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ANS austsino resources group limited

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bruceleroy

721 Posts.

175

06/09/21

23:45

Post #: 55876489
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Originally posted by Praetor: ↑

Well, that's a single Fund Manager's quote and they are prone to protecting their client's interest of course. What's to say he/she is correct...but let's assume they are.

Mbalam-Nabeba (at 40MTPA) on its own may not cut much swathe into the 650MTPA that Australia sells each year to China, but once you start linking the multiple mines in the Region (Akon, Nkout, Mbarga, Nabeba, Avima, Badondo, Belinga etc) you're getting to 250MTPA+ of high grade alternative.The Sangha deal itself proposes 150MTPA and I don't yet think we know the totality of it. Australian IO Producers could cut prices, but with their major client finding 30-40% of it's IO requirements elsewhere, Australian producers will have to find other markets - notably India & Asia. How much can they afford to enter into a price war to stifle development of a Central West African region that is stacked with enough high quality resource to keep China happy for the next 25-35 years or more? You find other markets, not cut prices to further aggravate an already angry Titan.

The other point I think of is the foothold that a Central West African IO play gives the Chinese, not only guaranteeing quantifiable supply but also the opportunity to get a firm foothold/beach-head to extend far beyond the Sangha States, into adjoining areas such as Guinea (Simandou), _Gabon (Minkebe, Belinga) and the RoC (Mayoko-Moussondji). Build a Steel Processing Mill at the Port of Kribi and supply African demand for wealth creation and Nation building without having to trans-ship Ore to China to process and send back. Do it from Kribi. Once you have 30.000+ workers coupled with rapid Chinese infrastructure building capacity and you have a mobile workforce that can keep building throughout Africa...a continent where the Chinese have found favour since the demise of French rule.

Everything about this Chinese entree into Central West Africa has me believing this is just the start. And if it is, then we're well placed with a consortium of world-class infrastructure companies that are part SOE and ready to extend the ambitions of Xi Jinping.

Australian IO producers may have to cut prices just to keep demand, rather than enter into a vicious war that will do the Country no good.

Expand

The economy of scale of the iron ore triangle really puts things in proper perspective in terms of the immense benefit to China, not just potentially 200 - 250 MTA of added supply to the seaborne market which displaces an equivalent volume otherwise would be needed to be purchased from the enemy (Oz) but the devastation to the global spot price by this excess supply would mean the several hundreds of millions of tonnes that still need to be sourced from Oz and Brazil will be bought at depressed prices (reflecting a systemic over supply vs demand).

This amounts to tens of billions of $$ in savings each year for imported IO into China at this "new normal" spot price. The leverage effect of just 250MTA additional supply could turn the global iron ore market upside down.

No wonder Core Mining (Avima) made such a hefty claim for damages. Maybe it's justifiable from their perspective.

ANS Price at posting: 1.7¢ Sentiment: Buy Disclosure: Held
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