The collapse of iron ore prices requires sacrifice

The continuing decline in prices since the beginning of this year has been 38 percent and the price of iron ore has slipped to $ 83.60 per tonne. Against this background, takeover deals have emerged, which now also raise doubts. And Chinese mines are on the verge of shutting down due to high operating costs.

The price pressure has become too great for the Australian company Western Desert Resources, which has been forced to rethink its financing arrangements. However, this did not help. Western Desert Resources (Western Desert) was forced to terminate the contract with the mining company of the contractor, calculated until January 2017.

The falling price is worrying tycoon Kerry Stokes, who received a takeover bid for Iron Ore Holdings (IOH) from BC Iron. Subject to the terms of the acquisition tender, the transaction may be terminated if the price of iron ore falls below AUD 90 per tonne for 20 consecutive days during the offer period.

The drop on Friday evening reached $ 83.6 per tonne, and in translation AUD 89.14 per tonne, and for the first time the price went below the designated level since August 11. The offer period was originally scheduled for September 26 and has since been extended to September 30. If the price persists, Stokes will receive approximately $ 8.5 million in cash and approximately $ 112 million worth of BC Iron shares, which are more valuable and much more liquid than IOH.