Well you might be right However i think it depends if the...

Well you might be right
However i think it depends if the hedging contract calls for physical delivery or if it can be settled in cash.
if physical delivery is required, the company could theoretically purchase ore at spot and deliver that thereby fulfilling obligations and receiving $120.

The company ran into trouble when the price was above $120 at contract expiry and they couldn't settle with physical due to production problems so had to settle with cash. This caused the hedging loss.

Obviously don't know the specs of the hedge but if delivery to China was req they could buy off FMG in the port for example and deliver

as always happy to stand corrected