I think you might be miscalculating. It could be worth double checking those figures.
IMHO I don’t think MCR’s payabilities are that high. I haven’t looked at Mincor in detail in a while but I think they’d probably be a bit less than the 84% you’ve quoted. Happy to be corrected if someone knows otherwise. 84% Nickel payabilities would probably be the highest terms in the world. Somewhere in the high 70s sounds about right (I understand they increase as the nickel price increases).
I also don’t think the tolling costs are that high. $55m sounds too high for the volume of ore they’re supplying? If you work out what the concentrator processing fees are then maybe add a capital charge to that then I think you’d get close to the right $/t number for tolling fees. I think that’s usually how these contracts are calculated. I’m just guessing but id assume BHP are probably doing it at close to “book” cost.
Mincor are probably the most important piece of BHP’s supply chain for the next 4-5 years, so it would make sense that their contract terms are very good.
MCR Price at posting:
$1.31 Sentiment: None Disclosure: Not Held
