Member Info for 99icecream

Why would Baowu want to invest in Emprise A of the Pointe Noire SEZ ? (N.B. Google translates Emprise as Right of Way a better translation might be "Holding" (as in Small Holding)).

Why would they want a guarantee on the gas price ?

How about an Iron Ore Pellet plant ?

Hi Extrader

Re: Fortescue (FMG) - FMG has always been a prime candidate to be part of a Chinese buying group for Zanaga as they are part owned (7.4%) by Valin Steel (Currently 12th largest in the world, 8th largest Chinese).

Hi Extrader

As I recall the COIDIC deal for the SEZ stalled because COIDIC could not find a Chinese company prepared to fund the SEZ land purchase without the security of being the owner of the land.

The COIDIC deal with Zanaga relates to progessing the infrastructure and financing of the Zanaga project and integration with the SEZ.

Hence no technical reason to comment ??

This is a very interesting find is relation to the Zanaga project.

1. If you were selling Zanaga at the current time China Baowu Steel Group would be your number one prospect to be the buyer (or leading a buying group) see my post on 18 September. They are now the largest Steel producer in the world and larger than the the next two Chinese steel producers in China.

2. The Zanaga plan is to export the iron ore by FDSO (floating port) located either near Point Noire or via another more northerly coastal location (which gives a shorter / cheaper route). Using the Pointe Noire route gives the possibilty for the supply of ore to a steel plant in the SEZ, and alo to supply other materials from the FDSO to the SEZ.

IMHO

Guinea's coup leaders focus on stability and investors

"All mining contracts signed by Mr. Alpha Conde must be reviewed", Abdoulaye Oumou Sow from the front for the defense of the Constitution FNDC told DW.

I cannot see China spending billions developing Simandou until its deal with Guinea is reconfirmed by a stable government.

https://www.dw.com/en/guinea-coup-leaders-mining-sector-investors/a-59341763

Mick Davis walks away from Guinea investment

“People with knowledge of the situation said Davis had come to the view that it could take many years before Niron would be able to secure a route to market"

https://www.mining.com/mick-davis-walks-away-from-guinea-vehicle-he-founded/

Iron ore futures: possible paths for Australia’s biggest trade with China

https://www.aspistrategist.org.au/iron-ore-futures-possible-paths-for-australias-biggest-trade-with-china/

I would be interested to know when the comment about change in dynamics was made.

The new dynamics might relate to the fact that firms in China will (in the new 5 year period to 2025) be much more controlled by the state. Which means that economics/profitability will not be the only consideration wrt iron ore deals etc.

https://www.woodmac.com/news/opinion/aiming-high-can-chinas-steel-industry-hit-its-ambitious-targets/

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/china-planning-to-establish-iron-ore-supply-overseas-8211-reuters-61934961

China is limiting steel production until after the olympics. This will improve air quality in certain cities which can otherwise suffer from industrial smog, etc. This year the limits on production are being more strictly enforced than previously. Iron Ore prices have fallen as a consequence due to low demand.

With steel production being increasing concentrated into a half year season (March to August), what will the iron ore price be in March 2022 ??

I think you are missing the point here guff. At Simandou, Chinese Baowu Steel (the largest steel producer in the world) wants a big role in the project. Why is that?

1. The greater the supply of iron ore - the lower the price - Baowu needs massive amounts of ore and wants it a cheap as possible.
2. If Baowu owns both mines and steel foundries then a lower (higher) iron ore price causes lower (higher) profits in the miner offset by higher (lower) prices in the steel foundry. This is why many businesses are vertically integrated (e.g. oil firms being explorers, refiners and retailers).

So Baowu Steel and China in general wants more supply of ore for both economic reasons and for political reasons.

In cyclical markets there is inevitably a reluctance to buy at the top of the cycle and overpay.

Recent events have made a deal between Zanaga and China more likely than earlier this year IMHO.

1. Iron Ore has recently been classified as a "Strategic Mineral" by China, which gives cheaper borrowing to firms developing Chinese mines at home or abroad (e.g. Africa) and will entail developing stockpiles of iron ore (for resource security).

2. China wants to increase output of domestic iron ore concentrate by 100 million tonnes per annum by end of 2025 (for resource security). Domestic ore is of a very low grade and requires lots of benefaction, making it both high cost (with a marginal cost of $90+) and highly polluting. Chinese firms will not add capacity if Iron Ore prices are low, below $100 some existing mines will enter care and maintenance.

3. The situation in Guinea means that Simandou will be delayed until such time as China views the country as a stable and reliable partner. China may eventually wish to renegotiate the existing deal so that iron ore can be shipped via the rail link in Liberia (to the port near Buchanan) saving billions in construction costs.

4. The Australian submarine deal will make China even more determined to hurt Australia economically and much more concerned about Australia's ability to restrict iron ore sales to China.

https://www.afr.com/world/asia/why-beijing-s-made-in-china-iron-ore-strategy-is-an-empty-threat-20210519-p57t8t

Coup - risk to bauxite mining .......... adds to Simandou uncertainty

A summary of the risks to Simandou and other mines in Guinea.

https://www.maplecroft.com/insights/analysis/coup-sends-jitters-through-bauxite-markets-adds-to-simandou-uncertainty/

Condor Gold charts two options for mining La India

https://www.mining.com/condor-gold-charts-two-options-for-mining-la-india/

Australian miners brace as Guinea flares

https://www.afr.com/companies/mining/australian-miners-brace-as-guinea-flares-20210906-p58p31

Guinea coup attempt sparks concerns for bauxite, iron ore miners

https://au.newschant.com/business/guinea-coup-attempt-sparks-concerns-for-bauxite-iron-ore-miners/

Denis Sassou Nguesso's declining health

https://www.africaintelligence.com/central-and-west-africa_politics/2021/09/02/denis-sassou-nguesso-s-declining-health-puts-his-entourage-in-a-flutter,109688633-art

Global iron ore production growth to average 3.6% between 2021-25

"................Fitch Solutions expect Chinese firms to prioritise investment in overseas iron ore mines, such as the enormous SImandou deposit in Guinea."

https://www.business-standard.com/article/economy-policy/global-iron-ore-production-growth-to-average-3-6-between-2021-25-121082700907_1.html

Simandou - S&P suggests 2027 for the earliest Iron Ore.

"SMB-Winning, a Chinese-Singaporean-Guinean consortium, aims to commission production from blocks 1-2 at the project in 2025, although S&P Global Market Intelligence anticipates an earliest likely start in 2027."

https://www.spglobal.com/marketintelligence/en/news-insights/blog/sluggish-iron-ore-supply-response-could-hamper-chinas-decarbonization-drive

Guinea rail builders blast in chimp habitat, no plan to protect apes

https://www.reuters.com/article/guinea-mining-simandou-idAFL4N2PO218

Mayoko Iron Ore project is owned by Sapro

https://www.sapromayoko.com/en/activity

https://constructionreviewonline.com/news/new-us-1bn-mayoko-to-pointe-noire-port-railway-line-underway-in-congo/