Going to be more than a bumpy ride for FMG and Roy Hill. Maybe...

Going to be more than a bumpy ride for FMG and Roy Hill. Maybe not happy times for BHP and Rio, but making some profit is always better than no profit. They can ride out the storm, not so the other two.

Squeezing out $6 per tonne of cost reductions will be tough for FMG, and if they can do it now, why haven't they done it yet. Roy Hill is brand new so you would hope they have built in the cost savings from day 1, but I doubt it. It is not even commissioned yet and I have heard rumours that it will go straight onto care and maintenance. I don't believe that for a second, but it is a scary sentiment.

There actually is one good thing about this. For years, the big boys and coal, iron ore and more recently LNG players, have been thinking they are going to make so much money that they tolerated poor work practices and set worker expectations about pay and conditions that other commodities and industries could not tolerate. Hopefully, some of the smaller smarter players can take advantage of this. For the investor, working out who can take advantage and investing in them is the challenge.