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* Slim chances for juniors iron ore miners as lower pricesloom
* Many running short on cash and finding few options forfunds
* Vale, Rio, BHP better able to withstand dips in iron oreprice cycle
By James Regan
SYDNEY, July 22 (Reuters) - From Africa to Australia,opportunities to develop small iron mines are fast disappearing,as cash dries up and miners are unable to compete with thecrushingly low production costs of the sector's heavyweights.
In Australia alone, a half a dozen or more projects peggedby prospectors in better times sit stranded in the outback withno timetable for development.
Most are running short on money and have stripped payrollsand equipment spending to a bare minimum, awaiting a turnaroundthat forecasters predict is a long way off at best.
Companies such as Aquila Resources Ltd, FlindersMines Ltd and Iron Road Ltd, which a year agowere leading a wave of new investment in iron ore, have hadtheir stocks gutted as investors turned cold on their prospects.
"This is not the time to be developing a new iron ore mine,the big boys are making sure of that," said Keith Goode, ananalyst for Eagle Mining Research.
Global miners Vale, BHP Billiton and RioTinto are increasing their supply dominance in theworld's second-biggest shipped commodity market after oil.
The three already control some 70 percent of seaborne tradeand are spending billions of dollars on new mines to capture aneven bigger share, just as the price outlook for thesteel-making raw material deteriorates and a supply glut looms.
Iron ore prices are forecast to reach a four-year low in2013, according to a Reuters poll. In a few years, some analystssee prices under $100 a tonne.
The majors are cornering the market with costs of $30-$50 atonne, compared with estimates of up to $100 for new entrants.
Add to that, expenses around rail lines that can stretchhundreds of kilometers across deserts or through jungles,limited port allocations and lower grade ores and it's littlesurprise new entrants are struggling.
Fortescue Metals Group, Australia third-biggestiron ore miner, has told prospector Brockman Mining Ltd it could charge the company up to $576 million a yearjust to access part of its Australian rail line.
Another upstart, Aquila Resources, had no option other thanto put its West Pilbara Iron Ore project in Australia on icethis year. It would have required billions to be spent on railand ports, stretching funding too far.
Japan's Mitsubishi Corp has opted to suspend workon a port and rail line in Australia that promised to establisha new iron ore export hub, 1,200 km (750 miles) from rail linescontrolled by BHP, Rio Tinto and Fortescue,further diminishing the hopes of aspirants.
NO DAYLIGHT
In West Africa, valuations for a number of iron orecompanies have fallen so low to suggest the market no longerbelieves these projects will see daylight, according to HunterHillcoat, an analyst at Investec.
"The view that the market is not ascribing value to thesecompanies on the basis that their projects won't get developedhas been really reinforced in the past few months," he said.
Zanaga, partnered with Glencore Xstrata onits project in Republic of Congo, has a market cap of $47million compared to around $38 million in cash reserves.
The firm's stock has lost about 60 percent this year, whileGuinea-focused miner Bellzone has had around 70 percentwiped off its market cap.
Bellzone was forced to sell its bulk-carrying ship after acut in its iron ore production forecasts at its Forecariah minemeant the vessel was no longer needed.
Another Africa iron ore developer, Australian-listedSundance Resources Ltd, has been unable to attractpartners to back its Mbalam-Nabeba iron ore mine straddlingCameroon and the Republic of Congo.
Shares in Sundance have lost about three quarters this yearbecause its planned partner, China's Hanlong Group, failed tosecure backing for $4 billion in development financing.
The plight of the juniors has not led to much consolidationeither.
One of the few exceptions has been IMIC, whichrecently made an agreed bid for Afferro , whichowns 100 percent of the Nkout iron ore deposit in Cameroon.
That deal was unique because IMIC had already sealed apartnership with China to build transport links so the rawmaterial can be exported.
LITTLE ROOM FOR UPSTARTS
Volatile trade in iron ore has seen prices range between$110-$160 a tonne this year, joining a wide range of commoditieshit by excess supply and slowing demand from China.
Oversupply of seaborne iron ore will be about 155 milliontonnes next year, according to analysts at UBS.
Almost all the new supply is coming from the big miners.
UBS, Goldman Sachs and other banks warn prices could dip aslow as $80 a tonne versus today's price of $130 .
Access to funds, particularly equity funding, has also driedup, further stretching developers.
"There is little appetite for debt funding for most of theseprojects and capital markets are closed too," which doesn'tleave much choice," said Paul Adams, an analyst for DJCarmichael, which specialises in small mining companies.
Even an iron ore project being developed by Gina Rinehart,Australia's richest person, to mine 55 million tonnes a year istaking longer-than expected to fund.
After years in pre-development, her Roy Hill project is justnow overcoming key hurdles holding up debt negotiations, sourcesfamiliar with the talks told Reuters.
However, if it starts producing by 2015 the project aimingto become Australia's fourth-largest iron ore producer will makeit even harder for smaller rivals.
The iron ore market in Australia has been sliced in three byRio Tinto, BHP and Fortescue mining an additional 100 milliontonnes next year, equivalent to a fifth of China's imports.
Vale, the world's biggest producing company, is spending $19billion to expand its footprint by nearly a third in its homecountry of Brazil.
The strategy relies on improving economies of scale to lowerthe cost of producing each tonne of ore to levels smallerplayers find it impossible to match.
That leaves little room for upstarts elsewhere in the world.
"The Rio's and BHP's are cushioned through every stage ofthe cycle, high and low," said Carmichael's Adams. "Unless, youare cycle-proof, it is going to be a very tough road."
