We have a difference of opinion. If you've worked in a large corporation, bureaucratic as they tend to be, you'd see that people do not rise to the role of General Manager unless they are exceptionally talented (both intellectually and politically). I don't believe that graphite is some "Eleusinian Mystery" that new devotees cannot master. Graphite is a tangible commodity, readily explained, that simply has a different distribution mechanism to many other commodities. If Shaun and Rob can rise to General Manager roles at BHP they can comprehend the intricacies of graphite and the graphite market probably within a few weeks of study and I'm sure that Shaun is already across it.
For the sake of argument, let's say that graphite is a relationship-based commodity as opposed to an exchange-based commodity. Therefore, to sell graphite, one must develop relationships with end users. I believe that Shaun and Rob are the best picks to do this, this was my earlier point that their specific sales experience perfectly lends them to Syrah's graphite market need. Syrah's economics of low-cost supply at significant scale does the rest of the work for them adding to their sales value proposition. If I'm not being clear, I think that Shaun and Rob bring the skill set we need; that sales skills
are cross-transferable and not mutually exclusive despite the difference in market disposal mechanism. I've heard your position a lot that Syrah won't be successful because we can't dump graphite in an exchange etc. etc. I don't buy it. Your view is myopic and based in short-termism. Do you really believe that as the lowest cost supplier, with the most professional western sales team, able to deliver at scale, that rational end users won't choose Syrah for their long term supply?
Try this argument:
(1) Business people make rational economic decisions most of the time;
(2) Rational end users make graphite purchasing decisions;
(3) The rational decision is to maximise profit for yourself or shareholders;
(4) Therefore rational decision makers will choose the lowest cost provider if it's reliable.
If I still haven't convinced you, if you're interested, read
Competitive Advantage.
Lowest cost will win, it's not a question of if it's merely a question of when (the new team needs to go out and supplant existing suppliers and in my opinion they will with time). Rational economic agents will always seek out the lowest cost supply for their business as long as supply is stable and reliable. I think you either buy this argument or your don't; there seems to be a clear delineator between the two camps (long and short).
Your comments about BHP, RIO and FMG miss the point. All 3 players are at the lower end of the cost curve merely amplifying my point that entities at the lower end of the cost curve win economically.
Reading between the lines, it seems like Shaun has been driving a significant change in sales since arriving at Syrah both in China and in developing new product lines.
Amusingly, I feel like we're standing in the USA in 1980 and I'm saying that Walmart is going to win in the next 30 years (until Amazon comes around as the equal lowest cost producer with the added utility of not having to leave your home; winning the utility stakes) because they're the lowest cost producer. And you are standing in the street telling me that I'm crazy, that selling goods is a relationship based business at the local hardware store and that the government will never let it happen. The lowest cost producer for a commodity always wins economically, always. This is true apriori and a posteriori; its a "law" of economics.
On your point of China not letting Syrah dominate. I will grant you that this is a risk. Graphite is a tiny industry for the nation and they have pollution problems so I don't think a cleaner supply solution would be fought at all costs if it's significantly cheaper.
(20min delay)