As we all wait for.. well we all know what- let’s remember that Sumitomo and Mitsubishi have their own shareholders & so their Boards must perform the best analysis of any deal with everything at their disposal- which includes time.
The recent announcement to cut royalties on WA nickel by half certainly won’t have upset the Consortium but it is something that would have demanded a revision of costs.
So! Let’s look at the wider market for a moment.
Berkshire Hathaway sees Japan’s top trading houses ( 2 of those 5, Sumitomo & Mitsubishi being in talks with Ardea! ), as worthwhile investing in even more than it did back in 2020:
https://www.japantimes.co.jp/business/2024/02/25/buffett-japanese-trading-houses/That tells me that the oracle of Omaha agrees with what those trading houses believe in. Many of us might know that Mr. Buffett doesn’t jump in and out of positions very often- he’s more of a ‘buy for the long term’ investor & what is Ardea’s business proposal? A long term one.
Zooming in to our own sector?
I’m guessing we’ve all seen the news that half of all nickel mines are suffering due to current pricing. The big problem there of course is that if half of all mines closed the market would be in an unbelievably large deficit.
Prices rise and fall but demand just keeps chugging along. With oversupply or deficit, people still buy stainless steel & batteries.
Here’s a story that’s made me chuckle over the last couple days:
https://uk.finance.yahoo.com/news/billionaire-forrest-calls-lme-identify-064323242.htmlWhy do I laugh? Because the US & EU are moving to close their markets to products produced by Chinese owned/linked companies anyway. Government policy is already doing part of what Mr. Forrest etc are asking the LME to do.
So far it appears that extends only to batteries but… if even a small portion of stainless steel supply gets cut out of those markets or has tariffs put on it things will become quite wild for a few years when it comes to Western nickel producers. Our value would rise substantially almost overnight & would talk years to come back down as mines with very little to zero connections to China came online.
Personally I think the very little connection demand would be best- allowing the world to work together but also encourage our Chinese friends to do better when it comes to their own environmental practices. It could be a bit of a carrot instead of a stick- ‘the cleaner you are, the more markets you will have access to’ kind of thing.
So as to not fall victim to tunnel vision let’s enjoy reading about the next big story- India. Poised to become the world’s most populous nation & destination for a lot of commercial activity, which hasn’t yet experienced the decades long construction etc boom China has:
https://www.straitstimes.com/multimedia/graphics/2023/08/india-infrastructure-big-plans/index.htmlI’ll let readers have fun reading that themselves as that’s a whole new topic so to close will bring it back home, with Ardea.
Really enjoying the to and fro recently with understandably optimistic yet realistic views being shared. Consortium stays? Great! We ride alone for a while again? Oh well- we are cashed up to keep progressing our projects for a year or more from today & carry with us all that our very detailed discussions have taught us.
(20min delay)
