Aurum, did you see Saturday's AFR story "Hugh's nickel-plated headache?" Any thoughts? I don't know who Ivor Ries is, who wrote the article, but [if you didn't see it] the article basically is a somewhat in depth analysis of the Anglo vis a vis the WMC positions.
Key points:
1) Anaconda Nickel is the world's largest science experiment
2) With $900 mil of project debt borrowed from "caring American junk bond investors," this highly complicated project needs to start generating cash flow quickly.
3) If technical problems lead to a much lower rate of metal production than forecast, the shareholders in Anaconda will lose shirts, shorts and suspenders.
4) Clearly, the risk of massive losses was acceptable to Anglo
5) Anglo has a market value of $23 billion US, so Anaconda investment less than 1% of Anglo assets.
6) It's just to early to say if the new plants will deliver the dreams of their owners. And no one would be surprised if they didn't. Nickel mines and smelters have killed off more hopefuls in the mining industry than most people care to remember. [CMR holders beware]
The second half of the article basically describes how dumb Hugh Morgan of WMC is for not going into laterites. Some discussion of proposed low cash operating costs of MM. No discussion other than that above of capital costs, and no discussion of the problems (exponential as I read your post) associated with operation under severe conditions of input, temp and pressure.
If one goes to the Anaconda web site, the 6/99 quarterly report seems fairly frank about multiple shutdowns predominantly associated with shock tubes. Wouldn't the multiple shutdowns be equivalent to batch, as opposed to continuous operations?
Also, can you credit or discredit one theory of mine. My understanding is that the Australian labor unions are so strong, that only Australian welders would have been able to work on the 3 laterite projects. I believe, at the same time, there was massive building going on in Sydney for the Olympics and several large road projects going on. My conclusion was that junior, journeyman type welders would have received the assignments in the bush, leading to breakdowns when the refineries came up to operating conditions. Am I way off the mark on this one?
Thanks again for all your insight.
The African situation is frightful. Uganda, I think, is cooking the AIDS numbers to get more foreign aid, and everyone else is showing marked increases in infection rates with AIDS. I was at a meeting with some SA mining company docs (very liberal and happy with the new coalition of business, govt and trade unions), who said that there miners were working in "a sea of tuberculosis and silica."
I've treated a number of people dying with AIDS and pneumocystis, before the triple cocktail drugs come out, and it was just frightful. I can't imagine the horror in Africa of having 1/2 of your young adults infected and having no drugs to treat either the AIDS or the TB.
Whether you go to the UN Aids site, or NIH, or Southern Africa Aids Coalition (in Zimbabwe) or the S. African Ministry of Health, it's hard to get a recent picture of incidence and prevalence trends. |
