SDL (ASX) what next

Originally posted by Mongrel ↑

A lot of irrational and naive arguments in here. Mostly based on emotion and ego, very little on logic and, in some cases, fact.

BHP and RIO's long term goals are not to drive the small player out.

small, high cost producers are beneficial in that they hold up the supply-cost curve

those same producers provide a point of difference to the big producers: steel production is all about feed consistency

the small producers account for a pretty small tonnage of seaborne traded supply, shutting them down would have a short lived affect on the market

Shutting down high cost producers is transient at best: as soon as the price rebounds (due to supposed under supply) the small producers would flood back in. Eg, Territory Iron and Western Desert Resources (in receivership) could restart production overnight.

Sure, the state owns the minerals and collects royalties, but the risk in mine development lies with the shareholders. A tonne of iron in the ground is worth about $0.50. Its mined and exported royalty is worth about $5.50 per tonne. How is Australia not reaping a benefit?

Vale's VLOC are not making any dent on pricing dynamics. SDL's proposed VLOC will be likewise irrelevant - simply because they will not have the volume to make a difference.

I could go on, but you get the picture.

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Hi Mongrel.

Not sure about the high cost producers flooding back in again if iron ore prices go up.
Once they have gone broke, No chance they will come back again with a high cost project.
This is all about getting rid of All None Financially viable projects at these lower iron ore prices. Why would these high cost Projects get Finance to start up again to then find RIO & BHP do the same thing again. Once gone that will be it I believe.
No others to share their Rail & Port Infrastructure with. No opposition blocking the roads across the Pilbara with trucks.
Total Control of The Pilbara is what RIO & BHP are after. They will smash FMG & Hancock if they can.

SDL with a twin Rail Line system & bigger Low Cost Port Infrastructure could build up to 100Mtpa of their own Iron Ore or more in 8 to 10 years from start of export starting.
That is a Fact, not an opinion.

Regards
Westcott.