Thanks paramazing. I agree with your analysis. I previously...

Thanks paramazing. I agree with your analysis.

I previously thought TFC’s would be able to control the market price because it will dominate supply and could delay harvest if the market price is inadequate. In addition to the incentive of a higher market price, TFC would also benefit from the trees continuing to grow producing more heartwood and increasing the oil concentration.

However, I am not sure whether this will apply. The graph on page 13 http://www.tfsltd.com.au/files/5514/5663/7499/SIO_2016_Information_Memorandum.pdf shows TFC’s supply of the world market is < 1% up to 2020; 10% from 2020 to 2025 and 30% after 2025.

The graph on page 11 shows the official Indian Government Sandalwood Harvest was 200 tonnes in 2014/15. TFC’s 2015 harvest was 30 tonnes and the 2016 harvest is expected to be 300 tonnes. With a world market of 30,000 tonnes (see page 13) there must be some very substantial suppliers. I understand this is illegal harvesting of native forests and not a plantation competitor to TFC.

Maybe TFC’s ability to control the market price and paramazing’s moat will be effective for the pharmaceutical grade sandalwood oil.