the china boom will continue, page-6

Hi,

in that case savadamoney:

1. Why would RIO have entered into a Mine Gate Sales agreement with IOH just last month for 1.5Mtpa?

2. Why did Marcus Randolph (the CEO of BHP's IO division) say that he was very open to discussion of mine gate sale deals with other IO companies. He said that earlier in August.

3. BHP have done similar deals in the past years (e.g. with POSCO & ILU I think).

4. RIO have done other deals recently - e.g. Hope Downs started off as a 300Mt resource, and has now grown, is split 50/50 between Gina Reinhardt and RIO.

5. If BHP/RIO don't take other junior's ore from Mine Gate Sales, the other option is for the government to force the railways to be open access ... and BHP/RIO certainly DONT want that to happen.

6. Tony Schoer (chairman of PLV, and with a few decades of iron ore experience behind him) has stated on here that he sees no problem with a deal between UMC and one of the two majors.

7. BHP and RIO are heavily focussed on INCREASING their output. Google BHP RGP5 and RGP6 and look at BHP's powerpoint presentations on their 'Rapid Growth Projects'. They are aiming to double and triple production in the next few years. They will look at all cost-effective options.

FYI: A mine gate sale is where you sell the ore to RIO or BHP. They then transport their ore on their railway. RIO/BHP prefer this approach because it means that they keep control the infrastructure. I think Hope Downs is paid via a 50% royalty agreement, but it is RIO that runs the operation on their railway. Their argument runs like this: The last thing they want is someone sticking 3rd party rolling stock on their line, something going wrong with it, and it jeopardises their production line.

Thanks for asking the question on a thread where people research IO. Happy to answer any more questions.

Joel