It would be interesting to know what the terms of the agreements...

It would be interesting to know what the terms of the agreements were.  From the ASX announcement, they are described as  

"Terms of the 12 month offtake agreement include market reflective pricing referenced to the Platt’s 62% Fe Index price, and market-typical lump premium and impurity penalties, on a Cost and Freight (CFR) basis."

Long term contracts are typically struck on some averaged index price (quarterly, monthly, etc.)   I very mucg doubt the deal was struck on a set price.  For customers to default they must see advantage in going to current spot prices, rather than an LT contract price.  This would work well for the customer in a falling IO market, which we've been in for the past few months, but not in a rising market, which we have recently entered.

Given the language of the current announcement, it was the customer who broke the contract, suggesting their view was/is the IOP will fall.