volume, page-22

Hi Caveman,

i am happy to discuss these points but please do not describe what i have said as misleading.
disagree by all means but what ive said is anything but

ill address what we've discussed in these last couple of points and then leave you and the board to it. No harm done I hope. You are obviously more than capable doing your own research. my last 2c as follows

- firstly i did not quote the $20/t as the likely sale price. But i will say that i think this is definately in the ball park IMO

- semi soft coking coal in fact much better than thermal coal and far more highly values. Contract prices for the last quarter for Hunter Vally SSCC (benchmark) were $254-264/t.

- south gobi's thermal is as you say higher ash and high sulpur than TVNs but to describe as lower quality is not correct. It is also ~50% higher in energy. Because TVN has better ash and sulphur it would not get 50% less $/t but it would definately get less than South Gobi's - power plants are buying energy not coal

- In regards to the $45/t in Inner Mongolia. Nice work find this price as this is key for TVN. In calculating a price for TVN however you need to consider the cost strucutres. I don't know where exactly that $45/t relates to but lets assume it is ~150km inside China.

TVN would need to compete vs this. Lets ignore for this arguement the fact TVNs coal has ~12% less energy than this coal (therefore less than 45$/t). But you need to factor in transport costs from the Mongolia into China + the border charges and handling costs that occur and the border of China and Mongolia.

For arguments sake:
Transport inside China: $5 (happy to have this argued but i reckon $5 is fair??)
Boarder charges: personally I have seen $10-15 but cannot find a referrable link so this is recommend you try find.
Handling: $3-5/t ( a guess but transferring coal from trucks to train will not be for free)
Any other tax that CHina might impose?

this all adds up to around $15-25/t of costs that a sale price of mongolian coal needs to adjust for to compete into a market in china. it is not different than the shipping cost of aussie coal to china's coast.

in my mind this turns $40-50/t within china quickly into $20-25/t at the monglian border.

ok mate good luck