Peeps, For FMG to squeeze the same amount of profit, with IO...

Peeps,

For FMG to squeeze the same amount of profit, with IO prices captured, discount to 62% Platt at $80, FMG will need to sell 296 MT of IO without incurring additional expenses and the same capex, as modelling shows. As a general rule of thumb, FCF is lower than Net profit due to depreciation book-ins.

Now some of what do we know,
# IB project has cost overruns.
# Not increasing production
# Cost is going up, as per tonne IO
# 0.25 basis points int-rate risk wihtin 6 months [30% Risk]

If RIO and BHP lower their production, IO prices will move up, this should bod well for all 3.

Now will that happen? So what do we know already. Dr Andrew Forest has accused both of increasing production thereby trying to dry up small miners. So they might not lower volume equally if they may not be able to volume up due to litigation risk.

THE NEW RISK NOW, SCALE BACK OF CHINESE REAL ESTATE ECONOMY.