Australia's largest stock trading and investment forum Australia's #1 stock forum

SDL

0.00%

0.6¢ sundance resources limited

140MT 22 Projects Gone (Already), page-3

First 3 Last

Share
Profile

Follow
cabmerlo

3,167 Posts.

443

24/12/14

09:01

Post #: 14504589
Share

Originally posted by squidd ↑

Hi Matt747,

Thumbs up for the article. I agree with most of it, and it re-enforces my recent posts.

What I don't agree with is that RIO's Silvergrass decision will affect IO hitting the market over the next 'few' years. RIO has already stated it's capacity expansion to 2017 remains unchanged. Silvergrass production would have come online after 2017 as it's a greenfield project.

What I do agree with is that there will be a supply deficit in the future. Some say 2018, others say 2020+. SDL itself predicts around this 2018-2020 time period. It's refreshing that you now agree with me (and 99% of analysts/IO industry participants including SDL) that there is a definite supply surplus which will continue for many years, and keep IO prices depressed.

I also agree with the statement that recent new capacity increases have made financing of new mines (even low cost ones) extremely challenging, with the projects being delayed or scrapped. Sounds very familiar to me.

I'm agreeing again with the comment that 95% of new supply over the next 5 years coming from Australia and Brazil. As I have continually stated, mining companies in these countries have already spent most of the CAPEX to bring this new production online. The production is locked in, it won't be cancelled. This guarantees IO over-supply for the next 3 years+.

I find myself again agreeing with the statement about the Chinese reducing taxes and tariffs on domestic IO production to keep those mines operating. Again as I have stated recently, it's in the best interests of the Chinese to keep their marginal mines in production as it will help keep IO over-supplied and prices depressed. Why wouldn't you prop up, for example, 100mt of domestic supply so that you can import 900mt of overseas supply 40-50% cheaper?

A good article apart from the Silvergrass analysis IMO.

Good luck!

Expand

More than 100 million tons of new capacity has entered the market since July, and that's made the financing of new projects so challenging that even lower-cost mines are now being delayed or scrapped, Hoffman said

And this is the goal that the big miners were looking for to protect their market share and dominance. However I do not believe they will keep this production up long term. The big miners (BHP&RIO) will cut back production to create shortage and the ore price per tonnage will rise, now they have knocked out the up and coming competition.

SDL Price at posting: 2.0¢ Sentiment: Hold Disclosure: Held
8 Upvote

0 Great analysis

Reply

Top Stories

WMG

Western Mines identifies 2 high-grade zones at Mulga Tank in WA

ALR

Altair Minerals hits high-grade copper and gold at Wee MacGregor, QLD

WR1

Winsome scoping study proposes low-cost operation for Adina lithium project

PTR

Petratherm adds $1.6 to the piggybank ahead of SA titanium drilling program

SNG

Siren Gold boosts antimony resource by 66% to 14.5Kt at Auld Creek, NZ