http://www.transitholdings.com.au/expstrategy.htmlworth checking...

http://www.transitholdings.com.au/expstrategy.html

worth checking the above from Transit's website

just reading an interesting article

DJ Carmichael head of research Paul Adams confirmed there was currently a lot of activity at the junior end of the iron ore market.

"Iron ore is obviously a very hot sector ... and we think there is good prospectivity for those companies to do well over the next 12 months, particularity with the outlook for the iron ore (price) negotiations," he said.

With bullish price expectations, iron ore miners are keen to secure additional, quality assets.

Mr Adams predicted Andrew Forrest's Fortescue Metals Group would look to increase its supply of direct shipping grade iron ore which, as the name implies, can simply be dug up and exported.

Magnetite, on the other hand, is a less desirable variety of iron ore as it usually requires pelletising and therefore involves far greater capital requirements than direct shipping ore (DSO).

However, in the long term, once the flow of DSO from WA begins to slow, attention will turn to magnetite, Mr Adams said.

This was why China's insatiable steel mills - looking 10 to 20 years into the future - have secured involvement with such projects.

"It enables them to lock up the junior miners to a certain degree and then, depending on how the agreements are structured, those companies are held to a Chinese timetable," he said.

Generally speaking, magnetite mining is a harder road.

Most investors do not have the patience to wait four years for a magnetite project to get into production whereas a DSO project can be up and running in half a year.