Whilst IO prices may drop, there is one important factor that is often overlooked.
China is the biggest producer of Iron Ore, however, many of their mining operations are marginally profitable, even at current prices. Any significant drop in prices will mean that many of these mines will shutdown, reducing supply, and atleast holding prices steady. This is what happened in 2009.
I don't see IO prices dropping below $100/tonne anytime soon. Also, the Solomon hub project is going to have significantly lower cost per tonne than current FMG mines due to the low strip ratio. This will lower the groups overall cost per tonne, making the company more resilient to any fall in price.
fairfax down ramps fmg - must be loading up !, page-9
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