OMH 6.38% 44.0¢ om holdings limited

OMH - Strong Sell, page-154

  1. 12,100 Posts.
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    Yes, you are correct in saying that S32 Mn ore production cost is lower for the Groote Eyland mine. OMH has much higher costs at Bootu Creek. The TRP will lower costs when it starts up as there are some 10 million tonnes already mined and ready to treat. OMH has already indicated a lower C1 cost for the TRP.
    The alloy operating costs of S32 at Temco US$947/tonne and RSA US$1178/tonne are also tied to the Mn ore sales price as is OMH.
    Both companies add the Mn ore sales price into the alloy cost and obviously the spot price at any particular time will affect the alloy production cost. Likely both companies Mn ore input cost would be similar as they use the benchmark price for the calculation between one part of the business to the other. The big difference for OMH is transport costs as well as power costs. For making one tonne of FeMn there would be approximately US$90 to $100/tonne difference in the power costs (extra US$0.03/KWh) between OM Sarawak and Temco. In South Africa at Metalloys it would be closer to US$200/tonne. As you'll note from the S32 latest financial report Metalloys in South Africa is losing US$100/tonne for Mn alloys. If it wasn't for the expensive power in South Africa (another US$0.03/KWh more than Temco) then Metalloys costs would be similar to Temco in Tasmania.
    Overall OMH alloy costs would be some US$90 -$100 cheaper due mainly to the power cost.
    As Random rightly points out that OMH has debt to service, the interest /tonne cost would be equivalent to US$50/tonne.
    There is no doubt that OM Sarawak has the cheapest power costs of any major alloy producer. The OM Sarawak power cost is on a 20 year contract increasing by 1.5% annually. In 20 years time OM Sarawak power costs will still be 50% cheaper than Temco is today .
 
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