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Falling Iron Ore Prices May Influence BHP Billiton's Bid for Potash Corp

Iron ore prices are set to fall by nearly 11 % as major miners such as Rio Tinto and BHP Billiton are likely to lower prices as demand for iron ore falls in China.

Prices per metric ton may drop to $129 for iron ore. This may be a reason why BHP Billiton’s chief executive officer Marius Kloppers said that they would be very disciplined about the ongoing bid for Potash Corp.

The company had given Potash Corp. of Saskatchewan Inc. A $130 per share proposal which Potash Corp had rejected. The restraint that BHP Billiton is showing in the deal may be based on the fact that The CEO is now setting out on a two week global tour to get share holder support for the deal.

While the doubling of its full year earnings announced this Wednesday seem to be putting pressure on the company to make an increased offer, they officials would be wary of delving into its robust cash reserves with the impending decline in sales of iron ore coming up in the next quarter.

Joel Scanlon

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Joel Scanlon

Joel emigrated to Australia in 1995 and worked for five years in the mining industry as an exploration geotechnician, using GIS mapping and CAD software. Upon moving to the North Coast of NSW, Australia Joel worked as a graphic designer for a leading consultancy firm. After that, he ran a successful business providing web services to businesses along the eastern seaboard of Australia. During this time, he developed and launched News-Medical.Net. Joel has been working with AZoNetwork since the company was founded in 2000.

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