Forum Archive Index - December 2001

[Marilyn Munroe <who.c@res.co.nz>]

There has been some recent discussion on N Z Oil & Gas's Pike River coal 
field.

There is a lot of coal in the world. It is a classic commodity. Steamming 
coal, don't invest. My advice for those tempted by investments in steaming 
coal is to put their money into fast women & slow horses. At least you will 
have fun losing it.

Mining is all about production costs v market prices with exchange rate 
fluctuations to manage. Markets, currencies go up & down, production costs 
stay pretty much the same. The key question is can the mine still operate if 
commodity prices and the exchange rate turn against you. If so good, then you 
can sit it out hoping that commodity prices & currencies move in your favour 
and clean up big time.

Pike River coal has several things going for it. The coal is high grade 
suitable for a veriety of purposes. The coal seam is on a gently rising 
incline enabling cost effective hydraulic minning and transport to the stock 
pile by a slurry pipeline.

I suspect that the bug bear for this project is transport costs from the 
stock pile in the Grey River valley to the ships side. Their proposal to 
allow the coal to be carried in overloaded trucks suggests to me that someone 
has been ratcheting the transport cost variables to make costs meet profit 
objectives.

Boop-boop-de-do Marilyn


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