It is ironic that some are calling the end of the mining boom, when both Rio tinto and BHP are reporting recording production and export volumes and iron ore continues to rise in value or hold around the $130 to $140 a ton price. What many seem to forget that building a mine is only one part of the benefit to an economy, once built that mine now provides income for the nation for the life time of its operation. As such incomes from resources will continue to expand as volumes rise, of course depending on global prices.
The benefit of a mines operation over its life time is many magnitudes greater impact on an economy then the short phase of construction.
Do not confuse the mining construction boom or investment boom with the resources boom, they are different beasts. Oh and in case you missed it, investment for the next 4 to 5 years is still many times what is was 10 years ago. It is just not as high as it once was which forced us to use 457 workers, which was pushing up inflation and interest rates prior to the GFC.
In fact the mining boom was the one thing we could have popped the so called property bubble by sending interest rates higher and higher to contain inflation which at one point was getting out of control. Had this continued we could have now had 10% interest rates and what effect on property would that have had? The GFC changed all of that, that turned out to be a massive bonus to property owners. Don't you recall the days when the RBA was raising rates to squeeze the rest of the economy to make room for the mining boom as inflation was to high, even a rate rise during the 2007 election which pretty much ensured Howard would lose, god what's mistake we all made putting labour in charge back in 2007.
It is ironic that some are calling the end of the mining boom, when both Rio tinto and BHP are reporting recording production and export volumes and iron ore continues to rise in value or hold around the $130 to $140 a ton price. What many seem to forget that building a mine is only one part of the benefit to an economy, once built that mine now provides income for the nation for the life time of its operation. As such incomes from resources will continue to expand as volumes rise, of course depending on global prices.
The benefit of a mines operation over its life time is many magnitudes greater impact on an economy then the short phase of construction.
Do not confuse the mining construction boom or investment boom with the resources boom, they are different beasts. Oh and in case you missed it, investment for the next 4 to 5 years is still many times what is was 10 years ago. It is just not as high as it once was which forced us to use 457 workers, which was pushing up inflation and interest rates prior to the GFC.
In fact the mining boom was the one thing we could have popped the so called property bubble by sending interest rates higher and higher to contain inflation which at one point was getting out of control. Had this continued we could have now had 10% interest rates and what effect on property would that have had? The GFC changed all of that, that turned out to be a massive bonus to property owners. Don't you recall the days when the RBA was raising rates to squeeze the rest of the economy to make room for the mining boom as inflation was to high, even a rate rise during the 2007 election which pretty much ensured Howard would lose, god what's mistake we all made putting labour in charge back in 2007.
Mike, Do you have any theories that would account for why raw unfinished steel at LME warehouses has plunged from almost 600 in 2011 to 272 in january to 152 yesterday?
What actually is stopping the iron ore price from settling back around 50?
The benefit of a mines operation over its life time is many magnitudes greater impact on an economy then the short phase of construction.
Do not confuse the mining construction boom or investment boom with the resources boom, they are different beasts. Oh and in case you missed it, investment for the next 4 to 5 years is still many times what is was 10 years ago.
Everyone seems to forget this. Volumes are going to be way higher. So when someone like lulldapull screams the end of mining, no, it's the end of the mining construction boom. The "poor" guys in operations on $120k/pa should be right unless the guts absolutely fall out of commodities.
The benefit of a mines operation over its life time is many magnitudes greater impact on an economy then the short phase of construction.
Do not confuse the mining construction boom or investment boom with the resources boom, they are different beasts. Oh and in case you missed it, investment for the next 4 to 5 years is still many times what is was 10 years ago.
Everyone seems to forget this. Volumes are going to be way higher. So when someone like lulldapull screams the end of mining, no, it's the end of the mining construction boom. The "poor" guys in operations on $120k/pa should be right unless the guts absolutely fall out of commodities.
If iron ore falls to $40/tonne BHP, Vale and Rio will cannabalise the market and buy up every competitor they are allowed to, and then they will build a business model very close to a monopoly.
The outcome will not be what is often predicted.
Any expressed market opinion is my own and is not to be taken as financial advice
If iron ore falls to $40/tonne BHP, Vale and Rio will cannabalise the market and buy up every competitor they are allowed to, and then they will build a business model very close to a monopoly.
The outcome will not be what is often predicted.
Catweasel laugh.
Does mouse speculate on future explain a why FM the G share the price is in a toilet?
It is ironic that some are calling the end of the mining boom, when both Rio tinto and BHP are reporting recording production and export volumes and iron ore continues to rise in value or hold around the $130 to $140 a ton price. What many seem to forget that building a mine is only one part of the benefit to an economy, once built that mine now provides income for the nation for the life time of its operation. As such incomes from resources will continue to expand as volumes rise, of course depending on global prices.
