ansteel mill

Ansteel building a steel mill in Australia just doesn't make 'complete' sense to me. I am suspicious it is more of a carrot to increase the Gov’t focus on Oakajee being built. It demonstrates though, the importance of Oakajee's development to the whole Karara project and to Ansteel.


Disadvantages to Ansteel

1. Gov't red tape and time involved

2. Construction costs and some other ongoing costs will be double that of China.

3. Ongoing labour costs will be multiples of that in China.

4. Ongoing taxation costs will be higher

5. Ongoing Pollution/Emission laws will be far more stringent than China

6. Most of the steel product will probably need to be exported to China anyway

7. Chinese Gov't losing taxation revenue to Aussie Gov't.

8. Will need to use predominantly Aussie labour instead of Chinese

9. Union problems


Advantages to Ansteel

1. Close proximity of mill to source of ore

2. Can use their own ore

3. Reduced shipping costs (of bulk concentrate) but offset to some degree by the cost of shipping the finished steel product back home- unless onsold directly to others FOB?

4. Teach Australian Gov't how to lick Chinese Govt's ‘you know what’ before Chinese will spend here.

5. Encourage Gov't to allow Ansteel to participate in building/ownership of Oakajee infrastructure before committing to mill

The list could be vast on both sides of the argument but the bottom line is- would it be cheaper and more profitable to build, run and ship finished product from here, rather than concentrate?