Iron ore price <$20, page-5

There is a complete misunderstanding of why IO prices were stable for such a long time.  While the cost of production should nominally have gone up, it didn't because the big 3 producers were increasing production, gaining economies of scale.  Rio Tinto, as Hamersley Iron, started out producing/exporting 6Mtpa, compared to the ~360Mtpa it does now.

The Japanese Steel consortium, who negotiated the IOP with HI/BHP, gave them just enough of an increase in price x volume to keep the IOP relatively stable.  Like the surge in IOP to near US$200, this was a once in a lifetime thing and not the norm, though it seemed normal for a good length of time!

One look at the IO cost curve will tell you it is improbable that the IOP will ever drop below the marginal cost of production for any sustainable time.  Of course it is possible - getting a chimp to type out the bible is possible, but highly improbable!   

The bigger issue for MGX is IO grade.  While they have good (high) grades (=good prices) out of KI, their Midwest operations produce low grade ores.  The discount applied to LG ores will, in my opinion, persist and MGX should look to exit these areas, though timing, as always, is everything.