So everyone thinks FMG would make more money transporting AGO's ore than their own. Fair enough if you think that but in terms of economics, product substitution, opportunity costs and a whole number of other reasons it doesn't make sense. If FMG was making so little money that it couldn't service its debt a bit of revenue from AGO would make no difference. And if prices got so low AGO wouldn't have enough margin to pay them since AGO sits higher up the cost curve than FMG.
But assume FMG are charitiable enough to tranport a competitor's ore to port at 15 MT a year, and maybe displace product from some of their own markets like Super Value Fines. How does it get from FMG's track to Utah Point without significant capital of spur lines, dumpers, etc at Utah Point ? Utah Point is truck dumping only. AGO wouldn't spend money developing infrastructure. So hopefully FMG would also put it on a boat using their dumpers, stockyard, and loaders, all at a nice charitable rate.
Is NWIO port allocation the missing link ? Who's raising the capital for that - go to the NWIO website and it hasn't changed in years. For a company needing to raise $1.5bn to $2bn or so its a joke. http://www.nwioa.com.au/ There's been no visible progress over at NWIO since 2012. Maybe they are like little ducks - nothing happening on the surface but legs going 20 to the dozen underwater.
AGO Price at posting:
93.7¢ Sentiment: None Disclosure: Not Held
