This is pure conjecture on my part. Although, if I am right, then hats off to George Jones for pulling off this master stroke and perhaps the reason why we finally see SDL standing up to Han Long.
In screwing Sundance and shareholders, the Chinese appear to have miscalculated badly in that they thought their only competition would be multi-national mining houses. They didn’t see the MOST populous country in the world geographically far closer to Africa with no tarnished reputation of exploitative behaviors upon Africans making a bid as part of a plan to implement a long-term strategic investment addressing her national interests.
In other words, the Chinese never believed in another counter-bidder who has the inclination, desire and financial muscle to bid for Sundance. They thought as Street-Talk paraphrased “no-one else would bother” as the Chinese kept on toying with IO spot price volatility with a buying binge and then a buying strike to rattle the market.
The Chinese assumption instantly ruled out Anglo American as it is barely a middle-weight player and a struggling one. BHP is already big in Pilbara and has already flagged pull back from outer harbor and mine expansion. Vale is scaling down production in Brazil and has struggled with the northern Simandou project in Guinea enough to just pack up and call it a day. RIO (with more cheap IO in the Pilbara that what it knows it can do with) has had all kinds of trouble with the southern Simamdou project.
The Chinese must have thought that the GlenStrata merger (the only viable opposition) may fall through and would easily out-bid it anyway if they had to.
Let’s hope the timing of Jindal’s visit and the photos of Biya is a shot across the Chinese bow.
SDL Price at posting:
34.5¢ Sentiment: None Disclosure: Held
