Don’t think anyone expected the price of iron ore to stay over 200 bucks, conversely, I also don’t believe anyone tipping their hard earned into a miner expects the commodity price to drop off a cliff as we have just witnessed. Problem here are the forces driving the fall are not rational and less than $100 will be here in a blink.

It has only been a few short years since the last iron ore crash when I predicted a few the juniors would go bankrupt. One on my list was Atlas Iron who, fortunately for them, were picked up by a Handcock subsidiary. Problem for Atlas at the time was their operating costs were marginal to being exceeded by the ore price. 

Fortescue are in a different league being one of the best operators globally with an incredible cost of about USD15/wmt. Currently the margins in this business are staggering but this being maintained all depends on how much further the commodity price continues to slide. 

There talk around Fortescue being a dividend play, but that means nothing if your capital is eroded by the same, or potentially more. 

It is one to watch, but I for one will be treading carefully.