I read an article on page 24 of today's fin review suggesting that BHP was not increasing coal production. This is keeping the coal market tight but forcing China to buy coal out of the US. Every time we have seen tight markets in commodities, China goes on the hunt for new suppliers. As a previous poster pointed out, China has a lot of experience in Mozambique and it makes me ponder. RIV now has 2 global steel mills on the register. The freight costs into Brazil and India is less than coal from Australia. The Bowen Basin has bottle necks for the next 2-3 years according to Southern Cross research. If China is looking for long term supply, look no further than the next Bowen Basin to remove any long term supply issues imo. BHP might out fox itself here. Makes me also wonder if in the longer term, BHP takes a serious look at RIV. This is speculation and by no means based on fact. The entire coal market has been in consolidation for the last few years and that trend is set to continue with the recent take over of Felix coal for $3.2b from a Chinese company. I like the longer term prospects for RIV for all these reasons. I also like $300m in cash and no debt. dyor.
RIV Price at posting:
$6.78 Sentiment: ST Buy Disclosure: Held
