Three of the world's largest mining companiesBHP Billiton, Rio Tinton and Vale control around 70% of the world's iron-ore trade. Every year annual supply contracts are negotiated by these companies with their customers. The growing demand has had an impact on price. In 2005, global prices rose to a huge 72%. After that, the rate of increase slowed down, but again in 2008 some contracts saw a rise of 68% and above. Demand continues to overtake supply.

Vale's earnings have been growing by a factor of 10 since 2002. Rio Tinto's share prices doubled in 2007. BHP is now trying to buy Rio Tinto to accelerate growth in its iron-ore business. Various mergers indicate that mining conglomerates have themselves become very attractive, piggybacking on the growth of emerging markets such as India and China.

All these firms are expanding their iron-ore operations rapidly to take advantage of high prices. Australia has benefitted enormously since it is the world's biggest exporter of iron-ore. Rio Tinto's mines in Pilbara, Australia has increased output by 15% a year for the past 10 years. By 2013, there are plans to triple this output. Rio Tinto also plans to increase production at a new mine in Guinea.

Rio Tinto could grow even faster, but it's growth was reduced due to inflation and increased competition. Rapid growth means that suppliers cannot keep up and there are shortages of inputs, such as tires for mining trucks and locomotives. The shortages are exacerbated by the fact that BHP and other companies are also growing at a furious pace in the same region. The boom in exports of iron-ore has ensured that the state of Western Australia (WA) is running a huge budget surplus with one of the lowest unemployment levels in history.

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