When the rout in prices ends for the world's iron-ore producers, those left standing probably will have more robots on their side.
Automated drills and driver-less trucks are among the new tools employed by the four biggest companies, including BHP Billiton, in a bid to preserve profit margins during a bear market that began more than two years ago. Using more technology helped reduce costs at Rio Tinto by 8 per cent since 2013, even as it boosted output by 5 per cent, according to Paul Young, an analyst at Deutsche Bank in Sydney.
Improvements by top producers is defying a productivity collapse for the rest of the mining industry, which consultant McKinsey & Co. says declined as much as 28 per cent in the past decade, forcing smaller operators to shut. With demand for iron-ore slowing in China, the world's biggest user, prices are probably headed lower as major suppliers expand output by tapping low-cost reserves, mostly in Australia, according to Citigroup. The top four companies will see their share of the global market jump to 79 per cent in 2018 from 64 per cent in 2010, the bank said.
"Higher productivity is certainly an advantage" because those companies "would be the last ones to shut down in a low-price environment," said Jessica Fung, an analyst at BMO Capital Markets in Toronto.
Source: The Sydney Morning Herald - see full article