Iofina Share Discussion Threads

[superg1] 28/8/2014 09:25

There is one very obvious way SQM can get their 30 percent plus
back and that is via an acquisition. Whether they go that route is
speculation. It would need to be someone with low costs, and that
option is limited on suitable targets.

I can't check the SQM forms 20-F right now but I recall El Toco and
Iris were not in play pre 2011 ish, but when prices went up they
brought them online. When it then hit 50 and falling they dumped
them once more.

They are clearly high cost and now viable.
On top of that late last year they got rid of over 700 staff. Then
recently including contracted firms they have shed over 3000.
So while they claim a determination to get back over 30 percent, as
you can see they haven't given the slightest clue about how they
can do that.
No analyst yet seems to have spotted the closed mine and plant.
Conference call today so let's see if any analyst mentions it.

[che7win] 28/8/2014 08:57

superg,
you may be right, but I'm looking at the relevent paragraphs from
the SQM results below.

With regards to IOF, they have been aware of SQM's intentions
for
months and have stated their iodine inventory position last RNS
and
excellent sales figures for reasons beyond investors.

IOF are ahead of the game, they are working to get opex as low
as
possible and have been cash flow positive these last few
months...

SQM:

"Lower revenues in this business line for the six months ended
June
30, 2014 compared to the same period in 2013 were a result of
lower
sales volumes and lower average prices. Sales volumes decreased
just over 8%, and prices decreased approximately 20%, averaging
US$40/kg for the six months ended June 30, 2014. However, we
have
been able to lower iodine costs: we expect average costs for
iodine
during 2014 to be 5-10% lower than average costs seen during
2013,
and we expect to continue lowering costs during 2015.

In the past 12 months, we have seen new supply enter the market
from Chilean competitors. We will work to recapture our market
share in the coming quarters, and despite stable demand growth,
market prices could reflect these efforts. On the demand side,
as
in recent years, growth continues to be led by X-ray contrast
media, LCD, and pharmaceuticals. "

hTtp://ir.sqm.com/files/doc_news/2014/new/PR_SQM_ing_FINAL.pdf

[superg1] 28/8/2014 08:06

Che

That's the problem for SQM at the moment. It's not about
sacrificing margins. If that was the option they wouldn't have
closed El Toco and Iris. That lost them around 2500 mt it
seems.

I'll find the details later which shows those only appeared
again
when iodine prices were much higher.

30 percent would mean they would need around 1500 mt more now,
and
add 300 mt plus per year to maintain that.

They gave up the 30 percent plus they had. They need higher
prices
to get the market share back.

A move to Pampa may allow them to do that, but they have
suspended
the plan.

They do quote the 'medium term' to achieve that. Higher prices
or
a
plan B is needed imo

[che7win] 27/8/2014 21:55

Seems to me that SQM is warning it's competitors that they
intend
to attain 30% market share and will sacrifice margins to
maintain
that.

This may be to curtail any appetite amongst their Chilean
competitors to expand.

With regards to IOF, our sales are robust and therefore
inventory
remains low, hence the last RNS stated:

"The Company had near record sales again for the month which
demonstrates good demand for our products and lower inventory
levels than other iodine producers."

This statement was probably made for a reason beyond
communication
to investors readership only, some gamesmanship at play I
suspect
:-)

I expect that our opex will slip under $20kg of iodine produced
this year, so we can reach formidable gross margins. Our
production
has not been a threat up to now, but at 720MT run rates and
further
expansion, we will become a sizeable competitor next year IMHO.

[orslega] 27/8/2014 19:08

SQM H1 results show effect of lower prices as revenues and earnings
tumble
By SIOBHAN LISMORE-SCOTT

Published: Wednesday, 27 August 2014

Although SQM remains upbeat about the future, the 41% slide in
earnings demonstrates how the market as a whole is struggling. Even
in lithium, which saw higher demand and less supply than expected,
prices remained low.

Lithium, potash and iodine producer Sociedad Quimica y Minera de
Chile S.A. (SQM) recorded a decrease in earnings and revenue for H1
2014 on the back of lower potash and iodine prices.

Earnings fell 41% when compared to the same period in the previous
year, at $152.1m, while revenue.......

[arlington chetwynd talbot] 27/8/2014 17:13

Looks like a new downtrend is starting here.

[orslega] 27/8/2014 17:01

sg1 - excellent summary/recap on SQM, very helpful - as you say
H1
2015 could be very interesting for the sector - by then, IOF
should
be firing on all cylinders - 7 full size plants running, a couple
of
strategically place mobiles, all taking advantage of an
abundance
supply of brine. IOF should start to feature nicely then.

And a big splash of Water..... : )

[superg1] 27/8/2014 06:54

SQM

Their prices look like an even split of about $40 per kg for Q1 and
Q2.

They expect the 2nd half to average 5% to 10% less ($36 to $38)
which are the prices we are seeing now.

