Another added challenge (in my opinion) that hasn't been discussed much here, is the fact that they're entering a very small market. Despite all the positive posts about the ferrochrome market and the huge demand for chrome ore there, CCI is effectively locked out from selling to this market. The MD has alluded to this as the basis for the company's decision to enter the non-met market.
My research indicates in 2005, which is the latest year for which I have data for, the total worldwide market for chemical/refractory/foundry chrome ore was less than 1.3mtpa. If you think about it, CCI going into this market with .2mpta, that's quite a lot!
I've read reports that the non-met market is also quite tight and supply is short. Part of the reason is Xstrata having to turn away customers such as Rand York, because they are dealing with shortages of ore themselves.
It's uncertain how quickly they can ramp up output to satisfy this small non-met market, and how permanent this shortage situation is.
Another part of the non-met market tightness is that traditional non-met suppliers are selling into the met market, to take advantage of the strength. This suggested to me that CCI might well be exposed to the metallurgical chrome ore price.
All up - it's a very murky picture I think. The non-met market itself is quite esoteric, with information about it quite hard to come by. It's not easy to get a grasp of the dynamics of that market for the average retail investor. On top of that there are the usual uncertainties with starting up any mining operation. CCI could do quite well and make shareholders a lot of money, but from where I'm looking from, I can't see that happening with any degree of certainty. Very spec.
CCI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
