Fortescue Metals Group chairman Andrew Forrest remains bullish about the future of the iron ore sector and says the current volatility in prices will settle at a sustainable level.
West Australian premier Colin Barnett and Mr Forrest, have played down concerns over the end of the mining boom, saying $160 billion worth of projects would still drive the state’s economy. Mr Barnett toldFinancial Review Sunday, that claims WA was on the brink of recession following the dip in commodity prices and a slowing in the pace of mineral development activity were off the mark.
Fortescue’s Forrest bullish on iron ore sector
PUBLISHED: 17 HOURS 2 MINUTES AGO | UPDATE: 12 HOURS 7 MINUTES AGO
Andrew Forrest ... industry sustainable. Photo: Nic Walker
NATALIE GERRITSEN
Fortescue Metals Group chairman Andrew Forrest remains bullish about the future of the iron ore sector and says the current volatility in prices will settle at a sustainable level.
West Australian premier Colin Barnett and Mr Forrest, have played down concerns over the end of the mining boom, saying $160 billion worth of projects would still drive the state’s economy. Mr Barnett toldFinancial Review Sunday, that claims WA was on the brink of recession following the dip in commodity prices and a slowing in the pace of mineral development activity were off the mark.
“There’s still basically $160 billion of resource projects either in construction or going into construction in Western Australia, so it’s coming off its peak but that’s all that’s happened,” he said.
Mr Forrest wrote off some forecasters’ predictions of an iron ore price of $US80 ($86.51) per tonne in the near to mid-future. Goldman Sachs is forecasting an iron ore price of $US80 for 2015 as the market switches into oversupply.
But Mr Forrest said such predictions underestimated the response from higher-cost suppliers who would likely halt production at that level.
“I think that’s underestimating the fact there’ll be a supply response at any level like that,” he said. “That’s really thinking the domestic industry in China can keep going at that price and that the very undercapitalised Indian iron ore export industry can survive at that price.”
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