Long-term success will challenge cost-cutting miners

The big miners' strategy to offset iron ore's price decline by carving into costs while ramping up exports is paying off so far, but it will be harder to sustain in the long run.

The Rio Tinto interim result (Walsh fires Rio to a roaring success, August 7) showed that the strategy of carving into costs while ramping up volumes that is being pursued by the major miners has worked to offset commodity price declines. The key question -- worth billions of dollars -- is whether it will continue to work.

Critical for Rio (and very important for BHP Billiton) is the iron ore price and the structure of the market for seaborne iron ore.



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