hi cost producers gain more from increase pric

Just noticed the following statement in the "4000tpd here we come thread" and wondering your reasoning behind it as I believe the opposite to be true, and no one seemed to comment otherwise.

"The copper companies which will do best out of price increases will be the low cost producers."

Here is my reasoning as to why I believe the opposite is true.

Company X = cost $1
Company Y = cost $2

Price 08 = $3

Price 09 = $10 (ha ha exaggerated price good for highlighting reasoning but we can live in hope)

Therefore

Profit 08: X = $3 - $1 = $2.

Y = $3 - 2 = $1.

Therefore Profit X '08 = 2 x Profit Y '08

or Profit X '08 = 200% Profit Y '08

Profit 09: X = $10 - $1 = $9

: Y = $10 - $2 = $8.

Therefore Profit X '09 = 1.125 Profit Y '09

or Profit X '09 = 125% Profit Y '09

Or probably a more accurate indicator as to benefits:

Profit X 08 = 2, Profit X 09 = 9

Therefore Profit X 09 = 450% X 08.

Proft Y 08 = 1, Profit Y 09 = 9

Therefore Profit Y 09 = 800% Y 08.

Therefore the higher cost producer's profits are increased at a much greater rate than the lower cost producer's, as I have previously stated.

The higher the price, the less significance as a percentage the costs become. This is important as rises in price will benefit TMR's profits much more greatly than a lower cost producer's (unless TMR becomes a low cost produder, here's hoping).

Therefore, an increase in the price of copper will mean a higher ratio of increase in profits, and hence lower ratio of decrease of PE, for higher cost producers than lower cost producers.

Please post if you disagree with reasoning, but to me at least this logic seems pretty irrefutable. Cheers.