With iron ore prices slumping since June, mining investor BlackRock has sold off a huge share of its iron ore shares.
The investment firm sold down about $60 million worth of iron ore stocks last Thursday, particularly from Fortescue Metals and Atlas Iron.
BlackRock sold 10.8 million Fortescue shares for almost $40 million, the SMH reported. This comprises more than 10 per cent of its stake in the company.
It comes after Fortescue sealed a $1.15 billion deal with Taiwanese steel firm Formosa Plastics last week, which means its FMG Iron Bridge project can commence.
The sale also comes at a time when miners are bracing for iron ore prices to replicate last year’s figure, when it dipped to $US86 a tonne in September.
It also sold almost six per cent of its Atlas stake, and smaller stakes in Rio and Vale that amounted to millions of dollars.
BlackRock has large shareholdings in the four companies.
Some miners and investment bankers do not anticipate last year’s price pattern to repeat as iron ore prices have risen to $US142.80 in the recent past, and due to iron ore inventories staying low in China.
The Bureau of Resources and Energy Economics, along with Fortescue and Ansteel, forecast in March that iron ore prices would hover at $US119 a tonne in 2013.
But UBS commodities analyst Tom Price said Chinese steel makers will soon hold back on production, which will mean iron ore demand will decrease.
Price has predicted iron ore prices will slump to $US70 for a short while between now and the end of October.
China’s steel manufacturing giant Ansteel recently warned Australian miners iron ore prices could fall as China’s steel makers are unable to break even
BlackRock did not sell any of its stakes from BHP Billiton, perhaps due to the mining giant’s broad portfolio.
BlackRock recently called on Rio Tinto and BHP Billiton to agree to lower asset sale prices if they are unable to clinch the full value on some projects.
It said realising the full price of assets is not compulsory to increase shareholder returns and embraced the idea of the mining giants selling non-core assets.
It was reported yesterday BHP Billiton will hand out a higher dividend despite a 26 per cent fall in its profits. The company is due to reveal its full-year result for the year to June 30 today, with expectations of an underlying profit of around $US12.6 billion.
Also anticipated is CEO Andrew Mackenzie’s announcement on what the company plans to do with the Jansen Potash project in Canada.
The company had flagged it as the fifth pillar but this was put in jeopardy last week when the world’s biggest potash producer, Russia’s Uralkali, pulled out of a joint venture deal.