Not only can the miners save billions on capex and make a ton more cash selling less, Canberra will never allow an execss supply (of unreplenishable resource belonging to Australians) to enrich the Chinese communist regime.
Apart from China being an enemy of Australia (and US alliance) as detailed in Kevin Rudd's last defence white paper (where he detailed about the need for Australia to prepare for WAR with China - an agressive and unpredictable dictorship with belligerent territorial intents towards all her neighbours - Indian, Japan, Phillipines, Vietnam, the contempt for international law), the other reason is simple economics.
Unless supply and demand is in equilibrium or slightly in excess on the supply side, assuming the RIO and BHP management (for that matter Vale) are absolutely insane in wanting to destroy share holder value by punishing their stock price EVEN further and drastically reducing dividend to shareholders (as IO is just about the only commodity profitable in their diversified portfolio), the Australian government finances (in the words of ex-PM Julia Gillard 2 months ago as GRAVE & URGENT and deteriorating) will never allow this scenario. Notwithstanding that for RIO and Vales, IO accounts for about 90% of their profit.
For 2013, some market analysts are forecasting an average price at $126/t. There people are suggesting the market is now in equilibrium. In future years, when supply exceeds demand, they suggest $70/t.
Now, assuming
550MT @ $126/t = almost $70 Billion
700MT @ $70/t = $49 Billion
That's a lot more of IO stockpiled by the Chinese and whole lot less corporate tax and mining tax collected by our broke treasury.
A China with access to cheap IO will be the end of Australia as coal (our other large export is hardly profitable and will provide next to nothing in government tax revenue).
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