its only the beginning ozl to 70 cents, page-42

There has been some criticism that using historic pe ratios are not the guide for share price movements, that is generally correct. We are entering a large bear market, with collapsing commodities and a world economic recession on the cards.

The reduction in capital expenditure in fixed assets by china will have a massive impact on resources and create extened surplus for longer periods, fixed asset expenditure is the key to chinas growth.

Much of the iron ore consuption in china has been due to expenditure on fixed assets. When there is a reduction in growth this will also lead to a reduction in fixed assets and it will filter throught the chinese economy and the world. I believe most of the iron ore price is held up by exitisting fixed assets contracts as these contracts are filled or expire you will see iron ore prices fall dramatically.

The first spending to reduce in a slowdown will be other commodities like nickel, zinc, copper. China is already putting commodity purchases on hold to drive down prices because they are aware of the slowdown.


If there wasnt going to be a large slowdown you wouldnt put purchases on hold because you would create a wost shortage in the medium term, when competition increases to catch up with backed up orders by stalling the market.

China has predicted the slowdown and therefore stalled orders to create a surplus ahead of time to increase its bargining ability. Why buy today what you can get 30% cheaper tomorrow.
Just to think that 2yrs ago nickel was 55k per ton and now 20% of nickel producers will go out of business if nickel goes uner $18000 per ton.

Im not a bear, I just listen to what Ive been told by ppl who have been around a lot longer than me.

Ozl pe ration is very important because a drop in profits on its current mines will result in a drop in share price and if you are factoring its new mines then maybe the pe ratio of 20 has the upside of the new mines factored already..