I was looking at the Mississippi River ports and I think they can barge down pellets to Louisiana out of Minneapolis. Since Nucor would be running a JIT inventory, barges could handle their demand. The downside for the Vale supply chain is the huge inventory they have to take on every shipment.
I expect something in December, just like last year. Low cost US mines are much more desirable than the high cost Canadian and European mines.
The current pellet price tells us that the world is oversupplied with pellets, so taking this production off the market will just make the price of pellets rise and the advantage will remain to the local suppliers. The big gainer here will be CLF locking up Nucor as they have been getting their pellets from Vale.
Without the infrastructure, it is totally worthless. But if MFC ever hopes to get another miner in there in the future, they need to keep the infrastructure in place. If they have no plans to sell or work this mine in the future, why go through the legal expenses to fight CLF and tell CLF to take all of their assets.
Not only the rail and the port facilities, Quebec wants the vast prime land holdings at the port that is key to full development of the port.
The Wabush mine is worthless to all except MFC that holds the royalty rights. MFC needs all of the movable assets to stay if they ever hope to get the mine operating at a low enough cost to make a profit. Those assets should be worth $50 million.
I miss read the expansion, thought they went from 8.3 million tons to 30.5, instead it was a 8.3 million ton increase. However, back in 2008, the mine was producing 15 million tons.
Brazil just needs to shut the mine down, force BHP and Vale to pay for the entire rebuild and repair of the land, employ all the miners in this reconstruction, pay a huge sum for loss of life or injuries and if they ever want to open this mine up again, do so under the most stringent engineering requirements and oversight. No matter what, this mine will be shut down for years.
Brazil needs to go into every mine in the country to insure the infrastructure meets elevated standards. Australia should do the same!
I brought up the Hoffman's because in this year of mining they opened up a "super cut" to double the amount of pay dirt processed. All of their problems are caused by that increased production and their failure to address the issues ahead of time. You just can't buy the equipment and increase production without upgrading all of the infrastructure.
Micro, do you understand the concept of royalties? MFC gets absolutely nothing if no ore is produced. If they can't find a miner that can work the mine and pay them their royalties, they are going to have to do it themselves. Then if iron ore prices rise, this mine could turn profitable if the infrastructure is in place. Iron ore prices will have to raise much higher if a miner has to build all new infrastructure.
was completed in 2014 to raise production to 30 million tons a year. Funny thing is they didn't upgrade the dams but increased production by 3.5 times. It is easy to understand the problem, they should have spent more than the $3.5 billion on this upgrade. You had a dam system that was built to handle 8.3 million tons of production. It is like the Hoffman's from Gold Rush is running this show!
From EPC Engineering:
" BHP Billiton PLC, said Tuesday that the partners of Samarco had approved the $3.5 billion Fourth Pellet Plant Project at Samarco in Brazil.
The expansion will increase Samarco iron ore pellet production capacity by 8.3 million tons to 30.5 million tons per annum (100% basis).
BHP Billiton share is $1.75 billion
First pellet production is expected in the first half of calendar year 2014.
The investment includes:
- additional mining capacity and a third concentrator at the Germano mine;
- a third slurry pipeline of 400 kilometers in length; and
- a fourth pellet plant and enhanced ship loading capacity at the Ponta Ubu site."
No, CLF has nothing to lose, with the royalties they pay MFC, Wabush is just plain to expensive to run. MCF will end up with an operating mine or a large duck pond, their choice right now.
Just strip the assets and then walk, don't throw away money on future lease payments. Trust me on this one, MFC stands to lose much more than CLF.
MFC has very limited time to step up and buy all the assets. CLF is free to sell the movable assets now and took a shot across the MFC bow by selling off the fuel tanks and the CCAA allowed it to happen. If CLF strips the mine of assets, it will be 10 years before anyone steps up and starts this mine up again.
So that is 16,292,550,000 gallons of water at 325,851 gallons to 1 acre foot of water. Or about 7 times CLF's current debt.
No, it is simple. The mine produces 30 million tons of pellets a year, 10% of Brazils total production. it is hard to replace a 100% of that quantity. So I am speculating that they can replace 90%, leaving 10% for CLF. I am being conservative about the 10% as the pellets they ship to the US will be more expensive due to the increased run time Vale will have to pay for. What is dramatic is assuming they can maintain 100% of sales through their other operations! The size of this loss, 100% is really unattainable.
That was great, did you copy and paste it off their reply! My experience with people that keep loaded guns in their nightstand is that the odds are they will shoot themselves than shoot an intruder.
Pellet production is not that easy to make up, you just can't dig a pellet out of the ground and ship it. The size of the loss is huge, just imagine the impact on CLF's bottom line is they just get 10% of the volume lost, that is 3 million tons! As this situation plays out, CLF will see increased orders and increased prices. Then asset sales will take CLF much higher. But go ahead and increase your short positions.