Mineweb today drew attention to observations fromÂ Standard & Poorâ€™s Ratings Services that iron ore prices could hurt some iron miners if they end up staying at $90 a ton for 2015. S&P analysts said that although larger companies would likely be able to adapt while some smaller, more iron focus companies might be put at a greater risk, either might just be able to weather the storm with good management and financial strategies.
The article quoted credit analystsÂ May Zhong, Diego H. Ocampo, Andrey Nikolaev, Amanda Buckland, Elad Jelasko, and Xavier Jean as saying:
In particular, miners with large iron ore exposure, but are unable to cut costs and are saddled with debt, will face a severe deterioration in earnings and credit metrics.Â Whether this deterioration triggers a downgrade depends critically on a mining companyâ€™s financial flexibility. If a miner can defer its capital expenditure and conserve cash, its credit quality should be able to withstand sliding iron ore prices.