VALE - Nickel and Iron Ore Statement



I was left a bit confused by this statement. They are lowering the output slightly compared to last year, but they can produce significantly more vanadium if required. It sounds like they are treading carefully and not flooding the market, but re-assuring manufacturers that they can meet a significantly higher demand if battery production really takes off. As for APF, Brazilian Nickel seems to have gone very quiet. I would have thought that some performance of their small pilot production plant should have been given by now.

Iron ore - Vele is predicting a small increase in production next year.

The Buzz


HI Buzz, seems to have gone very quite regarding APF all round. One wonders if issues like those with Spain are taking a lot of the companies time up. I had until recently been reasonably confident that a couple of deals would be announced before the year end with one of them, in view of financing available, being quite big. I look for an announcement each day but all quite so far,. S


Yes I have not posted much as you say not much news about. Prices of coal ans vanadium are doing well still - not really news if I keep on saying that.

Coking coal at $223/mt is a very good price. Price of oil is a big uncertainty - all one can do is observe what the achieved thermal coal price is

and in my books above $100/mt is a good price.
I have religiously been following the cyclone forecast for Australia
in particular recently with storms hitting Sydney, but apart from a small category 1 cyclone way off the East coast earlier this week, the weather seems to have been quiet. So it seems unlikely that there will be a repeat of previous years’ major damage to rail and mine infrastructure that cyclones have previously caused.

Then V2O5 - the price seems to be holding up:-
Then there is nickel - still a good price but really a revenue earner yet. As I recently posted - I am not really sure where it is going, but the IC seems convinced that it is going to do really well:-
“Nickel should soar …The price of nickel has declined despite expectations that demand for it is set to explode, so when will its bright future be fully reflected in prices and miners’ earnings? In our latest Sector Focus Alex Newman picks through the wreckage of the commodities markets at the end of 2018.”

and that leaves us with uranium - the price is doggedly slowly increasing. The Canadian toll revenue should be a good secure income - but Berkeley Energia is at risk of not performing - at least that is what its share price is telling me.

Moving onto acquisitions - it is a bit ironic that APF shareholders and at the edge of their chairs waiting for a deal to be announced, and yet deals can also be negative. For instance, I sold GSK at 08:14 on 3.12.2018 for £16.3921… a share. Hardly had the ink got dry on the sale when GSK announce a huge purchase, the market did not like it and the share price is now about £14.18!! Hardly a change that one expects with a blue chip!!

APF share price seems to have fallen back with the trade war with China and the USA. I saw that some of my shares bought cheap for a quick turn round were in profit, so sold 2700 shares at 148.2p, again on 3.12 2018. Disappointingly the share price is now only about 133p but at least I made the short term profit that I was aiming for.

To summarise, despite Trump’s battling, the revenue stream for APF appears to have remained strong of late… and the promise of a bonus dividend in the New Year beckons.

As for buying with the lower FTSE 100 share prices - I remain cautious still and will continue to stand on the sidelines - too many falling knives about!

The Buzz


hi Buzz
do you not think the slowdown in China is going to effect our bottom line?


Hi Scholomo,

Of course a slowdown in China will have an influence on the price of commodities. That said current prices are strong and what will be significant for APF are the increasing production levels at several of the mines eg Narrabri.

How much of a slowdown? Current steel production needs huge amounts of coking coal - so it is debatable how a relatively small decrease in demand will radically change the price of the commodities. In essence I suspect no one really knows and are we looking at worst case scenarios??

The only thing that I am ruling out for this year is major damage by a cyclone in Australia and in turn constraints in supply that have been seen in other years.

The Buzz


Hi Buzz, as always informative information and insights from you which are much appreciated. You are so right re acquisitions and how the market responds to them. In the market mayhem at the moment, three very big positives stand out regarding APF, namely 1. its a very well run company 2. it has low overheads and 3. it is highly profitable with an excellent dividend. That may well be four positives but as you know a great number of much larger companies in the footsie do not tick ANY of these boxes let alone four. Have a great Christmas and fingers crossed for a highly successful 2019 with APF. My wife and I intend to attend the agm again next year so hopefully might meet you there. S