Iron ore price, page-645

Licensing and permitting - as you would (or should) know - is well factored into the project life cycle. The Pilbara has been on continuous build mode pretty much since the turn of the century. While these are replacements projects there wont be any supply gaps.

Where is the downside on supply (that limits the upside that we see for met coal or copper)?

- The existing iron basins are massive with 50+ years to go
- FMG has moved from the shoulder to bottom of the cost curve (which I think is the part you miss on the increase in low cost supply, it is the transition of existing producers as well as new tonnes)
- New potential supply in Africa offers a price upside cap, just as on-shore O&G has pretty much destroyed the prevailing wisdom on long term O& G pricing for conventional high capex producers
- The scrap cycle is likely to have a further supply impact in 5-10 years

Demand wise many think China has peaked, while FMG has recently "discovered" India that is an old story is yet to play out, and of course India has some excellent domestic iron ore.

While LT pricing is on of course theoretical as the LT always moves, history shows strong reversion on margins when prices have been too low/high. Current margins are very high

FMG has the additional exposure of lower grade ore (which blew apart in the last quarter), massive replacement capex c.f their market cap) and well informed opinion that their cost performance isn't maintainable.