Australia’s second-tier iron ore players are concerned that aggressive production increases by iron ore majors including BHP Billiton and Rio Tinto – and promises of more expansion to come – are locking new competition out of the market by spooking financiers about supply gluts and further spot-price falls.

The majors, a group that also includes Brazil’s Vale and Fortescue Metals Group , are increasing capacity despite iron ore prices having dropped 30 per cent to about $US94 a tonne since the start of the year.