fmg strategic position relative to bhp&rio, page-4

FMG's position is that of a smaller higher cost producer that is laden with debt. Much needed production upgrades to get some economies of scale into the business have been canned due to the current crisis. This leaves FMG in a somewhat weakened position. The Chinese arn't writing a lot of cheques ATM.

Effectively Rio and BHP are going to be brought to heel at the IO price negotiationg table going forward. The outlook for IO price growth is bleak to put it mildly. This can be observed in RIO, in particular and their haste at throwing every expansion plan overboard and quickly. Do not place exagerated significance on FMG's strategic place as an independant producer at the negotiating table, its valuble but if you think the Chinese are going to pay over the odds wake up and have a listen to how foolish you sound.

FMG represents a speculative entry to last years hot commodity that has gone drasticaly cold. Contrarians need to tread wearily here. Those who brought into FMG at its more foolish exertions probably need to take whats left of their capital off the gaming table and retire hurt but somewhat wiser. Others who didnt allow greed to trigger the
Lemming synapse in their brain should be able to find fair speculative value at about 2 bucks. In my opinion FMG shares are going to be a Posseidon Nickel type lesson in the Tulip Mania that was Iron Ore in 2007. FMG is about to get very unfashionable and about as trendy as a pair of Amco V Knees. If youre not old enough to know what those are you probably should not have brought anything as speculative as FMG.

Twiggys accumen when it comes to managing a business with contracting terms of trade is pathetic to put it mildly. Observe all the Hot Air surrounding Annaconda and the three Nickel Provinces. A serious of spurious deals that made not one cracker for the hapless investers who Twiggy smashed before riding off into the sunset to reurect the hugely mediocre Sino Gold.