look to london tonight, page-6

re: look to london tonight re millways Contract prices for manganese are negotiated to come into effect on the 1st April each year. Same as iron ore.

Following a 65% price rise on the 1st April this year, things could not look better for CSM. Contracts in place for the ramp up of production at the newly negotiated rate of about US$4.50/dmtu. (Remember that was up 65% virtually overnight.)

Problem started, as suggested by CSM, markets experienced short-term oversupply of alloys and the annual contract price was simply not going to be honoured by CSM's customers. International contracts, where supply exceeds demand become very rubbery. Situation was such, that the original negotiated contract 1 st April price were void, and market went to a spot price situation-truely reflecting supply/demand.

I would suggest CSM was virtually giving away their manganese to get some cash flow, in that period ending December. (Look at spot nickel where info is more readly available-JBM profits ending December were 1/2 the previous quarter). This is where I got my estimate of todays result so wrong. CSM were saying all alone that things were too bad.

No doubt the situation is alot better now. If they can sell all their manganese at $3 (production up 60% on 12 months ago) and that $3 is back to the pre 1 April 2005, when they still made $20 million in Dec 2004 half. Maybe they will deliver the promised $85 million profit next year.

Nickel production ramp up is just so timely for the company. It is the one aspect of their report today that really stands out.