Not long after its chairman called for a cap on iron production, Fortescue is now planning to mine much more.

Fortescue Metals Group (FMG) intends to expand production by up to 10 million tonnes a year, so that it can push down its break-even price to just $US41 a tonne.

FMG’s two big competitors in the iron game – Rio Tinto and BHP Billiton – are still making solid profits despite the iron ore price sitting around $US49 a tonne.

But FMG needs a higher price per tonne, and has been haemorrhaging money as the price trends downwards.

FMG chief executive Nev Power claims that the value of iron ore has been smashed by financial speculators reacting to Rio and BHP’s recent plans to expand.

FMG has added to pressure coming from the government side, with reports that the WA Government (which relies heavily on iron ore royalties) is concerned that miners are not fulfilling their obligations to the state.

Rio and BHP operate under state agreements designed to provide long-term certainty for projects, but the contracts also require them to use their “best endeavours” to get the “best price possible”.

WA Premier has made some fairly contradictory statements on the miners’ obligations, but they have been enough to indicate he may hold them to account.

Mr Barnett has implied he would be willing to intervene to stop the state-owned resource being sold too cheaply, but also says that as a Liberal he would not get involved in private business practice.

Fortescue Metals chief Nev Power is more outspoken about the need o enforce requirements on Rio and BHP.

“But the current state of the iron ore industry has been a disaster for everyone. It has ripped the heart out of the industry, the heart out of the suppliers and contractors for the industries, the heart out of communities,” he said this week.

“There are no winners, only losers.

“It impacts everyone in Australia, whether you work in iron ore or not, because of the massive impact that the iron ore industry has on the economy. So I think there is an absolute issue here of public interest, to try and make sure there is the maximum amount of value [created] that we can in the industry.”

FMG claims its plans to expand are timed to meet future demand, while Rio and BHP’s expansions will only add to the iron ore glut in the meantime.

It did not stop Goldman Sachs slapping a 'sell' recommendation on Fortescue Metals this week, with a target price of 50¢.

“Whilst Fortescue Metals continues to make a commendable effort in controlling the controllables – increasing efficiency and reducing unit costs – our new price deck significantly crimps the cashflow, and consequently Fortescue's large debt position continues to be a major issue,” Goldman Sachs analyst Craig Sainsbury told Fairfax Media.