Iron ore surge to spark mining investments?

With iron ore prices continuing to rally to a multi-year high, will this spark a surge in mining investments? Current prices far outstrip the cost of production, said banking group Westpac.

The price for the metal has rallied on increased demand from China and traders are also bidding up the futures market.

With the metal bulletin iron ore index trading at around USD82 per tonne, up from USD41 per tonne in January 2016, Westpac expects to see widespread mining investments, predominantly in expansion projects. Miners in Western Australia’s Pilbara region need prices between USD36 and USD51 a tonne to justify replacement expansions, which could total USD8.2 bn, the bank estimated.

This would be a welcome boon for the heavy lift and project logistics industry, which would be tasked with moving the oversize equipment necessary for such developments.

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