One possibility is that Baosteel is looking beyond daily, or even annual, iron ore price movements and is thinking in decades, which means it is confident that now is a good time to buy an iron ore mine on the cheap.

Another explanation – and one that is popular with some Australian observers – is that Baosteel has grown impatient with Aquila’s slow pace of activity at West Pilbara, a project that comes with a $A7.5 billion price tag for mines, rail and port infrastructure.

Dryblower recognises those issues but suspects there is another factor at work, the one called “bird in the hand”, or to put it another way, Baosteel has made an offer that many Aquila shareholders will find too good to refuse.

One man who might refuse is Aquila’s founder and major shareholder Tony Poli, who speaks for 28.9% of the stock and undoubtedly has some good friends among the other 3364 other shareholders on the Aquila register who will do what he does.

What Poli will do as he digests the Baosteel raid on his company is the subject of intense speculation because of the popular view that the Chinese offer of $3.40 a share cannot succeed without his acceptance and that he is unlikely to accept what some people have called a low-ball offer.

But that leads to the absolutely critical question: is $3.40 a low-ball offer just because Aquila once traded at $12 a share or is $3.40 as good as can be expected?

That’s when this year’s 23% fall in the iron ore price to its current $US102.70/t becomes extremely important, as every Aquila shareholder knows, including Poli.

If, as seems likely, the iron ore price dips below $100/t in the current price cycle the appeal of hanging onto a stock exposed to a falling commodity becomes less attractive.

In the case of Aquila it becomes significantly less attractive because it is not yet an iron ore producer and to become one will require the raising of more than $A3 billion in a mix of debt and equity if it is to retain its 50% stake in the West Pilbara project.

At another time, in a higher-price environment, Aquila would not struggle to raise the capital required to pay for its share of West Pilbara, despite an intricate ownership structure of the project and the possible desire of some participants to extricate themselves.

American Metal & Coal International, a 25% shareholder in West Pilbara, is one of the potential weak links in the chain given its high exposure to a severely bruised coal-mining sector and the age of its two owners.

Fritz Kundrun is 77 and Hans Mende 69, a time in life’s cycle when simplicity, not complexity, appeals.

So far, AMCI has not been named as an agitator for change in the West Pilbara project and for a move to be made in breaking what has become a logjam, with Aquila seemingly happy to put development plans on ice.

Someone, whether at Baosteel or AMCI or at the new entrant in the situation, rail operator Aurizon, decided it was time to shatter the silence at West Pilbara by launching a takeover bid designed to force a change in the status quo.

Poli and friends have a choice. They can accept Baosteel’s $3.40 and leave West Pilbara to become a Chinese dominated development that could play a role in breaking the comfortable, price-setting oligopoly of BHP Billiton, Rio Tinto and Fortescue Metals.

Or, Aquila shareholders can refuse the $3.40 in the hope of a white knight entering the game with a higher offer and risk the stock plunging back to its pre-bid price of $2.45, or falling even further to its 12-month low of $1.68, a potential drop of 50%.

This week’s fall in the iron ore price, while seeming to be a negative for Baosteel, might actually be the major factor in Aquila shareholders, including Poli, acknowledging that $3.40 is likely to be the best price on offer for some time, given:

• The falling iron ore price
• The need to raise $3 billion if Aquila is to stay in the West Pilbara game it started; and
• The impatience of other interested parties, such as AMCI and Baosteel, to make something happen.

It is those factors that make $3.40 today a better prospect than waiting for a better deal tomorrow.