OCJ, page-84

I don't see what the issue is.
At current I/O PIOP is no chance of being developed.

IF/WHEN the I/O price does increase, or it is clear that it will increase, then those with deep pockets will start planning for a development.

At the moment it is all about securing the asset, such that the players can be in a position to secure potential supply for any such future development.

There is no way Todd would consider development of PIOP with the current I/O pricing, nor its short term outlook.
As far as we know OCJ does not have the resources to try and develop PIOP, nor even as a J/V partner. But who knows where OCJ's funding comes from?
they are certainly soaking uo shares on market, but they cannot exceed 19.99% without making a full takeover - so do they have the funds or even desire to do that?
So one must presume OCJ is simply averaging down, and is in it for a trading profit at some point.
I can say that based on their Sub S/H Notices, OCJ has lost over $10m so far!
Are they just catching the falling knife?
Who knows?

I worked out that Todd has invested something like $120m in this Pilbara investment overall.
They are stuck.
They have a plan for the port and rail, many approvals in place, a bucket load of money sitting at a huge loss in this proposed project, a big Offtake sitting there useless, they presumably have huge reductions with their cashflow in NZ because of the price of oil, and they are selling-off property assets.

So I think our investment in FMS is in a real pincer movement.
I/O price just heading down, down, down.
The price of oil heading down, down, down which handcuffs our biggest s/h and most likely purchaser from throwing money at FMS
Limited scope to attract other investors/buyers
FMS cash dwindling by the day, with very, very limited options for raising further funds.

So it just seems to me that we FMS s/h have to wait, at least until new year, to see if anything develops.
The FMS ASX releases says the FMS Board are talking to Chinese steel mills, and still talking to Todd.
I would be alarmed if FMS were to extend the Alliance Agreement. No point when Todd appear to treat the intent of that agreement with contempt. So let it expire.

Lets wait to see if FMS board come up with anything in the next quarter.
If not, then we should start shaking the tree!

All imho, and dyor

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todays SMH

Deutsche Bank says iron ore's rock bottom price could be $US36 a tonne

For those wondering where the iron ore carnage is going to come to an end, Deutsche Bank has a few suggestions.

The bank's Australian chief economist Adam Boyton said $US36 a tonne is a likely floor for Australian producers and $US26 is an absolute floor. And with Australia being a low-cost producer, it's likely these floors would apply globally as well.

On Saturday, Chinese steep production data showed crude steel output fell 1.6 per cent to 63.32 million tonnes compared with a year earlier. So far this year, production has dropped 2.2 per cent to 738.38 million tonnes. China makes about half of the world's steel.

Deutsche's AUD/iron ore pressure index has not yet reached levels that would worry the RBA.
Iron ore was trading at a fresh 10-year low of just $US38.30 a tonne on Friday night. To put that in perspective, in 2011 it was trading at over $US180 a tonne.

"Different producers sit at different parts of the cost curve," Mr Boyton told Fairfax Media.

At $US36, "that's the point where if you were sustained under there for a while you'd start to lose the first chunk of Australian production". At $US26, "most Australian production is uneconomic".

"Australia is 'the' low cost iron ore producer, so if we're uneconomic at those levels, why is anyone else producing?"

To sustain those levels would be "highly surprising", said Mr Boyton, as it would require non-traditional uneconomic producers of iron ore to be still producing at significant volume.

"The prospect that that's where you end up, and it's ultimately Australian production that comes out of the market, is very small."

It's not just investors in mining stocks who are suffering from record low iron ore prices – taxpayers and those dependent on government spending will feel it as well, Mr Boyton said in a note this week, as taxation of mining companies is a significant source of revenue for state and federal governments in Australia.

"The biggest impact on an iron ore price in the high $US30s remains the implications for federal government finances," Mr Boyton said.

"Much of the impact of lower commodity prices has been absorbed by the federal government via larger deficits and a higher level of net debt."

Mr Boyton put the cumulative cost of lower iron ore prices between 2012-13 and 2015-16 at $175 billion – almost $7300 per Australian.

Lower commodity prices to 2018-19 will add another $60 billion to that amount.

"The hit to the real economy from lower commodity prices will come if the federal government decides it can no longer … continue to absorb this balance sheet pressure."

However, "we don't expect to be at that point for a few years yet".

As to the surprising strength of the Australian dollar, which has pushed higher over the past weeks despite another dramatic plunge in the iron ore price, Mr Boyton said Deutsche's iron ore/AUD pressure index was not yet at levels that had in the past seen verbal intervention from the RBA (see chart).

"We also wouldn't expect the Australian dollar to 'automatically' fall in response to lower iron ore prices unless the market prices a greater risk of rate cuts from the RBA."


Read more: http://www.smh.com.au/business/markets/deutsche-bank-says-iron-ores-rock-bottom-price-could-be-us36-a-tonne-20151210-gll3jo.html#ixzz3u9w0mjqN
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