'luck' often plays a part in a company's life but point is RIV raised cash at the right time i.e.seized the opportunity. Tata may have paid a bit too much but they are in for the long term and are stoked to be holding 35% of world class deposit. Billy's point re 'coking coal is far more profitable than IO' is often overlooked. The margins are triple that of IO as both are large open cut operations with similar extraction costs. getting RIV's coal onto a ship is not expensive. Rather, it is a hassle getting the Mozambiquan infratstructure up-to-speed and will take 12+months... but costs won't be huge. The world has massive quantaties of iron ore. WA has 200years worth... much of it being high quality. Only those deposits with connected infrastructure are likely to see production within next 20 years. Coking coal is not rare... but 'Bowen-basin' coke certainly is and with pollution etc becoming a major issue its value is likely to stay high. Using a high quality coal in a furnace also reduces costs and produces a better quality product. I expect demand for the best grade coke to stay strong. China can look to Mongolia for a decent supply starting in about 3 years time. India and Brazil are likely to favour Australia and increasingly Africa as a source. Both these countries are big uses of steel. Plus... and again iy is overlooked is RIV can quickly (without any logistitical hassle) get income stream from building power generation on-site and selling into S.Africa. I am on holiday in Cape Town and papers are fill of news re Eskom increasing electricity prices next year by 45% and another 30-45% in 2011!! that's on top of 30% increase in 2009. This country is facing huge future power shortages and proposed coal sites are not conducive to power generation due to lack of water.
RIV Price at posting:
$6.28 Sentiment: LT Buy Disclosure: Held
