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Value-in-use iron ore costs Q2 2020

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18 June 2020

Value-in-use iron ore costs Q2 2020

Report summary

The average value-in-use (VIU) adjusted iron ore cost for Q2 2020 is US$36.21/dry tonne (62% Fe fines basis, CFR China). This is down a massive 18% compared to the average of US$44.07/dry tonne last quarter. At a country level, the changes compared to last quarter are different. VIU adjusted costs in Brazil have fallen 32% this quarter while Australian costs are down 15%. Chinese value-in-use costs are down a smaller 6%. Total operating costs have been positively impacted by significantly lower diesel fuel prices and weak exchange rates. From a value-in-use perspective, Brazil has benefited from our increase to higher grade (62% Fe vs 65% Fe) premiums although this was partially offset by a lower pellet premium and an increase to our Silica (4%-6.5%) penalty. In Australia, VIU adjusted costs have benefited from a lower discount for ore with grades less than 62% Fe and a reduction in the phosphorous penalty.

Table of contents

  • Executive Summary
  • Lower pellet premiums and higher silica penalties - again
  • Freight rate weakness continues
  • Profit margins soar
  • Value-in-use assumptions

Tables and charts

This report includes 7 images and tables including:

  • 2020 Value-in-use adjusted cost curve (CFR China, 62% FE fines equivalent)
  • VIU adjusted cost by country (CFR China)
  • VIU adjusted cost by percentile (CFR China)
  • Cash operating margins
  • Seaborne iron ore cash costs by operator (CFR China, 62% Fe fines unadjusted)
  • Seaborne iron ore cash costs by operator (CFR China, 62% Fe fines equivalent)
  • 2020 China value-in-use adjusted cost curve (62% Fe fines equivalent)

What's included

This report contains:

  • Document

    Value-in-use iron ore costs Q2 2020

    PDF 823.69 KB

  • Document

    China_delivered_VIU_adjusted_costs_Q2 2020.xlsx

    XLSX 688.72 KB