Chinese looking for high quality, reliable, long term, suppliers of iron ore. DSO deposits are getting lower quality and smaller in size. Poor quality ore stuffs up the steel mills furnaces and the ore is often needed to be treated to create a higher blend. High grade magnetite is around 70% (Karara) once processed. Its a far better product, thus attracts a premium price. The biggest benefit is projects like Karara are giantic and have a mine life of 40years+ at 70% grade ore (once processed).
Also China wants to get away from the BHP/RIO monopoly of iron ore. They hate it, hence companies like Ansteel have invested into companies like GBG to secure their iron ore needs for the next 40 years. BHP, RIO and FMG own all the large DSO deposits currently known. So its really a monopoly. The only option to get large amounts of high grade ore for the long term is magnetite.
Yuyu remember GBG is of a speculative nature, so im not suggesting you invest in them. You should read up some reports on DSO vs Mag ore, and take a look at all the big juniors coming up. Look at their websites etc as well.
Look into these iron ore plays: GBG, AGO, ARH, MIS, MMX. Also remember that access to infrastructure is the key to iron ore stocks. If infrastructure is needed, then be sure the resource size justifies infrastructure to be built and how/if finance is obtainable. Their are significant barriers to overcome before an iron ore company can dig it up!
GBG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
