Iron ore's price plunge is likely to start claiming corporate casualties among the industry's smaller players, Goldman Sachs said.
"Tier-one producers have no alternative but to reduce unit costs and to exploit their asset base more efficiently; their production volumes are not at risk from a lower iron ore price," Goldman said in a note last week. "However, the rest of the industry is now facing an existential challenge."
"We lump every other producer into the tier-two category," Goldman said, estimating up to 50 percent of the tier-two production capacity is at risk through 2019. Australia's Atlas Iron has already announced it suspended all mining operations, it noted.
Iron-ore prices are down more than 50 percent over the past year, with the April contract Nymex iron ore 62 percent FE CRF China trading at $48.26 a tonne Friday, compared with around $108.50 12 months ago.