joe Hockey has a clue as to the real dynamics of the problem. He still thinks Government regulation IS free enterprise….. I fear for this country.

  124. Token

    Perfect opportunity for them to destro all thei competition. It’s working a treat too. In 12 months it’ll just be them and Vale left. Then they can go back to their slovenly ways of buying overpriced assets and destroying shareholder value.

    Have they been offered a swag of grubbermint grants to keep the overpaid union jobs in place yet?

    You can bet the AWU has been in campaigning & lobbying hard to ensure its cashflow is not threatened.

  125. Token

    Australias Big Three Miners to Regain Control of Iron Ore Sector.

    Will we be seeing a similar shake out in the back rooms of the ALP where the public sector unions will be moving to take over positions previously held by the AWU and other mining linked unions?

    After all, going forward they are the best bet for guaranteed funds for the Trade Union Party.

  126. Dr Faustus

    I haven’t heard any more about it and was wondering if it was viable?

    You have answered your own question there. HBI is a tough gig, even without solar mirrors.

  127. Dr Faustus

    Australias Big Three Miners to Regain Control of Iron Ore Sector.

    The next thing they have to do is convince China that it should pay $145/tonne for a commodity that can be sustainably produced at ~$40-$50. Easy enough; just tell ’em the Australian Government is planning to cut supply unless they pony up.

  128. Stan

    Lem: “We actually had something in those giddy days of the noughties we referred to as the “shoe index” ”

    Sign of the times was walking past Payless Shoes, George St, Wynyard yesterday – noticed there was a queue at the checkout, very busy in there.

  129. Ralph

    What a horrible mess we find ourselves in. Australia convinced itself that high iron prices were here to stay, forever, and congratulated ourselves for our superior economic management (or good luck) with hefty ongoing spending commitments. Now it’s unravelling. This is when we need politicians will balls of steel. Tony and Joe are not what we need at this point in time.

  130. Spongebob Steve Pants

    Is JC always this unpleasant to everyone? what is the back story here?

  131. Fibro

    Can any Cat tell me what percent of the iron ore price actually finishes up in government coffers, and what the total government revenue is from this?

    It is beig thrown around as the reason for our woes, and I am suspect that it in reality makes 2/5’s of FA difference, just another spin campaign to take blame away from the real issue of reducing expenditure.

  132. old bloke

    I remember a long time ago FMG said/implied their cost of production was 30% of the price then increased to 40% of the price.

    FMG have a wheel barrow of iron ore as a decorative feature in their office’s reception area. Twiggy must look at it every day when he goes to work and realises that the wheel barrow is worth more than its contents.

  133. EB

    On a positive, second hand Maloo utes and jetskis in WA will never be cheaper!

  134. Russell Camel Wattie

    When everyone I was working with (most everyone) was shopping aroung for $600,000 houses in Mackay and shiny blingy toys, I brought a two bedroom cottage on 3.5 acres a lazy 2.5 hour drive north of Brissy for $192,000 Still driving my 11 year old ute, wifes wagon is older. I float from job to job same as I always have, no stress, time off to enjoy my rural outlook, and gin around with a few little projects around the place. I knew 6 years ago when I heard that we were in the longest mining boom on record, that the booms days were numbered. Simple economics, yet all the experts seem to have drank the Kool-Aid. I really cant figure out why we continue to elect the same people and expect a different result.
    Some shudder at the likes of Jackie Lambi, & Bob Katter in parliment, but the mainstream parties are shiting bricks over thewe “Mavericks” can’t play the game when you have a few pollies actually prepared to speak what is on their mind, right or wrong, wether you agree with them or not, I think politics is the better for these few strong willed people prepared to fight for what they see as right.
    The boom is well over, and we have a generation of Kids that have never seen hard times, this is going to hurt them the most, and of course the older ones that forgot to look at history.

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