Winner and Loser 1. It raises concerns about whether it is...

Winner and Loser

1. It raises concerns about whether it is Fenix's core business to be a port operator. With sufficient port shed capacity already available, the need for additional capacity in the Midwest region, which lacks high-grade resources to utilize all three sheds effectively, seems unnecessary. The benefits and cost savings of the additional capacity are not clear. 2. The uncertain value of low-grade resources, as evidenced by MGX's inability to make them work with fully depreciated infrastructure, suggests that they could be more of a liability than an asset for Fenix. 3. The obligation to remove the extension hill's crusher and camp, owned by someone else, and the associated site rehabilitation raise concerns about potential liabilities for Fenix. 4. The real question here is whether Fenix can acquire iron ore resources from Sino steel Midwest, similar to how they acquired the Sino steel shed at the port. However, considering that Sino steel is now owned by Baowu, who has a smarter long-term planning approach, selling off resources and compromising the scale of the asset may not align with their strategy. If Fenix's strategy is to influence Sino steel's decisions using port control, it poses a significant risk. If Sino steel chooses to operate on a smaller scale, they can easily gain access through the Karara Port facility as both are state-owned enterprises (SOEs). Alternatively, if they plan to expand on a larger scale with partners like FMG, a new port or barge facility would make more sense.

Port:
It is unfortunate news for the port as they have lost control over crucial infrastructure necessary to provide efficient facilities for shipping various commodities such as sand, titanian ore, and other magnetite ore.The decision to spend over 300 million to expand the port while giving control to private enterprise is unclear and raises questions.The control of all sheds linked with railway access by a party with a fleet of trucks raises concerns about the viability of railway services. With no sheds to utilize, the railway service becomes impractical, potentially hindering any future expansions and adding costs to the limited existing railway service. This situation could also impact the integration of infrastructure for the Midwest.

MGI:

MGI emerges as a big winner in this scenario, successfully passing on tens of millions of rehab liabilities. They have been able to realize value from fully depreciated assets, resulting in a total gain of 50 million or more.


General Public:
It is likely to become more difficult and expensive for new users to gain access to any commodities, creating barriers for entry.Other public facilities seem to work for private benefit, as all cargo from the port needs to go through the sheds.The general public gains little benefit from further expansions of the port.The lack of certainty regarding a port solution in project planning makes already challenging Midwest projects even more difficult to execute

Winner:

Whoever have resources in midwest now is a target, someone is out there and very hungry.