Ann: Balama Production Improvements, page-35

They are not the lowest cost producer. If they produce the 250 KT this year their costs will be over $400/tonne. After they pay royalty and shipping their landed cost in China will be close to $500/tonne. That places them in the middle of the local production curve. As China implements environmental controls smaller China mines should stop producing. The large China mines are comfortably below this level of cost.

I think the recent delay has demonstrated that the fixed costs for this mine are higher than projected. The negative is that it will be hard to get costs down as fast as they'd like. The positive is that when they go to 300 and then 350 KT the marginal volumes will be very cheap and very profitable. 

Most international production is above this cost ($500).So there will be a group of producers that stop. We have already seen Imerys make this decision on a relatively new mine. 

Syrah will also benefit from the need of buyers to diversify away from Chinese supply. So I expect Syrah will be able to sell their tonnes. I also expect that production will stop at small mines. But this will be more a result of environmental issues and diversifying suppliers than Chinese mines getting hurt by the cost curve. 

At $550 Aussie valuation it is a very cheap asset where most of the hard work has already been done. Hopefully it has found a floor.