At a time when iron ore prices are rocketing, this company is in the fortunate position of having mines, money and proximity to the booming Chinese market. As the company chairman puts it, the group is fortunate in its geography and geology and plans to bring the two together to create value for shareholders.
The freight advantage is extraordinary. The group’s mines are located on the Russian/ Chinese border next to railway lines.
As a result, the group expects to be able to transport its iron ore for less than $5 a tonne. Its chief rivals are BHP Billiton and Rio Tinto, which pay between $40 and $50 to ship iron ore from Australia and Vale in Brazil with shipping costs of $60-$70 a tonne.
Strong partnerships
The company is already in partnership with powerful Chinese companies like Chinalco, a significant shareholder in Rio Tinto.
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