JOHANNESBURG (miningweekky.com) – The price of iron-ore will fall into the mid-$30s/t range over next 12 months, Liberum Capital predicted on Wednesday.

This low price environment would in turn put huge pressure on the 14 000-employee Kumba Iron Ore, which requires a breakeven price of $45/t, Liberum analyst Ben Davis said in a video link.

However, any move to shut Kumba would not only fall foul of South Africa’s political unemployment sensitivities but also put Anglo American’s other South African assets at risk.

Against that background, Liberum foresees Anglo potentially incurring substantial cash losses before being allowed to close Kumba, which persuaded the firm to recommend a sell off of the shares of the London- and Johannesburg-listed diversified mining company.

Liberum calculates that Kumba’s $45/t breakeven price will be $6/t higher than Fortescue’s $39/t, which has caused it to overturn its previous contention that the Australian company would be the sector’s first casualty.

“For us, Anglo is now going to be the one that has to exit the market first,” Davis said on video.

Liberum also sees a probable widening of Kumba’s $6/t breakeven distance from Fortescue, owing to Kumba no longer being in line to receive lump premiums higher than $8/t – compared with up to $25/t in the past – and Fortescue leaving its low-grade past behind it.