They could do that, but would it be cost effective. By reducing...

They could do that, but would it be cost effective. By reducing production at Iron Ridge they will increase average cost as their operating costs will lose some of the economies of scale that you get from higher production levels.

I'll see if I can run some calcs on this, as obviously the price premium that FEX get for production from Iron Ridge will decline, but will this be offset enough by decreasing the price discount offered for Shine production? Its possible, the discount that MGX got when they actually produced from Shine was pretty hefty.


Around a 45% discount on the Platts price in the September and December quarters of 2021. I never really looked at the premium that FEX get vs the Platts index at the moment. It doesn't look like their product gets much of a premium to the Platts price, so potentially its better to blend the product "down" to a 62% product being as the premium product isn't being priced as a premium product.

I hadn't really looked at this, but potentially that could be the big game changer? If for example, FEX operated on a 5% premium and Shine has a 45% premium based on the current price of $105, then independently with 1.3mt at Iron Ridge and 1mt at Shine, then the average price per tonne would be something like US$87 or A$130. If they could blend it to a 62% product but reduce to say 2mt in total then they could increase the average price to the Platts price of $105 or around A$157 (an increase of $27 / tonne).

I personally don't think they will decrease production out of Iron Ridge so I wouldn't expect a LOM extension, but this could be a better option than I initially thought. I hadn't realised how much of a discount (or lack of premium FEX were getting) that Shine by itself was getting.