slow boat to china, page-21

Jimmy

Lets start at the start. This is not DSO. So comparisons with bhp and rio are not relevant at all.

It is also not high grade, check the Platts definition on grades and you will see "Platts has rapidly expanded its offerings for the iron ore market, which now include flat price assessments for 62% Fe and 63.5/63% Fe grades, high-grade 65% and a low-grade 58% Fe grade

Add in the high impurities of Silica and Alumina, (over 13% is very high), which will attract a penalty and the low LOI and the price comes down again.

OpEx costs for this will be nowhere near $60 per tonne. Shipping alone will attract around a $10 per ton penalty due to distance and smaller vessel size. That is extra, not total for shipping.

State royalties are 5.26%
What % are the traditional owners getting?

Add all of that together and the picture is not so rosy.

At a guess the all up costs for this will be around $90 a tonne. There are other costs involved as well.


The lower sale price due to lower quality and the chemical make up will see this marginal at best.


What happens if the Fe price drops to $100 per tonne??


Iron ore pricing is based on bonuses and penalties, having the box ticked in the wrong column costs a lot.