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Hi G_G_G,

Agree your assessment of possible/likely scenarios, the only thing I would throw into the mix is 'location, location, location' : PN /the SEZ is a credible deepwater port covering the Southern Atlantic seaboard and is a short distance (in Africa terms) from the (hydro) powerhouse that could be Inga, in DRC; it's also a gateway (potentially) to the interior of the Continent.

Guinea by contrast has serious constraints re offshore coastal shelf (as in, it hardly does shelve) and it's 'oop North', relatively speaking.

I'm sure China's interest isn't/won't be purely commercial.

ATB

Hi jedclampit,

Sounds good ! but what happens if AA announces a rights issue ?
It'd have to be severely dilutive to be meaningful, so on the news , the current s/p would arithmetically tank, held up only by those who trust a hedge fund to come to the rescue....
'Hope' is not a strategy.

To be clear, I hold, but I'm holding the popcorn in one hand, with the other on the 'sell' button.

ATB

Hi Jane,

Thanks for this, the key (for me) Alphaville take-away :

.."Finding any value whatsoever in AA’s equity is a real challenge and, while the inevitable refinancing might involve some form of take private, it’s not usually in the nature of PE firms to throw scraps to stub shareholders unless there’s no option. .."

ATB

Mynytho,

Thanks for this.

Take ..."they are going to have to look at the performance of ALL [my caps] their units and ASSETS[ditto]...." with the earlier 'need to compensate that.." Glencore does not produce IRON ORE and has MISSED OUT on the soaring prices that benefited some rivals such as Rio Tinto...." and I think even the pink 'un is telling Ivan to 'look behind you'... [I picture him as the wicked witch in panto...]

ATB

"So, what price a FMGL/GLEN/VALE deal in C-B ?" Working with FMGL's 'bestie' Bao Wu.....

Enough ! Too much time in the sun...

Have a great weekend everybody.

ATB

Me again,
Further thoughts :
(1) Vale has somewhat blotted its copybook in Guinea/Simandou, so may be interested in another (nearby) potential iron-ore supplier;
(2) FMGL appears to have missed the boat (Chinamax - boom! boom!) in Guinea as well;
(3) Turns out that FMGL and Vale have talked in the past about sharing production, see https://www.dowjones.com/scoops/fortescue-ceo%e2%80%8b-vale-blending-alliance-not-gone-hoped/
OK, this was 5 years ago and nothing transpired , but I note that .."In March [2015] , Fortescue and Vale said they wanted to create an ore blend for sale in China, the world’s largest buyer of the main ingredient in steelmaking. The union was expected to bolster profits and HELP TO DEVELOP NEW PROJECTS [my caps].
Mr. Power said Fortescue-Vale talks have yet to bear fruit because low shipping rates have leveled the playing field between exporters in Brazil and Australia, the world’s two major iron-ore production hubs..."

So, what price a FMGL/GLEN/VALE deal in C-B ?

ATB

ATB

Hi allthatguff,

To paraphrase Christine Keeler or Mandy Rice-Davies, " Well, they would say that, wouldn't they ?"

Drill down into the article and it sounds more like Vale bluster : " The expansion at S11D is expected to initially be 10 million tonnes of extra annual capacity, but Vale is understood to be studying ways to bring on a further 20 million tonnes of new capacity....For context, Australian miners collectively exported about 852 million tonnes of iron ore in the year to June 30..."

Article then goes on to say /show that Vale tend to overpromise and under-deliver.

Brazil is in a similar position as Oz vis a vis China : it's its biggest trading partner, main exports being oil, iron ore and soybean (where it competes with the US as major int'l supplier). It's got 'issues' with HuaWei and in Bolsonaro has a wild card political leader who's spoken disparagingly of the China virus....

Maybe Brazil (who could use C-B's potash ex Kore Potash / KP2 - cheapest potential supplier with shortest shipment issues), could 'persuade' Vale to show an interest in C-B ?

It might help that GLEN and Vale are already working together/have a major business connection in the Sudbury complex in Canada, see : https://globalminingobserver.com/glencore-vale-canada-nickel-sudbury. So, plenty of scope for trade-offs and 'wrap-up' deals, on the face of it.

