DYOR this post is not advice, this post may contain inaccuracies.
I get a double mention I feel special
Good luck back at ya kculovad. It's been brutal and one always wonders if the doom and gloom reports and predictions were true watching the recent tumble. My feeling is that the lower it goes the harder it gets for it to go lower again. IO is worth something and will continue to be, FMG is quite good at producing it 3rd best in the world as I understand it even with debt interest repayments factored in.
I think Roy Hill is going to be in massive trouble they haven't had time to streamline like FMG has and I doubt the infrastructure benefits of a 160mt complex can be matched by a 55mt complex.
I think Atlas is going to have to suspend operations again I can't see anyone buying in to their second attempt I feel bad for the workers and management.
I still have no doubt that RIO's stubbornness is much to blame for this situation. Sam Walsh just doesn't understand that China will never ever allow him to have too much controlling market-share of world IO production. I'm sure China would love to give him a huge hug though. I will say though that his actions were reasonable up until the point where it clearly became foolish, namely at the point where the diminishing returns of market-share grab strategy were impacted by causal effect IO price decline such that company profits decline. Probably around $80/tonne at a guess. And again I remind people that FMG had already committed capex to it's expansion well before IO started sinking.
The government if it had a clue should have stepped in and rectified this massive threat to Australian prosperity a long time ago. Incompetent and lazy government has led to all our eggs being in one basket - Australia "the quarry" as another poster put it. Moreover this free market theory belogny has led to a poor return on the countries considerable mineral assets. Notice how the Chinese government is stepping in to control it's market and act to protect it's prosperity? They are not "free market capitalists" and neither should Australia be, China is a hybrid and much wiser model IMHO.
The funny thing is, if everyone stopped producing so much and competing so hard everyone would be better off. It's amazing. Think about it, if all the Australian producers cut back to %70 - workers could work %70 of their current hours, IO would probably be at say $90/tonne and the budget would be massively improved.
This notion of Vale being the bogey man that would take market-share is hilarious to me because Brazil has more right to accuse Australia of this as we produce 2.06 times as much as them (probably more this year). Yet our population 23.13 million in comparison to Brazil's 200.4 million suggests that we are the greedier exporter. In human terms, if everyone in the world has to work harder, to get less, just to compete with other humans it demonstrates the stupidity of unbridled capitalism. Despite the half truth of Greeks dodging tax or not working hard one of the real reasons Greece is stuffed is because it can't for instance compete with German high quality manufacturing or Chinese low quality manufacturing, the IMF was happy to lend it money because in the long run it puts other countries into debt-slavery. They must have known many years ago that Greece with olives and tourism was not going to be able to pay it's loan back.
(20min delay)