The benefit of a mines operation over its life time is many magnitudes greater impact on an economy then the short phase of construction.
Do not confuse the mining construction boom or investment boom with the resources boom, they are different beasts. Oh and in case you missed it, investment for the next 4 to 5 years is still many times what is was 10 years ago. It is just not as high as it once was which forced us to use 457 workers, which was pushing up inflation and interest rates prior to the GFC.
In fact the mining boom was the one thing we could have popped the so called property bubble by sending interest rates higher and higher to contain inflation which at one point was getting out of control. Had this continued we could have now had 10% interest rates and what effect on property would that have had? The GFC changed all of that, that turned out to be a massive bonus to property owners. Don't you recall the days when the RBA was raising rates to squeeze the rest of the economy to make room for the mining boom as inflation was to high, even a rate rise during the 2007 election which pretty much ensured Howard would lose, god what's mistake we all made putting labour in charge back in 2007.
Mike, Do you have any theories that would account for why raw unfinished steel at LME warehouses has plunged from almost 600 in 2011 to 272 in january to 152 yesterday?
What actually is stopping the iron ore price from settling back around 50?
Iron Ore may indeed fall in value, it may fall by alot or alittle. What effect will this have on Australia? What will be the Govts and RBAs response? As of today Iron Ore demand remains strong, greater then what we can supply hence why BHP, Rio can sell every ton they make. Oversupply is not expected until 2015 and beyond, provided world growth does not increase. The fundementals of Iron Ore are strong unlike Gold. Iron ore as of today is at $139, hardly cheap. Prior to the mining boom Iron Ore was less then $40 a ton in 2003/4. Yet the Australian economy had enjoyed 10 years of economic growth prior to the boom and now 10 years of growth during the boom. We will be just fine.
Most still dont get it, the Govt and RBA have moved from squeezing most of the Australian economy for the mining boom to keep inflation under control, to now doing everything possible to let it expand.
A slow down in mining is great news for home owners and investors as interest rates will fall further, Govt will provide more stimulus for the FHB market and so on.
The slower mining goes, the greater the property market will benifit. Housing and construction need to drive the economy in comming years and the RBA and GOVT will do what ever is needed to achieve this. You can choose to take advantage of this or ignore a golden oportunity.
Iron Ore may indeed fall in value, it may fall by alot or alittle. What effect will this have on Australia? What will be the Govts and RBAs response? As of today Iron Ore demand remains strong, greater then what we can supply hence why BHP, Rio can sell every ton they make. Oversupply is not expected until 2015 and beyond, provided world growth does not increase. The fundementals of Iron Ore are strong unlike Gold. Iron ore as of today is at $139, hardly cheap. Prior to the mining boom Iron Ore was less then $40 a ton in 2003/4. Yet the Australian economy had enjoyed 10 years of economic growth prior to the boom and now 10 years of growth during the boom. We will be just fine.
Most still dont get it, the Govt and RBA have moved from squeezing most of the Australian economy for the mining boom to keep inflation under control, to now doing everything possible to let it expand.
A slow down in mining is great news for home owners and investors as interest rates will fall further, Govt will provide more stimulus for the FHB market and so on.
The slower mining goes, the greater the property market will benifit. Housing and construction need to drive the economy in comming years and the RBA and GOVT will do what ever is needed to achieve this. You can choose to take advantage of this or ignore a golden oportunity.
Under that kind of scenario if you live in large proportions of Australia your property is not going to do well with low interest rates if there is much less work, instead it would seem to favour the eastern capitals.
Under that kind of scenario if you live in large proportions of Australia your property is not going to do well with low interest rates if there is much less work, instead it would seem to favour the eastern capitals.
Spot on, I talked about this a few days ago. As the mining booms slows down the $A will decline in value with rates falling as well. This will lead to a resurgence of prices in eastern states and their economies. Melbourne will benefit the most.
This is why I have properties in the eastern states as well as the mining states. You ride and play each cycle as they happen. Nearly always one area is growing strongly hole the others tread water. I live in Perth now but have spent many years in both Sydney and Melbourne.
Sydney is already growing so people might have missed the best chance to buy, but Melbourne looks like a good buy with prices still below peak prices. Melbourne has some of the most affordable areas In any capital city.
Mike, Do you have any theories that would account for why raw unfinished steel at LME warehouses has plunged from almost 600 in 2011 to 272 in january to 152 yesterday?
What actually is stopping the iron ore price from settling back around 50?
Can you expand on this please Andrew. It is a very interesting phenomenon.
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
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