Ann: June 2024 Quarterly Report, page-109

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hagetaka

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23/07/24

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Post #: 74867077
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Originally posted by Masami: ↑

The benefit of Inflation is that commodity prices tend to move up during periods of high inflations.

The reasons behind this usually come from the inputs to mine the commodity (Labour, Insurance, Material Goods, Fuels & Machinery) all increase in tandem.

This results in a global cost curve restructuring if the inflation is global, which this period has been.

But even if it is isolated to high inflation in Australia, then given the significant global control the Bowen Basin has over Seaborne Met Markets we will still see a re-ordering of the cost curve if Australian mines fall out the arse end.

I know we don't often see if as much due to the lack of interest and listed public companies, but a MAJORITY of these miner operating out of South Africa & Mongolia are sitting at marginal points on the cost curve. ie at current prices some are only skimming $10 a tonne.

BCB.Ax is a great example of Marginal Producers struggling to maintain cash-flows.

Going to $150 would destroy the FCF of the QLD assets, yes.

However, Seaborne Met markets are still quite tight and the sheer amount of Met that would fall out of the market would reset that $150 a tonne price point pretty quickly.

Hage can add any other thoughts on but I think I've encapsulated the general idea.

Hope that helps!

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Low prices are the cure to low prices... to quote someone who knows more than me.

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Ann: June 2024 Quarterly Report, page-109

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