I know it seems impossible to be able to match The Pilbara and Vale costs because of the cost per tonne coming down with each extra tonne produced and exported to China.
At least two items that help SDL with its delivered cost to China is that the Rail and Port Capital charges would be lower than if in The Pilbara.
The cost The National Railway Master Plan Study in Cameroon which I reported on says. The cost for construction of one kilometre of this railway line is about 1 million Euros. I thought that the cost in Africa was more like A$3million per kilometre compared to The Pilbara cost per kilometre of just over A$5 million per kilometre. I think with out working out the conversion from Euros to A/dollars it would be close to $1.7 million Au dollars per kilometre that the report says. they say that 6000kilometers of the 10,000 kilometres rail is still to be built at a cost of Euro 6Billion.
Even at $3 million per kilometre, it would be 3 fifths the cost of building rail in The Pilbara.
Next point is the strip ratio for DSO at over 63%Fe. Royalty portion per tonne at $0.40 against the Pilbara which I believe to be a lot more than that.
The other point in cost saving compared to The Pilbara Big three is that strip ratios in The Pilbara I believe start around 1.5/1. The Report states that, Mbarga High Grade pit has <0.2: 1 stripping ratio, Nabeba is expected to be similar. If you look at the picture on the SDL site of the costean, you will see that the High Grade iron ore for Stage one is at or as good as damit to surface.
The Second Stage Itabirite has attributed to improved strip ratio from 0.9:1 to 0.7:1, reducing mining costs.
One other point for Stage 2. A pellet Plant will be built in Stage one with a capacity of 4 million tonnes per annum has been costed into the figures and costs in Stage One.
My thoughts on you talking about RIO, BHP, FMG and Hancock. Only RIO and BHP have highish grade iron ore around 62%Fe. Generally FMG and Hancock are below 60%Fe. SDL would have +63%Fe in Stage One= Premium price.
Happy to discuss further with you.
Regards
Westcott.
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