The chickens are coming home to roost for the world's leading global miners, and this time things look set to be considerably messier than what they experienced in the aftermath of the 2008 global recession. "Everyone made bad decisions; no one was immune to the euphoria-induced spending that characterised the industry a few years ago," said one mining analyst, explaining the excess capacity and need for continued writedowns by mining groups worldwide.story_article_left1The closure announced this week of Kumba's iron-ore mine in Thabazimbi, Limpopo, is just the tip of the iceberg.The 80-year-old mine, which mainly supplied ArcelorMittal South Africa, accounts for around 1million tons of Kumba's total annual production of 48million tons.A London analyst estimates that 200million tons of iron-ore have to be taken out of the global market if supply and demand are to stabilise.Unless that happens, or China resumes its implausibly strong growth trend, iron-ore prices will remain under pressure, as will share prices."Lots of Glencore and lots of Anglo is under water. There will need to be lots more closures. It will be pretty painful," said the analyst.The value of the JSE's mining sector, as a percentage of total market capitalisation, is close to a record low.It is expected to move even lower as margins and cash flow in the sector continue to be squeezed.Far from taking supply out of the iron-ore market, the two major Australian mining groups, Rio Tinto and BHP Billiton, are planning to add 120million tons to the oversupplied market this year.A recent report by Citi said the additional supply would push iron-ore prices down to less than $40 a ton.Smaller, higher-cost producers, such as Australia's Fortesque Metals Group, blame "over-production" by Rio Tinto and BHP Billiton for the weak market conditions.In a bid to secure more stable prices FMG's CEO, Andrew Forrest, has suggested that top global producers agree to limit output along the lines of Opec in the oil industry.Forrest contends that the low-cost players are using the woeful conditions to force higher-cost players out of the market.Iron-ore prices were at historically high levels for a sustained period, generating margins of 60% to 70% for many producers.One Johannesburg analyst said there is little prospect of recovery in sight for global commodities.story_article_right2"There are no barriers to entry in this business, which means the high prices have encouraged a huge increase in supply," said the analyst, who did not want to be identified."Everyone made big, big mistakes. Rio Tinto overpaid for Alcan, BHPBilliton spent $40-billion [about R493-billion] on natural gas resources that were worth less than $20-billion, and Anglo spent way too much buying and then developing Minas Rio [iron-ore project in Brazil]."Ironically, Cynthia Carroll, the former Anglo CEO who took the Minas Rio decision, replaced Tony Trahar because of Trahar's more conservative approach to asset acquisitions.This week, Anglo American told shareholders it would report writedowns of as much as $4-billion when it releases its interim results in the coming week.The writedowns will be taken against Minas Rio and some Australian coal assets.But the market was not convinced that the $4-billion will be sufficient.Anglo is more than 69% off its all-time high, reached in June 2008.BHP Billiton is 32%, and Glencore 30%, off their respective highs in July last year as oil prices began their slide.Brazil's Vale, the world's biggest producer of iron ore, is 75% off its 2008 high, and the London-listed shares of Rio Tinto are 56% off their highs...