BC Iron expects rebound in iron ore prices

The head of junior iron ore miner BC Iron says China's demand for the steel-making commodity will pick up again under the country's next head of government.

BC Iron operates an iron ore joint venture in Western Australia's Pilbara region with Fortescue Metals Group.

Slowing demand from China has led to iron ore prices falling sharply in recent weeks, sparking concern about future investments in the economically important sector.

Fortescue on Tuesday announced a cut to its spending on expansion of another project, in response to uncertainty about future iron ore prices.

Iron ore spot prices have dropped by 50 per cent from the record levels of about $US180 ($A174.70) a tonne in the first half of calendar 2011, and have fallen by 30 per cent over the past two months.

Releasing BC Iron's full year results on Tuesday, managing director Mike Young acknowledged the falling price "has everyone a little nervous at the moment".

"My view is that very little is being said of the effect of the leadership transition in China going on right now," he said in a statement.

"I expect that, following the election of China's next premier Li Kequiang, you will see a loosening of monetary policy and systematic stimulus.

"It is no secret that China wants slower but sustainable growth, going forward."

Li Kequiang is regarded as the likely successor to current Premier Wen Jiabao.

BC Iron made a net profit of $50.6 million in the year to June 30, a massive increase on $1 million in the previous year.

The profit growth was driven by the first full year of production at BC Iron and Fortescue's Nullagine project, where exports had so far exceeded guidance, BC Iron said.

The company also declared its first full year dividend to shareholders, at 15 cents, fully franked.

Investors welcomed the result, sending BC Iron shares up 15 cents, or 6.3 per cent, to $2.52 by 1552 AEST.

Market Data

  • Currencies
    Currencies
    NamePriceChange% Chg
    0.9280-0.0085-0.91%
    AUDUSD=X
    0.5527-0.0039-0.70%
    AUDGBP=X
    0.6705-0.0079-1.16%
    AUDEUR=X
  • Commodities
    Commodities
    NamePriceChange% Chg