[miningmx.com] – THE decline in the price of iron ore was not expected to prevent BHP Billiton and Rio Tinto, two of the world’s largest producers of the mineral, from returning cash to shareholders, said Bloomberg News.
Citing a report by JP Morgan, the newswire said BHP and Rio Tinto would still achieve large operating margins from mining iron ore. This was despite a decline in the price from about $140/t to below $90/t in about two years.
“These businesses will have to get used to a lower iron ore price environment,” said James Sutton, a portfolio manager for JP Morgan’s $1.6bn Natural Resources Fund.
“They may become more boring as a result and focus on those core assets and focus on getting more and more margin out of them. That will ultimately lead to higher dividends and buybacks,’ he said.
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