GREY:ADEXF - Post by User
Post by
Greenandgold.on Oct 31, 2011 4:02pm
257 Views
Post# 19196521
One Explanation
One ExplanationOne explanation for why XinXing is not honoring its original commitment to AXI: the switch in production plans from nuggets to concentrate. In 2010, when XinXing signed the framework deal and $5.3 private placement, AXI was planning to produce 1 MT per year of iron nuggets, which is high-purity pig iron. What is high-purity pig iron (HPI) used to make? Ductile iron.
*
Ductile iron is mostly used to make ductile iron pipes, which is, of course, the central business of XinXing Ductile Iron Pipes Co., Ltd.
*
In February 2011 and in May 2011 AXI issued press releases indicating they were going to pursue an iron ore concentrate operation at start-up (leaving open the option of a nugget plant). This must have thrown XinXing for quite a loop. They were investing in AXI to get a ready supply of high-purity pig iron, which is a very expensive and specialized product, not concentrate. No wonder AXI hasn't signed the JV, they're not getting what they bargained for.