Copied this from top rated posts above ......good read for those thinking IO prices headed down....
TRF may fluke the timing just right .....?
Hey Guys
We have been saying this for the last 2 years that minerals hoarding will become more and more prevalent, thereby reducing world seaborne iron ore supplies, just as China and India's demand is set to surge!
Brazil, the World's Second largest exporting nation of iron ore has just announced that is plans to increase employment in Brazil by expanding its steel industry.
To do this, they will reduce iron ore supplies to world markets via an iron ore export tax, thereby increasing the world seaborne Iron Ore Spot Price, and subsequently the Benchmark Price of Iron Ore to make their domestic steel mills more competitive against cheaper Chinese and Korean and Japanese steel imports.
This, coupled with India's existing Iron Ore export tax, the world's Third Largest exporting nation, which has already reduced iron ore supplies, will force up Iron Ore prices for a long time to come.
Iron Ore Exports from India are set to fall even further from the pre-iron export tax volumes of 110mtpa, to 58mtpa from 2011 onwards.
India's reduction in Iron Ore supplies that we discussed in April-May last year, increased the Spot Price of iron ore from $120-130 per tonne ave in 1H2010, to $170-180 per tonne in 2H2010!
What is going to happen to iron ore prices if Brazil, with their incredible 65-68% Fe DSO Hematite begin to restrict world iron ore supplies??? :)
This, coupled with terribly poor quality iron ore in China, forcing their iron ore mines to operate at a cash cost of $150 per tonne, will inevitably lead to iron ore prices ranging between $105 per tonne to $195 per tonne, with peaks of $220-230 per tonne as Japan now significantly increases their demand for iron ore to rebuild northern Japan after the terrible earthquake and tsunami. This would be expected to occur in 1H2012.
We are at the cusp of a minerals boom that will last for years to come, which will also exacerbate prices for our minerals due to the fact that the 2nd and 3rd largest exporting countries of iron ore, are not happy to just export their iron ore, but are reallocating this precious resource for domestic use, thereby reducing world supplies.
What does this mean for Sundance Resources? As they release their DFS to the market, then announce the Finance/JV and Offtake Partners, Mining COnventions/Licenses in coming months, then work will commence on the Rail Port and Mines as Nabeba and Mbalam, the price of iron ore will surprise analysts, economists, hedge/super fund management, and SDL will receive multiple upward re ratings.
The significant iron ore price rises will not only push up the NPV of Sundance Resources' project at Mbalam, but SDL will also announce an increase in their annual output from 35mtpa to at least 50mtpa, now that their indicated JORC resource is sitting at 484mt. When will they do this? Only the SDL Board and Management know, but this will happen!
All the indicators are there for this to occur, most probably in the next 6-12 months, with a possible increase above this level a few months after the mine becomes operational in 2014.
My point in this post, is that iron ore prices will remain at significantly elevated levels for years to come, amplifying NPV of SDL's share price (Which we'll need Bigstar to work his Excel spreadsheets!!!)
Mr Kloppers knows this, hence his $6.6Billion investment in WA to expand their annual iron ore production, a massive 65% higher Capital Investment than Sundance is now finalising with Chinese steel mills with the help of CITIC bank!
Fundamentally, Sundance, with its ultra low cash cost operations in Africa, will outperform the three Iron Ore Majors in BHP RIO and Vale in terms of Gross Margin per TOnne of Iron Ore, who will struggle to contain costs in booming economies!
As the media begins to look deeper into SDL and its future, the analysts will begin to jump on board, then the public, amplifying the share price movement over coming weeks/months!
It is important to stay focused on the brilliant economic fundamentals of Sundance Resources and enjoy the riches to come for all of us holders!
* Measure seeks more investments in domestic steel plants
* Comes as Vale is choosing new CEO under gov't pressure
* Finance ministry denies the measure (Adds finance ministry comment)
SAO PAULO, April 1 (Reuters) - Brazil's government is considering creating an iron ore export tax meant to spur investment in local steel production, a leading Brazilian newspaper reported on Friday.
Advisors to President Dilma Rousseff have asked the finance ministry to study a measure that would tax iron ore exports and exempt steel exports, the newspaper O Estado de S.Paulo reported on Friday, citing a source in the presidential palace.
The finance ministry rejected the report in a statement late on Friday.
"The government is not undertaking any analysis on the subject. Nor has the president requested the finance ministry to study the issue," the statement said.
The news comes as Brazilian mining giant Vale (VALE5.SA: Quote) is seeking a replacement for chief executive Roger Agnelli under heavy government pressure following years of criticism that the company was not investing enough in steel. [ID:nN31285411]
The move's intent would be in part to boost pressure on Vale to finish building a steel mill in the state of Para, according to the report.
Vale has taken minority stakes in Brazilian steel projects as a way of attracting investment and boosting domestic demand for iron ore. But it does not want to become a major steel producer since this would leave it competing with its clients.
Brazil is seeking to expand domestic manufacturing to create jobs and reduce reliance on commodities exports, but its high operating costs have left many of its industries struggling to compete with products from China. (Reporting by Brian Ellsworth and Raymond Colitt)
UPDATE 1-India's iron ore exports seen less than 100 mln T-Sesa Goa Wed Mar 23, 2011 6:13am GMT
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* Spot iron ore prices have fallen 14 pct from mid-Feb
* Slower China, Japan demand weighing on prices (Adds iron ore prices, background)
BEIJING, March 23 (Reuters) - Iron ore exports from India, the world's third-largest supplier of the steelmaking material, will be less than 100 million tonnes in the next fiscal year starting April if prices stay at current levels, a top executive at Sesa Goa said on Wednesday.
India usually exports about half of its annual iron ore output of around 200 million tonnes, most of them going to China.
"Iron ore exports from India will be less than 100 million tonnes if prices stay at current levels," P.K. Mukherjee, managing director of top Indian iron ore exporter Sesa Goa, told reporters at an industry conference.
Spot iron ore prices .IO62-CNI=SI have fallen 14 percent since hitting record highs in mid-February as thin steel demand in top consumer China slowed buying by Chinese steel mills.
Worries that demand from disaster-hit Japan may also slow in the near term before a reconstruction-led rebound has also weighed on iron ore prices.
Iron ore prices surged more than 40 percent in 2010 on booming demand from China, prodding global producers in Brazil and Australia to boost output.
But India's iron ore exports fell for a seventh straight month in January because of a ban on shipments from its key Karnataka state and exports are seen falling further due to a four-fold rise in export tax.
India's iron ore exports are likely to fall 35 percent to about 58 million tonnes in the next fiscal year due to the curbs and the increase in taxes, R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, said earlier this month. (Reporting by Ruby Lian and David Stanway; Writing by Manolo Serapio Jr.; Editing by Himani Sarkar)
