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Value-in-use adjusted iron ore costs Q2 2017

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06 June 2017

Value-in-use adjusted iron ore costs Q2 2017

Report summary

We estimate global average value-in-use (VIU) adjusted costs have increased 12% since 2016. Much of the increase has been driven by a rise in Australian VIU adjusted costs owing to higher penalties for low-grade ore and lower lump premiums, both of which Australia is a major supplier. Costs in other countries have also risen because of higher ocean freight rates and increased royalties as iron ore prices improved. But with iron ore prices now declining we expect these uncontrollable cost increases will reverse and VIU adjusted costs edge lower in H2 2017. The attached spreadsheet contains VIU adjusted iron ore costs on a mine-by-mine and company basis.

Table of contents

  • Value-in-use adjusted costs up 12% since 2016
  • Improved Fe-grade premiums benefit Brazilian iron ore mines
  • Margins peaked in Q1 2017
  • Chinese supply to face margin compression

Tables and charts

This report includes 7 images and tables including:

  • CFR China cash cost by country
  • CFR China cash cost by percentile
  • 2017 CFR North China cash cost curve (62% Fe fines equivalent)
  • Seaborne iron ore cash cost by operator 2017 (CFR China, unadjusted for quality)
  • Seaborne iron ore cash cost by operator 2017 (CFR China, 62% Fe fines equivalent)
  • Cash operating margins
  • China full cost curve 2017 (62% Fe fines equivalent)

What's included

This report contains:

  • Document

    China delivered VIU adjusted costs Q2 2017.xls

    XLS 1.57 MB

  • Document

    Value-in-use adjusted iron ore costs Q2 2017

    PDF 320.90 KB

  • Document

    Value-in-use adjusted iron ore costs Q2 2017

    ZIP 697.10 KB

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