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https://ranagruber.no/media/leading-the-way-to-green-steel/
Higher grade ore reduces input needs
Higher grade iron ore contains more iron, meaning that steelmakers need less iron ore to produce the same amount of steel, resulting in both less waste and reduced carbon emissions in the production. Demand for high-grade iron ore is increasing because of higher carbon prices.
In addition, this positive demand trend for high-grade iron ore is driven by leading European steelmakers’ target to reduce net carbon emissions by 30 per cent by 2030, and by 100 per cent by 2050. Increasing the iron ore grade from 63 per cent to 65 per cent is an important part of Rana Gruber’s contribution to the decarbonisation of the industry. When this is realised, the company expects increased appreciation for Rana Gruber’s products and hence increased price premiums.
The steel industry is gradually introducing more ambitious decarbonisation targets, as the transition to green steel requires changes in the entire value chain. While Rana Gruber is targeting carbon free mining operations, Cargill is working to decarbonise shipping. Each year, Cargill moves around 50 million tons of iron ore and 6 million tons of steel globally. European steel producers aim to be carbon neutral by 2050.
Not widely understood, but I will repeat, 65% iron ore is a premium product there is a reason it sells for a massive premium above the lower grades.
Many companies will be interested in Amapa, I expect our PFS to be roughly 6x better economically than Macarthur Minerals project.
2012: "LONDON (Reuters) - At least four suitors including commodities trader Glencore GLEN.L are in the bidding process for miner Anglo American's AAL.L majority stake in the Amapa iron ore operation in northern Brazil, according to sources familiar with the matter."
The value here is very poorly understood, ~$200m capex is basically nothing from an investment perspective for a major when the production annually will be generating a net profit around $250m/yr.
just a few days ago:
China's Sinosteel signs $680 million iron ore mine deal with Cameroon
https://www.reuters.com/world/africa/chinas-sinosteel-signs-680-mln-iron-ore-mine-deal-with-cameroon-2022-05-20/
$675.96 million for a 60% iron ore product, and we have 65% and existing infrastructure......
"The long-term supply/demand dynamics in natural resource markets favor high and rising prices.
...
While commodity prices have risen, the resources sector continues to trade at extremely attractive valuation levels."
-GMO
Jeremy Grantham on owning resources in a portfolio during times of inflation:
https://youtu.be/-qD4kqAarec?t=2186
"We have a wonderful exhibit that looks at the correlation between all the major sectors: utilities, consumption and so on consumer goods and there's only one where as the time period lengthens the correlation drops and that is resources and resources drops to such good effect that based on the last 80 years of data every rolling 10-year period, that the 10-year correlation is negative so if you believe, in inflation you know that resources do very well, you also know, that in the long run it's strongly negative it's negatively correlated modestly with the rest of the portfolio. As we're seeing today when they do well it puts a burden on the rest of the economy and they do bad. So there is a very strong case here for a resource portfolio. On resources just a point that the last time we had a a super bubble in commodities there were very large new mines waiting to come online what has happened since the 2011 crunch when china slowed down in its heavy industrialization and the growth rate on usage of iron ore and coal dropped from double digit to zero dead flat for three years in a row are breaking the back of the of the resource industry they have not done any capex it takes five to fifteen years to bring on a mine they have not been doing this there are no great reserves of lithium, cobalt, copper, nickel even iron ore to come online this time and everybody knows it.
If you look at the need for these particularly green metals greening metals there are it doesn't compute, there are no backup resources and that applies right across the length and breadth of resources they have not been capexing even in oil and gas for for the last 10 years to a remarkable degree right."
SP creeping up
https://www.youtube.com/watch?v=vrsMVGqKKmM&ab_channel=Trendingnews
a pity, but this is the changing world - its's disruption!
Thanks for posting, Jeremy specifically touched on good iron ore deposits getting harder to find and therefore prices going up, especially for the higher grade resources like our own. I will fish out some quotes later.
GMO's latest quarterly newsletter is about soaring commodity prices; it is a good read:
https://www.gmo.com/europe/research-library/1q-2022-gmo-quarterly-letter/
You have to register to read the entire article, but it is worth the effort...
"EXECUTIVE SUMMARY: Commodity prices have soared, and inflation has hit levels not seen since the early 1980s. Due to long-term supply/ demand dynamics in commodity markets, we may have to get used to high prices in the years to come. Resource equities trade at deeply discounted levels and offer investors both a chance to benefit from high commodity prices and to protect their portfolios from inflation. While there are always risks in the resources sector, we believe investors are likely to be rewarded with a compelling mix of strong returns, inflation protection, and diversification."
Thanks, @EV_Bull and so reassuring that the reasons I have held for so long were covered in one webcast.
And not surprisingly:
https://www.bbc.co.uk/news/world-australia-61539426
Anthony Albanese, who won Saturday's election with the opposition centre-left Labor Party, said Australia could become a renewable energy superpower.
Worth a listen - Ray Dalio and GMO's Jeremy Grantham on How They're Seeing the World Right Now - Covers inflation and resource investing
https://youtu.be/-qD4kqAarec