why the big decline, page-6

Yep Westcott, got it in one I think, as per my post in GBG:

Midwest Rejects Murchison Bid; US Dollar Woes Hit China Boom
Posted by Dan Denning on Nov 20th, 2007
What about iron ore? The proxy battle between Japanese and Chinese companies continues to play out in the Mid West of Western Australia. With the Pilbara all locked up between BHP (ASX:BHP), Rio (ASX:RIO), and Fortescue (ASX:FMG), the Mid West is “in play”. Or is it?

London’s Financial Times reports that, “Midwest Corporation (ASX:MIS), the Australian iron ore explorer backed by China’s Sinosteel, has formally rejected a hostile takeover bid from Murchison Metals (ASX:MMX), saying the AU$1bn offer undervalued its potential. Australia-listed Murchison is backed by Mitsubishi Corp of Japan and the takeover battle underlines the strategic rivalry between Japan and China to secure supplies of Australian iron ore.”

For years, the Pilbara’s been dominated by a few companies and the West Australian government. There simply wasn’t enough global demand for steel-making ingredients for other companies to make a viable business of competing with the giants. That seems to have changed today, as evidenced by the wild success (at least of the stock) by Andrew Forrest’s Foretescue Metals.

But has it really changed? Are the pieces finally in place for a structural expansion of Australia’s ore business? We think the answer is yes. But yesterday’s news that China has “frozen” all bank lending for the remainder of the year suggests that China’s spectacular boom is subject to the same kind of volatility that characterises fast economic growth.

In other words, in the long-term, the rise of the Far East as the world’s engine of growth seems pretty certain. In the short term, junior iron ore outfits in Western Australia could be buffeted about pretty good. Hang on for the ride.