A Roy Hill-Fortescue tie up makes sense

The iron ore market is already flooded with supply and much of it is cheap. BHP (ASX:BHP) and Rio (ASX:RIO) are, of course, pumping out cheap ore and the Brazilian giant Vale (BOVESPA: VALE5) is adding about 90m tonnes of cheap ore as well. The cost curve is now lower and flatter than it has been in a decade and everyone expects prices to fall further.It is in this environment that Hancock Prospecting is launching the Roy Hill project, an ambitious $10bn mine to produce 55m tonnes of iron ore a year. The project has taken years to plan, fund...

The iron ore market is already flooded with supply and much of it is cheap. BHP (ASX:BHP) and Rio (ASX:RIO) are, of course, pumping out cheap ore and the Brazilian giant Vale (BOVESPA: VALE5) is adding about 90m tonnes of cheap ore as well. The cost curve is now lower and flatter than it has been in a decade and everyone expects prices to fall further.

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