Member Info for 99icecream

Fierce power struggles at Simandou Mine

https://www.theafricareport.com/187214/guinea-fierce-power-struggles-at-simandou-mine/

Morgan Stanley have recently estimated that Simandou will not be in production before 2028 at the earliest.

Thats it for Simandou for another 5 years at least !

Who would be stupid enough to invest $15 Billion Plus, on a time scale that cannot be met, with the threat of loosing the licence ?

If Guinea were to withdraw the licence, who else could the possibly get to invest $15 Billion plus ?

More on Simandou

https://www.dw.com/en/guinea-military-junta-stokes-nerves-of-mining-sector/a-61234381

IMHO, the sticking point is simply the price offered for the Zanaga mine. Glencore may want to do offtakes in commodities that will be key for the future (e.g. Copper, Nickel etc. etc.) but I doubt that applies to Iron Ore where the future price may not be as high as today even.

If China can develop a large mine (or lots of smaller ones) the market will be oversupplied and future Iron Ore prices will be low. If Zanaga is that mine (i.e. before on in place of Simandou) then it will sell for a premium price.

Iron ore’s long goodbye is extended – again

https://smallcaps.com.au/iron-ore-long-goodbye-extended-again/

Simandou, iron ore’s ‘Rolls Royce’, is back in the garage

https://stockhead.com.au/resources/monsters-of-rock-simandou-iron-ores-rolls-royce-is-back-in-the-garage/

IMHO the action by Guinea just reflects the current situation - it won't change anything. For the domestic audience it is always better to show leadership. MRDA

The project was always going to be delayed by the coup until such time as China knows who speaks for Guinea long term and that any deal agreed is not changed by Guinea at a later date (either for resource nationalism or corruption). China will be very wary of another Sierra Leone, where an otherwise excellent investment is ruined by an incompetent government.

The project is also delayed by budget issues and the possibility that the costs of the railway / port will be shared by Rio / Chinalco.

Baowu Steel partners with Posco and Han**** in Hardey Iron Ore Project (Australia)

https://www.kedglobal.com/steel/newsView/ked202203100017

Simandou further delayed

https://www.lse.co.uk/news/guinea-orders-halt-of-activity-at-simandou-iron-ore-mine-0mroyvx8sszq0mu.html

WSJ makes a similar point.

https://www.wsj.com/articles/if-currency-reserves-arent-really-money-the-world-is-in-for-a-shock-11646311306

A couple of comments:-

China Baowu Group is a much bigger deal than perhaps you imply. Based on 2020 numbers for the merged entities, Baowu (146.4 mT) is over 85% larger than Arcelor Mittal Group (78.5 m/T). Ansteel (55.6 m/T) and Shougang (52.8 m/T) and number 3 and 4 in steel production in the world.

China plans for the 3 groups above to continue to expand through merger. Private chinese steel firms have no incentive to expand and/or replace existing facilities.

China has a strong preference for all the roles in a foreign (iron ore mine) development to be carried out by Chinese firms working together as a group. Others see a railway or port as a downside to a project, China sees them as a way to sell steel, trains, civil engineering etc.

China considers Iron Ore to be a "Strategic Resource", so they want a resource that would not be restricted by (say) Australia at a time of dispute (e.g. over the South China sea).

Isn't your question a tautology ? - Would it be sensible to own an investment if you don't think there is a reasonably probability of success.

Iron ore price rise to $150 after China eases steel’s green targets

https://www.mining.com/iron-ore-price-rise-to-150-after-beijing-eases-steels-green-targets/

Iron ore price recovery sends mining stocks higher

https://thewest.com.au/business/mining/iron-ore-is-back-again-c-5611124

I do hate titles that are inaccurate or otherwise wrong for no reason.

Another illustration of how the Iron Ore / Steel market has changed in China. In the past companies would ignore or cheat on the rules designed to reduce pollution during the winter months.

https://www.mining.com/web/china-jails-almost-50-steel-executives-for-faking-emissions-data/

By my calculations the Shard facility will run out soon. Some of the worry here may be about what comes next. As things stand not a great deal of funding is necessary. In the early part of the Shard facility Zanaga had to pay its share of the cost of the "recosting exercise". Between 26/6/20 and 5/5/21 Shard sold 14 million Zanaga shares for £972,000 (net of costs). This was about £ 4,350 per weekday. Between 5/5/21 and 28/9/21 Shard sold 2.65 million Zanaga shares for £163,000 (net of costs). This was about £ 1,550 per weekday. Running costs were nower as the re-costing was over.

So at this rate, even selling shares at 2.5p Zanaga would only need to sell about 1.4 million shares a month.

Having a low share price may continue to benefit the Directors and the few staff as they will be entitled to bonus shares rather than cash.

IMHO etc.

Ground Breakers: China vows to control iron ore (again) after prices threaten US$150 per tonne

https://stockhead.com.au/resources/ground-breakers-china-vows-to-control-iron-ore-again-after-prices-threaten-us150-per-tonne/

Vale accuses Steinmetz of ‘elaborate’ fraud in Simandou deal

https://www.mining.com/web/vale-accuses-steinmetz-of-elaborate-fraud-in-the-simandou-deal/

Matters are out of Glen's hands also. Until China decides what it is doing with respect to investment in its own iron ore (or scrap) supply as part of is new 5 year plan (2021 - 2025) then expect Vale / BHP / RTZ / Glencore etc. to do little.

With the Simandou project currently halted for what may be an extended period, and iron ore prices recovering from recent lows the prospects for Zanaga are actually far better now than they have been during 2021.

Expect Baowu Steel as the largest steel maker in the world (acting as an arm of the Chinese government) to be hearily involved in new Chinese iron ore investment abroad. As a huge buyer of iron ore they are the ultimate provider of finance. They are a large part of the potential Simandou project (both parts) .