Above graph of world's steel production versus IO prices was posted by someone before. Thanks for that.
I think it is a very solid demonstration of world's demand of steel. No one can deny that. That is rock solid growth in steel demand and the support for IO prices.
The top table shows IO prices are consolidating at recent high before likely further gains in the months ahead. Of particular interest to me is the premium that Fe65% concentrate in pellets form has increased to all time high of USD $75.50 set by Vale SA (Brazil). It confirms to me that Vale SA's cost structure has completely changed and has increased so much since that dam collapse few years ago. Since then the government of Brazil has shut down many other mines and fined Vale SA many $billion dollars plus it have had to pay the hundreds of victim families. What followed was the flood of new regulations and compliance costs and the resulted increase in its cost structure. This has significant ramifications to world's IO prices as we have seen lately. Gone forever are the days of cheap IO prices.
Plus, the world is pouring trillion dollars into infrastructure in the aftermath of Covid is helping to keep IO prices higher for longer. The demand is crazy nowadays. Steel mills in the US had to stop taking order from customers because they simply are working at their maximum capacity.
Mr Bryan told me that there plans in the previous PFS to look at option of a plant to produce 2mil tons of pellets but it didn't go ahead for various reasons. IO prices at the time were too low and the pellets premium didn't justify a plant to produce it. But now the IO prices are currently sitting at USD $220/ton for Fe62%, USD $250/ton for Fe65% and USD $325/ton for Fe65% pellets. This price is mind-boggling juicy for a plant to produce pellets and it makes absolute sense to go ahead. And in fact that is what Mitsui & Co wanted in its original off-take anyway. Someone did post that article about Mitsui & Co details of the deal. I believe the plan to produce 2mil-2.5mil tons of IO pellets will be incorporated into the BFS this time because the economics is stunning now.
