I just found this article posted by Groovearmada on the MIN board. I think it's interesting for a couple of reasons:
1. It seems that MIN is taking the JV seriously and is starting the process of getting the port infrastructure built at South West Creek.
2. In this article FMG is reported to have an EBITDA margin of $24 per tonne (AUD) on its 58% grade iron ore. Prices for 58% ore is currently circa $39USD per tonne and 62% ore is circa $70 USD per tonne. BCK's and MIN's Marillana JV mine is reported by BCK likely to produce an end product of 61% with low impurities, which should bring a price closer to the 62% benchmark. Also, Marillana supposedly will have some of the lowest mining costs, particularly as much of it is free dig and will not require blasting.
I don't have any information on FMG's mining costs or income from its ore sales nor Marillana's likely mining costs/income to compare the two, but on the face of it, it seems there is significant potential to have an EBITDA that exceeds $24 (AUD) per tonne. Even if Marillana results in a comparable EBITDA of $24 (AUD) per tonne, it's still looking to being about 2.4 cents per share ( assumptions; 20 million tonnes/p.a, 50% to BCK, 10 billion shares).
Sourced via AFR 8.8.18.
Fortescue CEO Elizabeth Gaines sees end in sight to iron ore discounting
Fortescue Metals Group has hit back at naysayers who maintain the price discounts applied to lower grade iron ore are here to stay.
Fortescue chief executive Elizabeth Gaines said Fortescue stood by its view that the discounts were cyclical and that the widening price gap between high and low-grade product would eventually narrow.
Fortescue's position flies in face of comments by BHP, Rio Tinto and others that the discounts are here to stay as China cracks down on emissions from its steel mills.
Ms Gaines said that despite the focus on discounts, Fortescue's strategy of being a low-cost producer had allowed it to maintain an underlying EBITDA margin of $24 a tonne in the first half of 2017-18.
"There is a lot of talk about of pricing and discounts and premiums but the reality is what we are very focused on is optimising our margins," she told the Diggers and Dealers conference in Kalgoorlie.
"In actual fact, the price that we have received for each tonne of iron ore has not varied as much as the headlines around discounts and premiums might suggest."
Ms Gaines said the Fortescue balance sheet had never been in better shape after a period of debt repayment and refinancing.
"We are comfortable with our debt position and we are looking to reallocate capital to invest in growth and also returns to shareholders," she said.
Margins at high levels
While confident discounting would eventually come to end despite many in the industry thinking otherwise, Ms Gaines said it was impossible to predict when that might occur.
"In our view it is still cyclical, we don't know when that will change. What we do know is that currently steel mill margins are at historical high levels," she said.
"Whether that can be sustained for the long term? Our view would be that as and when those steel margins moderate we know steel mills are very focused on input costs and will look at the high value in use of our 58 per cent product."
S&P Global research suggests an expected cut in steel output in the 2018-19 winter will put more downwards pressure on 58 per cent product.
Important infrastructure assets
Ms Gaines said
Fortescue had not ruled out seeking a seat on the board of Atlas Iron after blocking Gina Rinehart-controlled companies acquiring a 100 per cent of the loss-making junior iron ore miner.
She also gave the strongest indication to date that Fortescue was interested in the development rights to berths in South West Creek in Port Hedland's inner harbour.
"We welcome the [West Australian] government's comments regarding these berths. They have clarified the fact that they will consult on berths in South West Creek we expected to participate in the industry consultation process," she said.
"Those berths and the whole of Port Hedland are very important infrastructure assets for WA so we expect there will be a full consultation process that will take as long as it takes."
Chris Ellison's Mineral Resources, which sparked the bidding war for Atlas, has already lodged a proposal to develop one of two berths earmarked for South West Creek.
The berth sites are adjacent to those operated by Mrs Rinehart's Roy Hill.
(20min delay)