you know this is going to go nuts on monday, page-18

i agree whole heartedly with forlan.......
one must look at both demand and supply

i have had an interesting convo with a broker mate of mine. his views are that phosphate is another Uranium bubble. His points are this:
"supply is huge - everyone has it - MNM, MAK, Legend, IPL, POZ and who else is gonna list that has phosphate in the coming months. So supply will squash demand."

i then stated to him the following two key points which i will expand on below:
1) there will a gap between demand needed now and the ability to supply demand now for at least 2 years ie supply coming online now wont meet demand now

2) the causes of demand will continue to grow and even if supply comes online now, it wont be enough to meet future supply ie the future supply gap will continue to gap for 4-5years min

now the expanison
POINT 1
we currently have a gap between demand and supply where demand > supply. in order to meet the NOW demand, hundreds of millions of tones of supply must come on NOW. there will not be an upgrade of supply tomorrow to meet demand tomorrow of hundreds of millions of tones. therefore the demand we dont meet tomorrow, means that supply must come on exponentially to meets yeterdays demand in the future (hope this makes sense). Also note that india has STOPPED ALL rice being exported even the crappy rice. BHP wants to spend $10billion in this sector – big alarms in my view.

POINT 2
The broker is saying supply is everywhere - i said to him "y is it then BHP, RIO, Vale cannot meet demand for the Fe boom - ie RIO, BHP and Vale have BILLIONS of tonnes in ground but cant get it out fast enough to meet demand, which is exponentially growing (like i expanded on above).

remember that Fe demand is based really on the BRIC countries developing and urbanising. this is vital for the phosphate boom which i will expand on further.

Point here is that even having supply, it wont meet future demand + current demand. The supply to get out will take min2years to get coys into production and even current coys to ramp up production. Remember we have a GLOBAL skills shortage.

Further IMO the drivers behind the PH boom are the SAME as the Fe boom ie the fe boom is based on BRIC countries developing AND urbanizing. As more people leave the rural areas to move the cities, LESS food is produced, as those people farming move to the cities for a new life. Further, the populations in those countries are HUGE. As people become developed, more luxuries are needed ie more meat, more alternative food such as fast food etc etc that these people don’t have in rural areas. This is not also taking into account of demand for alcohol (ie ethanol) + biofuels.

One last point – the NT government will have less red tape in their bottom draws than the WA govt. watch the NT govt assist in making it the Phosphate capital of the world.