This from Macro Business today....
Under the heading:
Iron ore sacred cows plod to the knackery
FALLING iron ore prices and a dwindling share price have done little to dent the enthusiasm of Sundance Resources chairman George Jones, who has set a tight timetable for the group’s ambitious $4.5 billion fundraising efforts. …Acknowledging that many in the market viewed Sundance’s plans to develop its large but remote Mbalam iron ore project — which sits in jungle on the border between Cameroon and the Democratic Republic of Congo — as an “impossible dream”, Mr Jones said there had been strong interest from a range of potential financiers and partners. He pointed to his previous success at iron ore miner Portman, where he grew the market capitalisation from $12 million to $3.2bn, and the success of Andrew Forrest in financing the development of Fortescue Metals Group’s Pilbara iron ore assets as proof that Sundance’s goals were achievable. The Chinese money that may or may not go into this project has no other intention than one: crushing iron ore prices permanently. Which is also how the West Pilbara kerfuffle aught to be viewed. Both the takeover of Aquila by Baosteel and the plan for Ankatell Port aren’t markets responding to price signals: Morningstar Resources analyst Mathew Hodge said Baosteel wanted control of Aquila. “If you’re a pessimist you would say they want to have something sizeable where they can add meaningful supply to the global market to reduce the cost of iron ore for China,” he said. The West Pilbara Iron Ore project would only be financed with Chinese money, he said. WP iron ore is nearly all 58% grade and lower, that area of the market in which oversupply is most chronic. Massive new supply that is cheaper and better will be poring forth for years yet from existing tenements and infrastructure. Add in China’s structural adjustment as well as the lead time for development and West Pilbara makes very little sense.
Full story at:
macrobusiness.com
Cheers J
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