I didn't have time earlier to put a full response together around my thoughts with HRM.
When it comes to the strategy that ADN have employed around selling each of their products it makes sense that they are using distributors at this stage.
When it comes to HRM and distribution through AUS/NZ, it really does make sense to use a distributor given the size of the Australian concrete market, in comparison to Europe (and China from what Bob said) the market is so small that from an economic point of view why do it yourself. Plus, it's another avenue for marketing the product given the below.
When it comes to tiles, similar situation but on a slightly larger scale, Bob has explained the reason for using Foshan and Iberoclays, again makes sense given their geographical presence (web) and understanding for the market that ADN is aiming at, i.e the contestable market figures ADN has explained given the quality of ADN's magic clay.
When it comes to HRM though, this is a different beast all together. If concrete (cement companies) do decide to change their recipe because they see the saving on CC, then they will want to make sure firstly it works and secondly there is enough supply to warrant the change. Now what I think some of the retail shorts, and perhaps the pro shorter's, are missing that whilst Europe (each country therein) might be 2-3 years away from allowing HRM to be used, this does not mean that a LOI/BoA is 2-3 years away from being signed and could come ty anytime.
If I were a concrete company and was changing my recipe, I would want to make sure that I had a supply that would last multiple decades, hence the JORC that Chairlift etc will likely be able to fill given TGWP is only small.
By this what I mean is, given the size of cement(concrete) companies in Europe (compared to the contestable tile market Bob refers to), a LOI/BoA could come well before the 2-3 years and be forward looking i.e they could put a LOI together when they have done their validations, the JORC results proving the resource size and it being signed off to be used in a country/countries throughout Europe.
Given the volume of concrete made in Europe, as a concrete company would you want sign as much as possible and perhaps without competition i.e. make sure you have enough supply of HK for as long as possible. I know I would if I were going to make the effort to make such a change.
As a shorter, the above would truly scare me, this is why I think most of the shorts at the minute are mostly retail shorter's (and perhaps a few 'pro' shorter's) that don't understand what HRM could mean. Bob keeps saying educating the debt providers, equity guys etc. Also, the short position is only small.
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