It would appear to be more subtle than that. BHP, RIO, FMG invested in haematite mines because they were cheapest to produce. But China has now clearly indicated a preference for higher-quality ore in order to cut pollution, and that is where magnetite comes in. If this Motley Fool report is to be believed (http://www.fool.com.au/2015/07/17/the-mining-investors-handbook-part-3-iron-ore/) then a very large amount (~200Mtpa) of Chinese domestic production is uneconomic and some proportion of that can be replaced with higher-quality product from the likes of IRD. The report also indicates that in 2015 there was a large premium for the high-quality magnetite, $117/t compared with the $60/t for FMG's lower-grade stuff. I am happy to have a modest holding in IRD and to sit and wait. I would be more nervous if I held FMG.
