Iron Ore breakeven levels

Bell Potter have run the numbers on the breakeven levels, measuring their cost of prodcuction for the mid tier Iron Ore miners and the results are as follows:


Fortescue Metals US$66 per tonne

BC Iron US$77 per tonne

Atlas Iron US$82 per tonne.


Currently the spot price for iron ore is around US$70 per tonne.


From a balance sheet perspective, BC Iron has net cash of $78m, Atlas Iron has net debt of $118m and Fortescue has net debt of US$6.9bn.


Atlas and BC Iron are cash flow negative on these numbers, while Fortescue can adequately servie their debt at iron ore prices above US$66 per tonne.


We fail to see what news flow is likely to come that would drive up the iron ore price, particularly given the changes underway in the Chinese economy.


Investors unlikely to have a happy time playing the iron ore game for sometime.