Iron ore price, page-1638

This is a catch 22 situation given contracts for supply are generally long term albeit price is linked to the indexes of the day and right now 58% Fe is at a much bigger discount to 62% Fe than historically. So that means CD needs to be developed before current mines are exhausted orelse they will lose their contracts and will need to renegotiate when they redevelop a mine and who says the production may not be locked away by someone else and there is no room for you in the market given they are not exporting 62 Fe at that time - so continuous supply protects your market share..

If we are going to talk about foresight or lack of it has to do with their option of not building rail - a catch 22 issue given they did not have the 20 million to 25 million tonnes initial starting production to justify a rail investment hence kept trucking (hence their higher cost of production compared to other Pilbara players) in the hope they would get rail access on someone else railway (and obviously that was never going to happen). At the height of the boom they would have been better off dealing with other smaller producers to share the costs of building their own railway. Ironically once you build a railway, costing $2 million - $3 million per kilometre, the cost of upgrades are minimal in the first instance of scaling carriage on the railway (eg the first $4 million passing loop could double railway capacity for example) but that opportunity was lost.

The best basis for AGO IMO is to scale up its exploration effort around iron ore and then get a Chinese backer for a railway - now so you know, when the Chinese invest in railways, like they were proposing to do with Oakajee, what you need to put into your evaluation criteria is the benefit of constraining BHPB's/Vales/Rio's price gouging and that works wonders for project economics (standalone a project may not be that great but when you model the benefit of reducing the price gouging of the three and now throw in FMG into that mix the project can look better on a holistic level to a Chinese steel mill investor. IMO that is what AGO needs to focus on, but its probably what some investors here don't like to hear.

All IMO