Can you answer my question in last post? Big already has 70% market and 30% market is seems to me low grade market and china want to keep it as well. Why big has taken very aggressive action, may be iron ore going useless in near future and big want to make money as much they can before new product arrives.
I don’t know current situation. As I know iron ore demand is same, it is still growing or stable. The supply is more than demand, hence the price is coming down. Major producers are dumping more ore in the market. The majors want to keep their profit numbers in billions dollars not in million.
I have read new article, it could be more than a year. RIO boss was telling, there are more concern on 30 odd new projects will be in production in years’ time. They were more concern on new projects going in to production then lower iron ore price. New project which was in the market they are out at list for five to ten years. May be you never see them.
The current junior supplier will be out of market for couple of years or they will reduce their production tonnage. The people who were buying product from juniors may start buying product from majors, it matter of reliably in supply.
For juniors, the transportation cost is main component of the price in compare to admin, mining, processing and shipping cost. It is very difficult when you have to take your low-grade when iron ore price is down. Unless you have low grade stockpile at port. BCI has 11 million tonnes of low-grade stock pile at mine site and want to do test work at the end of mine life or when iron ore price is low. One stage we said it is worth 30 million dollars in paper value. Current market cap is ~20million dollars.
Major can stock pile there low-grade at port. If they want they sell low-grade or blend with high grade to get full price. This flexibility is not there with BCI.
Most of the time I hear from the junior is, we got lower grade tonnage than expected in this quarter. This is like cut and paste job for every quarterly. This is lack of ore body knowledge in juniors companies. This is good lesson for the juniors to have good in-house technical experts in the companies.
Have a nice weekend.
Cheers
BCI Price at posting:
9.7¢ Sentiment: None Disclosure: Not Held
(20min delay)