Anglo When?, page-21

I had a go at explaining before, this is all my own opinion, but I’d suggest researching a bit about the iron ore price currently, to understand what’s currently putting the downward pressure on iron ore companies like MGU.

Whilst MGU has a longer term plan to produce green steel ingredients and differentiate themselves from DSO only miners by tapping into a more lucrative commodity market, in the short term the plan is to sell DSO to fund that longer term plan.

Naturally we are going to have exposure to rising and falling iron ore prices and we will see the SP react accordingly. The MGU plan is to reap the benefits of very high prices and our Anglo agreement will hopefully lock us in at high prices, though ill informed investors/traders will still react to the commodity price fluctuations regardless.

I’d expect we will see some sustained recovery when the iron ore price stabilises. When you research you’ll find that recently the iron ore price has taken a couple of sharp falls due to actions from China’s government to cut their steel production and try to reign in iron ore prices by curbing their demand. They buy about 70% of seaborne iron ore.

The prices remain very high though and as many analysts are predicting the price will remain high as are predicting it will fall further.

For the collapse that you predict to happen, the iron ore price would need to collapse. It’s entirely possible, but the global steel demand isn’t going anywhere and right now it’s nowhere near collapsed, but it is at its lowest level in 2 months (retreating from record highs) and a couple falls recently appear to have spooked the market.

So in simple terms, high/rising iron ore price = good for MGU share price, low/falling iron ore price = not so good.