AC,
I did not touch Cokal shares for a long time as I knew the issues with the river. I know the problems with barges and also the problems with the Mississippi barges. I travelled down the river in a small speed boat. 650 bloody kilometres in 2004. beached and overturned barges due to river fluctuations. It is a bugger of a river.
There are some problems still to be solved but not dire. The strategy is right with the intermediate port. I would have made the haul road longer and got to a point where the river was more reliable.
MGM and KTA (TOP) use the river and get over the issues. BHP will soon start.
BHP would rather use the Mahakam River but that is higher capex and slightly higher opex for a secure River.
I would never have bought the shares until these issues were addressed at any price. 8 months of the year, there are no barging issues except a bridge that prevents passing in times of flood. 2 to 3 weeks of the 8 month good time. BHP. MGM and others offered to replace the bridge with a very high and wide span bridge at no cost to community but greedy politicians wanted the money and then would have pocketed half.
I understand your reservations and I do believe that they did not recognise the obvious that the river is the number 1 risk. I did talk to them early in the project and asked how they were going to overcome the river issue.
There are a number of solutions long term that depends on more tonnes. Rail line to the south, rail line to the east, haul road 250 km long to point where river is never an issue. Just chicken and egg stuff.
CKA Price at posting:
8.5¢ Sentiment: Buy Disclosure: Held
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