BFS should be due soon, interesting weeks ahead...WPG has...

BFS should be due soon, interesting weeks ahead...

WPG has slightly over 90mln shares valuing it at approx. $122mln..... WPG expects to start mining from 2008 and ramp up to 3mln tonnes per annum..... big hematite and huge magnetite reserves... relatively at a discount in comparison to GBG, MIS, MGX......

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http://www.theage.com.au/news/business/miners-to-throw-down-the-gauntlet-on-iron-ore-price/2007/09/21/1189881777822.html


BOOMING iron ore miners are set for another bitter clash with their Asian customers over who should pocket the billions of dollars in transport savings that stem from Australia's close proximity to the region.

Australian ore lands on Chinese and Japanese wharves about 40 per cent cent cheaper than competing ore from Brazil due to sharply lower shipping costs, but BHP Billiton and Rio Tinto have never managed to convince the steel mills that the lucrative savings should flow to the miners. Instead, iron ore wholesalers and mills in Asia have reaped the vast extra profits.

But booming demand for iron ore, which is expected to lead to prices rises of at least 25 per cent and possibly as much as 50 per cent in the coming round of annual talks, has given BHP and Rio unprecedented negotiating strength to push their case that they are entitled to a big slice of the transport savings.

BHP raised the highly sensitive issue in annual price talks with its Chinese customers in early 2005, sparking a war of words with Chinese officials.

The fight ended in humiliation for BHP when it unsuccessfully pursued the matter alone, long after Rio and other iron ore miners had agreed to an already huge 71.5 per cent price increase for the year.

Australian producers currently receive around $US50 per tonne for Pilbara ore, which ultimately costs Chinese customers around $US75/t after paying for shipping costs. In comparison, Chinese buyers pay up to $US125/t for contracted deliveries from Brazil, and are now paying as much as $US165/t for lower-quality Indian ore bought on the more volatile spot market.

Even if Australian miners pocketed the entire $US25/t "differential", Chinese customers would still save $US50/t by buying Australian ore.

The annual price talks, which start informally next month, are highly sensitive and neither BHP nor Rio would comment yesterday. But one senior market source said there was little doubt that Rio would fall into line on the issue this year, noting that new Rio boss Tom Albanese had adopted a "watch this space" attitude when the issue was raised during analyst briefings last month.

"The gap is a lot wider now than it was then … so I suspect Rio don't mind the issue being there on the table," the source said.

Fortescue Metals Group, which will become Australia's number three ore exporter when it starts production in May, declined to buy into the pricing debate yesterday.

Operations director Graeme Rowley said the company would not be involved in the coming talks and would accept whatever price outcome was negotiated.