parts of pilbara - disaster zone from flooding, page-14

Hi Bleach

Some other producers than I am aware that are coming on stream or increasing their production are

Saldanda Bay - Extra 35 million of capacity coming on steaming in 2011.

Simandou expected to be producing 95 million in 2015.

I don't have complete data of new/increasing production - Something I must do.

My original point was related to market forces. When you have high prices generating large profits, this encourages new players to enter and current players to increase supply to keep market share and make more money. This pattern continues until supply satuatates the market. Then buyers begin to take over and drive down the price. This is how the market works. The commodity of iron ore is not in short supply. The current short supply is the infrastructure to handing the huge volumes. The infrastucture will be built on the back of the high prices.

Quote From Newsreports re supply;-

Iron ore production increases may run ahead of demand
by . last modified Dec 08, 2010 11:59 AM
Jamie Freed, writing in the Australian Financial Review, reported that iron ore miners expect to double supply in the next decade, but there are doubts over the extent of global demand.



Fortescue's Port Hedland facility will be working hard to keep pace with future exports

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Australias three biggest iron ore miners, Rio Tinto, BHP Billiton and Fortescue Metals, plan to boost exports from the Pilbara to over 1 billion tonnes a year by 2020, wrote Freed. Rios iron ore chief executive Sam Walsh was quoted as saying, Really the only limit on expansion is the market.

Huge new projects in Brazil and West Africa are set to compete for market share with the Pilbaras supply of iron ore. China is also expected to increasingly utilise supplies of scrap metal and CLSA analyst Ian Roper recognised the possibility that Chinas demand for iron ore may fall from 2020 onwards.

UBS commodities analyst Tom Price said that the iron ore market could turn from deficit to surplus by 2015, lowering the price per tonne from $US150 to $US60. The miners are all promising big tonnes into the market, Price was quoted. Weve got modest growth rates for demand for steel.

However, the current spot price for iron ore, $US150 a tonne, makes iron ore a very lucrative business. Right now we think there is a great market for the products, Fortescue developments director Peter Meurs was quoted.

Unquote

I am coming from my point of view on supply and demand.

I am a long term holder and believer in SDL

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