Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
I'm not an expert on the steel market so I don't want to 'sound the alarm' but I think we would do well to put our collective brains together to understand the implications of the 1-2 punch of potential china slowdown and the Vale disaster.
On Bloomberg just now there was an analyst from CBA who said that the Vale disaster and resulting regulations in Brazil could take 4% of global supply of iron ore off the market, and that shifting the iron ore cost curve 4% to the right would result in Iron Ore prices of more than $100. Also producers like Fortescue who have a lower purity iron ore would stand to benefit the most. The host said there was a risk of negative margins for steel producers.
If there are steel experts on here, I'd appreciate your insights on what this might all mean for vanadium.
thank you alfa
I was just curious, do you know how the company choose which PI's to invite?
Any guess as to when BMO publishes a report and target? How much time passed between when ARC joined as a joint broker and when they published their first report?
Yes, no doubt there are a lot of positives for BMN. This article contains the only one or two things that worries me (China slowdown, implications of the huge increase in iron ore prices). Worth keeping an eye on. But my best guess is the low V inventories worldwide is what ultimately wins out.
https://www.bloomberg.com/news/articles/2019-02-07/arcelormittal-sees-steel-demand-growth-slowing-as-china-drops
World's Top Steelmaker Says China Slowdown Weighs on Demand
By Elena Mazneva
February 7, 2019, 1:25 AM EST Updated on February 7, 2019, 6:12 AM EST
ArcelorMittal sees China steel consumption falling this year
U.S. and Europe steel growth is seen slowing in 2019
After two years of bumper profits, the steel industry is entering a slowdown.
ArcelorMittal, as well as smaller European producers like Salzgitter AG and Voestalpine AG, are sounding the alarm about weakening conditions, particularly in China. The country, which uses about half of the world’s steel, is now expected to see a drop in demand, the first contraction since 2015. Demand in the U.S. and Europe will grow at a slower pace this year, ArcelorMittal said.
“Whether the ultimate outcome is a bit more positive clearly depends on possible additional stimulus measures in China” and the potential for a trade truce with the U.S., said Commerzbank AG analyst Ingo Schachel.
The reports from steelmakers reinforce economic data pointing to a gloomy outlook for the global economy. Sentiment is being dented by the ongoing China and U.S. trade war, Brexit, as a well as manufacturing and sentiment indicators that point to waning demand.
Steel is often viewed as a barometer for global growth because it’s the backbone for much of the world’s construction and manufacturing. The industry is also facing a squeeze on profit margins as prices of iron ore surge in the aftermath of Vale SA’s dam collapse in Brazil.
ArcelorMittal shares dropped as much as 3.4 percent in Amsterdam on Thursday. The company’s fourth-quarter earnings missed analyst estimates.
Still, it’s not all bad news. ArcelorMittal reported record earnings, doubled its dividend and reduced its debt burden in the fourth quarter, a sign that the company is on stronger footing.
China’s steel demand is seen falling by 0.5 percent to 1.5 percent this year, compared with growth of 3.5 percent in 2018. While global consumption will grow at a slower pace than last year, the outlook for the world excluding China is slightly stronger, driven by stabilization in Turkey, ArcelorMittal said.
China may increase exports because of weaker domestic demand, although neighboring Asian economies should be able to absorb the volumes, Chief Financial Officer Aditya Mittal said on a call. As a result, the company doesn’t expect a spillover effect for its sales in Europe and the U.S., he said.
I'm sorry for the off-topic post, but if you haven't seen it yet than this may bring more value (or at least humour) than a lot of the stuff I've read on here lately.
https://www.youtube.com/watch?v=V3TT1VE8Jq0
great increase in profits -- after tax, etc. too
Yes, thank you. I am sure that is not the only mistake/simplification.
So that would make the Trailing P/E: 10.43
That starts to look cheap!
Sorry, Forward P/E I think we expect is lower (good) because we expect earnings are higher (also good, haha).
Well this is really simplified and probably wrong (maybe a pro like Nick can step in) but I calculate it as:
Vametco EBITDA: $107.5M
Bushveld EBITDA (74%): $79.55M
Bushveld After-Tax Earnings (ignore DTAs, assume 38% tax rate): $49.32M
Bushveld After-Tax Earnings (GBP : 1.31): £37.65M
Bushveld Market-Cap @ Close (40.75): £456.02M
Trailing 12 Month P/E: £456.02M / £37.65M = 12.11
Certainly not that expensive, but not screaming cheap. But this is a Trailing P/E, and most often people look on a Forward P/E (i.e. for the next 12 months) which I think we expect is higher.
And I am sure by ignoring DTAs (deferred tax assets) I am there at a minimum over-estimating the P/E. Also I am guessing 38% is the SA tax rate looking at the pre vs. post Mokopane NPVs from last years annual report.
Yes, not to be negative (I do love this company) but Fortune was on Proactive with Andrew Scott in December or November talking about 5,000 Mtv with an eye to 10,000 Mtv.
We are profitable and not that expensive on a P/E basis, but a long way from those production numbers.
Just to follow-up, I'm not sure what taxes are in South Africa but if I look at last year's annual report the NPV of Mokapane is
pre-tax: $ 418.0M
post-tax: $ 259.3M
Implying a 38% tax rate. However, I imagine we have some Deferred Tax Loss Assets from previous years to chew up first. Not sure how substantial those would be though relative to the current (huge) earnings.
Inner-Harmony,
Given we bought Vametco for a song, I doubt there are significant Depreciation expenses at this point.
Taxes on the other hand though, those are real and not to be ignored.
I've posted it before, but this is the full note in case any one is interested:
https://assets.angelpub.com/pdf/ea/bmo-global-january-2018.pdf
Do we know the size of Golden Summit? It's a positive sign no doubt, but £4m may or may not be serious money for them.
https://uk.reuters.com/article/us-china-metal-fanya/chinas-scandal-hit-fanya-exchange-to-begin-metals-sell-off-idUSKCN1PJ0QB
I wonder if they have any Vanadium in stock? The article only mentions Indium. Does anyone know of any Indium miners? Might be a buying opportunity.
gotta love him.
I have him filtered, but I liked your comment nonetheless
Where/when did the company give indication it was considering a $100M Kiln investment at Vametco?
I must have missed that.