1. Ring of Fire project going according to plan, which is to get Ontario to pay for the transportation infrastructure.
2. Spot iron ore holding above $135.
3. Iron ore futures for 2014 holding above $150.
4. Japan is suspending greenhouse gas reductions which will lead for other Asian countries to follow, will be good for met and thermal coal.
5. US auto production at all time highs.
6. China GDP may come in over 8%.
7. CLF is going to earn over $3 for 2013.
8. CLF will not have to invest $800 million into transportation infrastructure, can continue to pay down debt and build cash.
This is a great 4 part article about the chromite project, this move to put the investment in transportation infrastructure has been in the works well before CLF announced the suspension.
If CLF was playing the game, it is clear they would win. The strategy they are employing to move forward on the Ring of Fire is to make it appear that they are not moving forward to get the government to step up to build the required infrastructure. Soon the investment community will realize this and all this media hype will be put behind us. Today is a gift to the shorts to cover.
Ontario and First Nations are going to make money on this deal. Not only the taxes Ontario will collect but the royalties First Nation will receive. Plus, when the government goes ahead with the transportation systems, you can bet they will collect a toll on the mining traffic which is completely fair. If CLF would have got the easements and gone forward with the transportation system, they would have lost their investment when the government took control of it. The real blessing here is the courts denying the easements.
They will be going forward with the Ring of Fire project, CLF will not be building the transportation system and forcing the government to do it. It will save CLF $600 million to $1 billion, which puts the project within reach without taking on additional debt. It also delays the outlays of big dollars for a couple years, allowing them to accumulate cash.
I think the GS iron ore outlook had the biggest impact on all the materials stocks today (right or wrong). The suspension of the chromite program is a good thing at this time. It is far better to have the government put in the transportation infrastructure than it is for CLF to shell out $600+ million. It is more important for Ontario and First Nations to mine the area and if they want to make it happen, they are going to have bring something to the table. With CLF formally suspending the planing, it is now on the government to invest in their future.
As far as iron ore prices in 2014, futures markets have it at $150. How GS comes out with $108 is beyond me.
They double counted their copper smelting to make it appear that copper supplies are high in order to get the price of copper ore down. I would not surprise me if the PMI surveys are the same as purchasing managers are more concerned about securing lower iron ore prices than giving accurate information. It is just the way the Chinese operate and you need to look beyond the survey numbers.
I was really hoping someone would bite on this one, thanks for showing up! Do you really understand what expanding means? Yes, anything over 50 is expanding. And China is making big changes that will lead to further stimulus and infrastructure investments. Maybe if you would have been in touch with real economic news, you would not have lost on that $20.81 short position. The $19.80 long position I took on your stupid posting has netted me a fair profit.
All of this makes sense now, I was wondering why Ontario, First Nations and the Canadian government was making moves to develop the transportation infrastructure into the Ring of Fire. In the article the agencies stressed the importance to the region's economic health is to open the area up and worth the investment into the infrastructure. Now CLF just has to concern themselves with developing the mines after the government gets the transportation in place. This move also makes the government want to see the mines developed to recoup their investments into the region.
This should get Ontario and First Nations off their bottoms and get the infrastructure in. The governments know they need to act to make the ring of fire a reality and they can't rely on CLF to foot the bill for the transportation infrastructure. Furthermore, it does help their debt reduction at this time. I believe the delay might add one year on the project.
At the time, CNBC was interviewing Ford a representative discussing record auto and truck sales this year. Then the entire market headed up along with the big move in CLF's price and volume. Maybe investors realize the strength in the steel market along with at CLF's current price and 2013 earnings estimates, CLF is at a sub 10 PE.
From the Motley Fool:
"Speaking to a high-powered audience at the official opening of is new global headquarters in Melbourne, BHP Billiton (ASX: BHP) CEO Andrew Mackenzie provided a positive outlook for the Australian mining sector, suggesting that Chinese demand for natural resources may prove to be stronger than currently believed."
Yeah, you can go out and buy some ribeye since you didn't get some venison. I remember our trips to Poughkeepsie when my daughter was in college, we always saw deer between Scranton and Fishkill. I always liked orchard fed deer better than forest or sage fed.
Our problem is not the stock, it is the constant bubble talk on CNBC and the parade of so called experts they have coming across their desk. It is more about DOW 16,000 than it is about CLF.
Most of these analyst are basing their iron ore projections on production increases from RIO and BHP in Australia. What they are not accounting for is these producers are selling other assets around the world, so they are just shifting production to their low cost mines, not really producing more iron ore. It is in their best interest to keep iron ore over $130 and they have the market position to achieve it.
What kills me is the analyst that have projected the price of iron ore in 2015 when they can't even get close projecting 6 months out. That is why the market really needs to look at the new Chinese futures exchange.
And yet the DaLian exchange has the heavily traded May contract up $1.90. I have noticed the two don't move in lock step with each other.