Never mind 'pulling up yer socks', what the market needs is a little flash of 'ankle'....;->

ATB

Hi NewKOTB,

"Now or never ... race to market could be lost.... time to complete a deal..."

With Chinese partners in both parts of Simandou, that takes care of part of China's mooted/threatened diversification of supply away from Oz .....but introduces dependency risk on Guinea. No reason to think it wouldn't want to mitigate that risk by taking on C-B as well....

BaoWu Steel (who are supposedly 'besties' with FMGL) is Rio's intended partner in Simandou 3 and 4. With the example of Yantai Group already involved in Simandou and now sniffing around C-B with COIDIC/ZIOC, would it be a stretch to imagine BaoWu collaborating with FMGL on something in our neck of the woods ?

Apologies for getting a bit 'ramptastic' : I share your frustration at what seems (no doubt simplistically) to be something of an open goal....

ATB

ATB

Hi caml et al,

Thanks for this. The Gulf Arabs are certainly more active in Africa than might be immediately apparent.
Kore Potash - just mentioned - is an example : its largest shareholder (19.7%) is the Omani Sovereign Wealth Fund.
KP2 is certainly worth keeping an eye on, you know what they say about waiting for a bus....

There have been periodic talks about aluminium smelters in various countries, leveraging their M East experience.

The tricky bit about possible Emirati involvement in the Congo (C-B) is that they've crossed swords with the Chinese elsewhere in Africa - see https://africaneyereport.com/control-of-djibouti-ports-uaes-dp-world-battles-chinese-firm-in-court/ - and may be reluctant to engage in PN.

OTOH, DP World is a major global logistics and free zone operator, see https://www.dpworld.com, with $ 8.5 Bn turnover pa, so no slouch.
And as an aside , Transparency International or Global Witness, I forget which, have exposed several Nguesso bank accounts in the Emirates/Dubai, so who knows what other useful connections there might already be ?

Must admit, it would be fun to have news of a UAE/FMGL mission rocking up in Brazzaville.....

ATB

Hi abzzba,

Thanks for this, encouraged to see a mention of Yantai Group's home town :

.." The four new terminals that can berth ships up to 400,000 dwt are in Rizhao....YANTAI...and Lanshan in Shandong province, and Sanduao in Fujian province, according to Chinese metals market data specialist Mysteel Global, and add to seven ports in China that can already handle the super large ships...."

ATB

Hi abzzba,

Thanks for this ! This bit may be particularly relevant/not coincidental :

.."The FOUR new terminals that can berth ships up to 400,000 dwt are in Rizhao..... YANTAI ...... and Lanshan in Shandong province, and Sanduao in Fujian province, according to Chinese metals market data specialist Mysteel Global, and add to SEVEN ports in China that can already handle the super large ships...."

ATB

Hi all,

Africa Intelligence reports :

" Commisimpex Affair: As they battle it out in French courts, Hojeij and Sassou hold secret talks in Beirut
Engaged in extensive foreclosure operations in Paris, Lebanese entrepreneur Mohsen Hojeij, who is seeking to recover €1.2bn from Congo, is holding very hush-hush talks with the president's office...."

To quote from Life of Brian : ...' he's a very naughty boy..."

ATB

Spread currently 6.50 / 6.68 or 2 .7%.......

Hi Longlad,

Thanks for this !

So AIUI, Rio is teaming up with one Chinese group (Baowu) to offer competition to Winning/Shandong/United Mining Supply and Yantai, another Chinese group.

I guess 'competition' will be overstating it : they'll need to share railway access to coast and port facilities....so maybe also part of the $ 15BN (?) infrastructure cost.....

Wonder where that leaves BHP, FMGL , Anglo American, Arcelor Mittal etc , if they want to pick up an African iron ore source ?

ATB

Hi beardozer,

.."Currently listening to Engelbert Humperdinck ..."

I hope you're left thinking of " 7 billion people" - all consumers of Chinese goods - and not "There goes my everything.."

;->
ATB

Hi 99icecream,

Thanks for this. TTNYR is a new one on me ! What does it mean , pls ?

