Dalian Futures, page-41

From Alan Kohler today freely available -

"When the iron ore price fell in 2008, BHP, Rio and Vale cut production; when it fell more steadily from June 2011, Vale held production and BHP and Rio increased it.

Here's another view, focusing only on the Australian producers, including Fortescue and the other smaller ones:

They are mainly going after the Chinese underground (therefore high-cost) miners, but the disappearance of Fortescue from the market would presumably be perfectly OK with them as well.
Here's the global iron ore cost curve:
That graph's a bit old now - the current price is not $US63, of course, it's $US48. According to that chart, FMG is already underwater, although Andrew and Nev dispute that cost figure, saying their all-in costs are $US42 per tonne. The cut to $US35 requires $US7, or 17 per cent, off the costs - no easy task.
Some of those Chinese producers are apparently still producing iron ore for $US130 a tonne, would you believe, and virtually the entire industry in China is now losing money.
The burning question is: how long can they all keep going? Andrew and Nev reckon it's basically forever because the Chinese Government is letting them off taxes and other charges. They might even be giving them straight subsidies - you just wouldn't know.
I think it's a fair bet they can keep going for quite a while, in which case any thought that iron ore supply will tighten this year, and possibly next, driving up the price, is optimistic. The risk to the price is on the downside.
If BHP and Rio decide to double up their bets, and not shut production even if the price gets down to break-even for them ($US35 or so) - that is, they decide to go into cash losses for a while to press home their siege of the Chinese miners - Fortescue might find that even if it's the lowest-cost producer it's still just breaking even or losing money, and it has fewer balance sheet resources with which to do that.
These are not good times to be invested in iron ore producers. They are now very definitely long-term investment propositions (remember that the definition of a long-term investment is a short-term one that didn't work out).

The turnaround will come, but picking the bottom will be hard."
cheers