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April 28, 2008 Dear Friend, We reviewed the combined outputs of Vale released April 24, BHP Billiton released April 23 and Rio Tinto released April 16th, and determined that their combined outputs fell sharply for met coal, steam coal, copper and nickel in the March 2008 quarter compared to one year ago and fell more sharply compared to December 2007. Aluminum output was about the same, and only iron ore rose 14.5% from March 2007. This seems to contribute to very firm metals prices in a slower growth phase of the world economic growth. The "copper industry" report reviews the Teck Cominco purchase of the Relincho copper-moly deposit on April 14th at about a 25% discount to 22 earlier 2005-07 transactions. We were surprised at the low asset sale price with copper and molybdenum prices near records and many earlier transactions at lower copper price expectations. We conclude that "smart money" fears mine construction cost overruns and various input shortages, and concludes the outlook for production profits could be worse. Faithfully yours, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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