The international credit ratings agency Standard and Poor's has stated that the recent steep fall in
iron ore prices to about half its peak in 2011 will substantially reduce earnings of miners.
The credit agency stated that an
iron ore price persisting at or less than $100 per metric ton will threaten miners that are substantially debt-laden and heavily exposed to the commodity. According to a study by S&P on eight rated miners,
iron ore prices will need to recover to an average of above $120 per metric ton in the near term, or miners will need to cut capital spending or costs, for credit pressures to subside for certain producers.
S&P emphasized the importance for miners to take measures to mitigate the pressure they are under and to maintain their credit quality, adding that this also applies to investment-grade miners. The rating agency believes that miners that are able to defer capital expenditure and cut costs will be able to withstand a period of low
iron ore prices.