*dj fitch street interview: australian iron or, page-6

I thought the interesting points from that article were

"Australian iron ore companies are high-grade and low-cost producers, then even in a scenario where Chinese demand growth stalls and iron ore prices fall significantly the extent of the negative impact on their operating profiles should be limited compared to other iron ore producers."

"Chinese domestic iron ore production is typically low-grade and accordingly of higher cost to produce compared to imported iron ore. With iron ore prices likely to soften in 2012, the viability of domestic production will be under pressure, and hence it will not be easy for the Chinese to increase their output of iron ore significantly. Moreover, China needs higher grade foreign ores to blend with its local product, and this together with the close proximity of Australia means that Chinese demand for high-grade ore from BHPB, RT and Fortescue should remain strong."

"As part of the plan, China has invested significantly in Australian projects - Sino Iron project being just one example. Importantly the five-year plan no doubt includes China's intention to invest in existing producers. In this regard Hunan Valin Iron and Steel Group became Fortescue's second largest shareholder following a placement in May 2009 and it currently has a 15% stake."

and

"we would still expect the Australian iron ore producers to fare relatively well in such a worse-case scenario. This is because they are adding capacity at the bottom of the iron ore cost curve, so in a weaker demand/price environment they can continue to generate good project returns when the viability of other producers come under question and their expansion plans will potentially be deferred."

I thought the article was more about Australian iron ore producers and China's reliance on them because of the high quality ore that could be blended in with China's own low grade domestic ore.

Maybe I have misinterpreted the point of Mahony's post?