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Reinhart lieutenant upbeat on iron ore price

Roy Hill train. Photo: Roy Hill

One Hancock Prospecting director has provided a public vote of confidence for iron ore, predicting the commodity will not dip below the US$50 a tonne price mark in the 2016 calendar year.

Hancock executive director and long-time Gina Rinehart ally Tad Watroba this week reportedly made the prediction, as the company’s senior staff attended a ceremony in the Chinese port of Caofeidian to mark the arrival of the first shipment to China from Hancock’s 70%-owned Roy Hill iron ore project.

In an interview reported on by Fairfax, Watroba reportedly made the bold prediction that iron ore will stay above US$50 a tonne, thanks to sustained Chinese consumption.

“We are hopeful it will stay around the US$55 to US$60 a tonne range for the rest of the year,” Watroba was quoted as saying.

“Of course, you will see prices move around, like any commodity, but we are happy with what we see on the ground.”

Watroba’s positive forecast comes as the commodity sits stable at US$54 this week, up significantly from the low of US$38 a tonne in December.

The iron ore market was hit hard throughout 2015, as Chinese steel demand slowed and oversupply from the world’s major iron ore miners continued.

The newly-opened Roy Hill, the only major iron ore project under the Hancock banner, added another 55mtpa of supply capacity to the market, but the miner is confident that operational efficiency and a high quality product will help keep the mine viable.

Of course, the primary factor determining the mine’s success will be the iron ore price.

But Watroba is confident China will play its part in keeping the price within its current, relatively healthy bracket.

“I went to the Boao Forum recently and [China’s] Premier was really quite optimistic in terms of infrastructure and projects, so we see that as a good signal for demand,” he was quoted as saying.

“China has been our friend for years, and they know [Hancock] well from our experience with the Hope Downs mine with Rio Tinto.

“We are very happy with the model and the way it is moving forward.”

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