News Wrap

IN THIS morning’s News Wrap: Anglo plunges after HSBC flags potential dividend cut; Rio to approve $US1B South of Embley; and iron ore mine closures only a matter of time.

Lou Caruana

Anglo plunges after HSBC flags potential dividend cut

Anglo American's shares slumped to the lowest since 1999 after HSBC Holdings said the producer will continue to burn through its cash even after cutting costs and potentially scrapping its dividend, according to the Sydney Morning Herald.

HSBC anticipates “more near-term pain” and no “clarity on a long-term resolution to reverse potential cash burn” and expects Anglo to forgo paying a full-year dividend.

Rio to approve $US1B South of Embley

Rio Tinto is poised to approve its long-stalled $US1 billion ($A1.4 billion) South of Embley bauxite expansion project as early as this week, after CEO Sam Walsh visited the project in Queensland on a trip to Australia this week, according to the Australian Financial Review.

Rio expects the return on the bauxite project, near Weipa, to be comparable to its lucrative Pilbara iron ore operations – that is, greater than 20% – but its development has been plagued by delayed approvals and environmental opposition.

Iron ore mine closures only a matter of time

The iron ore industry's junior producers have dramatically cut costs to chase down the plummeting price, but according to some analysts, the continued cost reductions are only delaying inevitable mine closures, according to the Australian Financial Review.

The benchmark iron ore price has crashed 55% in 18 months to $US43.89 a tonne on Wednesday, a record low since daily prices became the benchmark pricing system in 2009.

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