(2) Even if China, India and Brazil growth falls to 4%; this still guarantees iron demand will outpace supply. These countries are growing at 10%, so Iron mines will be spectacularly profitable.
(3) Iron margins in 2005 were very good and in 2007 they were excellent. In 2008 they will be tremendous. For example in 2005, Rio Tinto's iron ore division contributed $US1.72 billion to group-wide earnings.
(4) Iron ore is one of few commodities that has substantially maintained its price in real terms over
many decades and will continue to do so.
(5) There is no cut-throat price competition; producers have very strong price-bargaining power
especially in the seaborne export market.
(6) There are many more steel companies buying iron; than mine companies, selling iron.
(7) Barriers to entry are very significant – Just ask Teck why they do not own an Iron cash cow. Many juniors can bring a gold mine into production. But not so with Iron ore, because you need deep sea shipping ports. So those highly attractive margins enjoy significant protection against new entrants.
(8) It is a low-technology game with very high returns, especially Direct Shipping Ore. Just dig it up, get it to port – and throw it on to the first ship heading to Asia.
(9) Governments love iron ore mines, because they bring long term regional economic benefits that accompany iron ore developments. The iron ore can also be used to build lower cost local infrastructure.
(10) No major substitute for steel making – and steel accounts for nearly 100% of iron ore demand. You can tweak the manganese, vanadium, niobium, chromium and nickel contents but you need iron!
(11) You get price premiums of 20% for lump ore products; – that's anything above 6 mm.
(12) Australia has reserves for over 100 years without seriously looking. Large miners manage the supply to avoid price discounting. Clines project is close to China and India and will have guaranteed markets because China and India do not want to be priced locked by the Australia miners.
(13) The Australians have huge supply and transportation advantages and can bankrupt a single Iron mine in Canada, who focus on Asian markets. This makes Cline a significant take over target from within and outside Canada.
(14) Existing supply capacity is producing flat out. Brownfield expansions are cheaper than new mines, most producers are seeking incremental tonnes at every opportunity. Clines Iron mine will be an exception due to its close proximity to China and India and low operating and construction costs.
(15) Australia and Brazil are world leaders in iron ore supply. Asia and India want alternative supply and will pay a premium for security and alternative supply.
(16) Other producers like Russia and Canada are a long way behind Australia and Brazil.
(17) Australia and Cline are best placed to serve the growing seaborne markets. Asia is where the demand is. China, Japan, South Korea and Taiwan make up around 65% of seaborne iron ore demand.
(18) High shipping rates in the current strong commodity cycle increase Australia's and Clines Madagascar location advantage over Brazil and Canada.
Clines Iron Mine project; is a Gigantic Lottery Winning Ticket.
MP