.."The possibility of a floating offshore port means that Zanaga can proceed without the New Port of Pointe Noire a key issue if either Glencore develop or sell the asset. It seems an interesting coincidence that this new concept was being developed at the same time as Simandou was being sold (i.e. H2 2019)..."

More than a coincidence, I suspect :
(a) apart from Simandou (future iron ore), Guinea's principal earnings come from Bauxite exports - AIUI it has the largest deposits in the world and currently supplies approx 1/2 of China's imports;
(b) Simandou famously requires a new port (as part of the deal), Yantai Group is currently handling its bauxite exports from an existing port, using barges because of the shallow Continental Shelf offshore Guinea. IIRC, Elphick said at the last AGM that you've got to go 15 Km offshore before you get more than 20m depth...
(c) Yantai Group's exports go to...Yantai port in China, which per http://www.chinadaily.com.cn/business/2015-11/16/content_22467121.htm ..."is accelerating its pace of constructing transportation bases for energy, ores, containers, coal, and chemical fertilizers to turn the Yantai Port into an important transportation hub..."
Note also the hat tip :..."Zhou Bo, chairman of Yantai Port Group said, "The transportation line is a demonstration project of Yantai port developing overseas transportation lines along the Belt and Road..."
(d) YG is currently shipping raw bauxite to China for processing (with attendant transport costs (bulk) and domestic China energy consumption and pollution implications);
(e) AIUI, its interest in ZIOC/Zanaga's FDSO is that it could use the FDSO to ship bauxite back onshore and process Guinea exports in C-B , shipping only the reduced alumina to China.

All adding value to the PN SEZ and surrounds.

ATB

Hi G_G_G,

To be fair to Hanno et al (OK, but why ? ;->), there's quite a lot going on in Moz atm, see Africa Intelligence :
- Maputo suspends Eurobond repayments;
- Local content issue major source of tension with oil majors;
- Cabo Delgado : a gas Eldorado and security nightmare; and , particularly concerning :
- Portuguese brewer Super Bock has stopped doing business in the Portuguese-speaking states that have been its key markets in Africa to focus on China.

Incidentally, more grist to the mill re Pengilly interests :
Power-Blox teams up with businessman Egideo Leite to set up shop in Maputo
Swiss start-up Power-Blox, which sells off-grid intelligent energy storage units aimed at developing countries, set up a subsidiary in Mozambique on 21 May called Power-Blox Africa. ....

Lots of distractions/competing priorities...
ATB

Hi allthatguff,

Seems GLEN was particularly unfortunate in their timing :

.."Glencore agreed to an 18-year rail and port deal with a local government entity in June 2014 {the report that they'd pulled out is dated March 2015...]

The iron ore price was $US94.84 per tonne on the day the transport deal was announced, but with the sharp drop in iron ore, Glencore and Sphere have decided to withdraw from the project. Iron ore for delivery to the Chinese port of Qingdao last traded [March 2015] at $US57.61 per tonne..."

The other interesting bit is that GLEN may have been caught on the 'take or pay' provisions in their agreement with SNIM in Mauritania., ie a 'learning experience' : the support they've given other mining projects subsequently HAVE included 'take or pay', but 'conditional'.

Remains to be seen how 'scarred/scared' GLEN is today : 'the past is another country, they do things differently there'.

ATB

Hi Longlad,

.."Price of iron yesterday was $110, so in miners price range for metrics to make sense?"

Could be ! ;->

Plus, one would hope that (a) Zanaga's tax terms are more favourable (a multi-year stumbling block in Mauritania, from the article) and (b) there's someone else (COIDIC) now doing the heavy lifting on all the associated infrastructure issues/headaches. Not quite as 'oven ready ' as Mauritania supplying an existing port/railway, but the next best thing...

In any event , this appears to undermine the 'we don't do greenfield' argument made by/about Glasenberg/GLEN.

ATB

Hi all,

Here's the story : https://www.smh.com.au/business/companies/glencore-abandons-mauritania-iron-ore-project-after-us1bn-investment-20150311-141cdg.html.

Note unfavourable economics at the time (iron ore price and GLEN's own stretched finances). Plus dependency risk in a one - export economy.." Mauritania, ...relies on iron ore for half its exports and a quarter of its tiny $4bn economy.."

ATB