T  he discussion about whether it is the time to buy iron ore stocks very often turns to debates about whether the market price for the key steel ingredient is going to rise or fall.
You can get any number of pundits to predict the iron ore price plunging even further and a similar number to mount an equally convincing case about why it will recover above the current $US50tonne. 
These iron ore price guessing games often hinge on what pundits reckon is going to happen in China and can descend into circular discussions about State-controlled economic figures and global growth forecasts.
Probably the more tangible side of the iron ore miner investment equation sits right under our noses.
It involves estimates of what it costs each company to produce a tonne of iron ore and, therefore, the prices at which the company will start having difficulty and where it can begin to hopefully make a profit.
Analysts from international investment group UBS last week gave a detailed briefing on the factors that go towards working out the iron price ore that is needed for a company to break even.
The explanation was particularly timely given UBS had just upgraded heavily indebted WA iron ore miner Fortescue Metals Group from a neutral rating to a buy.
This reflected Fortescue management having worked to slashed its costs in the face of the iron ore price plunging from above $US120tonne at the peak of the boom.
There are two very distinct elements to an iron ore mining company's cost structures.
The one we hear about all the time is what is known as the FOB cost for each tonne of iron ore produced by a company.
FOB cost stands for free on board and reflects the total cost per tonne of digging the stuff out of the ground, trucking and blending it and getting it on board a ship waiting at the port.
Fortescue management have cut their FOB cost down from around $US50tonne during the boom to around $US21 a tonne. BHP has eked its FOB cost down to around $US15tonne and Rio Tinto is around $US14tonne.
These figures are often wrongly used by punters to guess how much profit a company might be making.
As UBS analyst Glynn Lawcock points out, FOB cost is also what politicians grab on to when they want to slam how much profit an iron ore miner is making. 
The boomtime rhetoric went something like this: "It costs BHP $20 to mine a tonne of iron ore and they selling it for $120 - that's a $100 profit."
Yet FOB cost is only part of the expenses for an iron ore miner.
On top of this, all companies have non-production bills known in accounting speak as selling, general and administrative expenses. There are also usually costs in maintaining capital expenditure on the project and ongoing mineral exploration.
We also cannot forget the royalties that miners must pay to the State Government and to the discoverers of their project, such as those that Rio Tinto pays to the descendants of Lang Hancock and Peter Wright.
Once these expenses are added, even low-cost Pilbara operators such as BHP and Rio Tinto would be $US1-a-tonne underwater on their iron ore operations if the Chinese benchmark market price of iron ore fell to $US20tonne from its current price of about $US50tonne.
And there's more stuff to take the gloss off the benchmark price. 
The quoted benchmark that assumes the iron ore is dry and that it contains 62 per cent iron in a powdery form known as fines.
Therefore what every Pilbara miner gets for each tonne of iron ore is quite different to the benchmark and every miner's break-even point is also different.
 Rio and BHP produce an average 60.6 per cent iron, whereas Fortescue has an average 58 per cent. Fortescue's ore averages a mixture content of 9 per cent, compared with 6 per cent for BHP.
"What we put on the boat is very different for every player," Mr Lawcock said. "Fortescue puts on a lower-grade, higher-impurity product, so they get a lower price."
On the positive side, many Australian miners enjoy a premium that UBS estimates to be $US7tonne extra for the parts of their output that are lumps of iron ore, which are considered higher quality. All this affects the price received by the companies for their ore.
In trying to work out the break-even point for a mining company, UBS adds all these positive and negative variables to come up with a FOB cash break-even estimate for each company that is adjusted for the quality of their ore.
For example, BHP's cash break-even figure of $US21 a wet tonne tonne becomes an equivalent of $US23tonne of dry benchmark iron ore at 62 per centtonne. 
This is because it has a healthy output of lump to offset the price hits for wetness and its 60.6 per cent average concentration.
Whereas Fortescue's $US21tonne becomes the equivalent of $US30tonne benchmark price to break even. 
Fortescue's break-even figure has become much higher because it has less concentrated pure ore and, unlike BHP, does not have lump bonuses to offset the impurity hits.
Then there are the costs in actually getting the iron ore shipped to China and an allowance for the interest bills that companies must pay on their debt. 
Fortescue has a high debt cost of about $US4tonne because it borrowed more than $9 billion building its iron ore operations over the past decade.
However, Fortescue still appears to be making money based on the current iron ore price - around $US10tonne going by recent prices and UBS' adjustments for all those nasties that don't appear in the FOB cash cost.
And like BHP and Rio, Fortescue also has the potential to further cut its FOB costs and trim operating expenses.
But now this is where we get into the tea leaf reading and trying to predict where commodity markets will go. 
One rule of thumb in predicting commodity price downturns is that the price generally falls to the cost of the lowest cost producer. 
If that figure is anywhere between the $US14tonne unit FOB cost for Rio Tinto or even the $US29tonne adjusted figure, then a lot of companies will face challenges surviving until the price picks up.
As Mr Lawcock points out, every $US1 cut in the costs of the big miners is likely to mean the market price could go another $US1 lower.
However, his forecast for this financial year has the benchmark iron ore price averaging around $US53tonne and Fortescue making an after-tax profit of $US465 million. 
We also cannot forget the royalties that miners must pay to the State Government and ... the descendants of Lang Hancock