The price of iron ore has fallen again and ex-Rio Tinto boss Tom Albanese warned that it wouldn’t be picking back up again in a hurry.
Benchmark iron ore for delivery to the port of Tianjin in China was last trading at $US68.00 a tonne, a fresh five-year low.
Speaking to Fairfax, Albanese said as long as there was a huge amount of supply entering the market, iron prices would remain subdued for a few years.
"The new normal is volatility – for the past five years we've had to accept a high level of it, post the collapse of the benchmark pricing system, “Albanese said.
"While it's fun on the way up, it's painful on the way down."
Albanese said miners like Rio Tinto, BHP Billiton and Vale that were pushing out record tonnages in a time of oversupply and softening demand were looking after their best interests.
"It is in a company's individual best interests to put more supply in when costs are low – although that may create collectively an oversupplied situation,” he said.
"I think we are still sorting out where the supply-demand equilibrium is. I don't think it's quite as precise as economists would like to think."
Over the next 5 years, iron ore prices are projected to average between $US90 and $US95 a tonne.