They reiterate their desire to get back over 30% of the market
share 'in the medium term'

I have mentioned in the past that they spread costs, so what they
actually may quote as a cost for any particular product, does have
some 'flexibility' available.

EG
A significant portion of SQM’s costs of goods sold are costs
related to common productive processes (mining. crushing. leaching.
etc.) which are distributed among the different final products. To
estimate gross margins by business lines in both periods covered by
this report, the Company employed similar criteria on the
allocation of common costs to the different business areas. This
gross margin distribution should be used only as a general and
approximated reference
of the margins by business line.


I see they have almost come to a full stop re expenditure, but
claim they have reached their goal. Hmmmmmmm 1 year back they
talked of expansion and the $665 mill move.

So have they reached their goal on iodine, the below tells a story
and shows their sales in the last few years.

2010 11,900 mt

2011 12,200 mt

2012 11,000 mt

2013 9,300 mt

2014 4,540 mt (400mt lower than H1 2013).

Ignoring the big market crash impact of 2009, you have to go back
to 2005 to show where they sold/produced less than this year (2006
9.7k mt, 2007 9.1k mt).


We know in 2013 they said they had dropped some custom giving way
to others, that is Cosayach as we know. Cosayach increased roughly
what SQM dumped.

The important bit for me is the inventory. We know due to the
issues through 2011 and 2012 they dumped inventory, which in part
covers some of the bulge in the figures.

My estimate is that they now produce around 8500 to 9000mt, so on
that front, it seems they don't have any significant inventory.

They talk of termination of one area (non iodine) so I'm wondering
if that relates to Corfo, who own leases, and are in court
proceedings against SQM re revenues owed. Corfo want to cancel the
leases.

SQM clearly are not keen on any expansion, which is a massive
change from a year ago.

In relation to iodine with a 3.5% average demand rise each year
(around 1000mt), 8 years on and they are selling no more than back
then.

They have made significant staff cutbacks, and those closed units
are too expensive to run or reopen due the market price (the staff
have gone anyway).

It's all sizing up for an interesting H1 2015.

Water laws pending :-). No mention of that I see.

[superg1] 26/8/2014 18:07

Sand

I doubt CF has the slightest clue re the use of cement and the
cold, but that's another story. -30 to -40 is rather chilly
imo.

[woodpeckers] 26/8/2014 15:19

Part of me is hoping that we don't get water news too soon as we
will no doubt get the same percentage rise and though we're
slightly down today, the general trend is up so we will hopefully
get more bucks for our rise if we wait a bit.

[sandbag] 26/8/2014 15:07

Super,

It was I who asked the question about construction in the winter. I found his answer a little hard to believe.
"Western Montana during the winter receives much more snow, generally, than areas in eastern Montana. However, all areas of Montana can receive deep snows. Eastern Montana, along with the occasional deep snow, also suffers from the curse of seemingly always blowing snow.

Not surprisingly, eastern Montana also is much windier during the winter than is found in western Montana, just like during the summer months. This wind, besides making the wind chill plummet, also has a nasty tendency to blow the snow that does fall in eastern Montana all over the place. Huge drifts frequently form behind houses, barns, small hills and behind anything else that the wind can't blow away. Snow fences along eastern Montana highways, which help to capture snow and prevent it from blowing onto the highway, are also a common sight.

How much snow falls in Montana changes, often dramatically, from year to year. The tall mountains in Montana, even those found in the eastern part of the state, often receive very substantial snow falls – generally ending the year with well over 100 inches of snowpack (snowpack = packed snow depth, not how much snow actually fell during the year. To create a 100-inch snowpack by early April usually requires well over 250 inches of snowfall during the course of the winter).

By contrast, the lower valleys in western Montana tend to avoid the deep snow that happens in the mountains. The mountains tend to draw away the moisture of big storms, leaving lighter snowfalls for the low elevation valleys. Generally, most lower valley locations in western Montana tend not to receive more than 50-70 inches of snow a year.

This changes, though, for high-elevation valleys and plateaus, like West Yellowstone and Cooke City. In these locations, substantially more snow can be expected."

[che7win] 26/8/2014 15:03

Aside from water,
September iodine production will be exciting, with full month contributions from IO6 (second only to IO2 in ability) and IO5.

I'm looking forward to a step change with contributions from those two.

[superg1] 26/8/2014 14:25

Bog

Personally I don't think there is a time limit for a decision, as if you go back over the years, then they can take just a few weeks or many months.

I haven't sought to clarify the timeline through the water website, but I'm not hanging my hat on a 90 day limit, it could take much longer imo or happen any day.

However the frack situation was around for most historical hearings, and as we know they have just introduced measures to speed things up.

Comfort wise it would be nice to get a decision either way, but in reality, if it was awarded next week, then we are not going to see a water depot until Q2/3 next year.

I recall Chris Fay at one presentation saying he sees no reason why it can't be built during the winter. Many that post here were present. Well I can, because the rights of way document states that pipelines can not be laid when the ground is wet. It was all to do with surface protection.

'Construction activities would cease if precipitation occurs and would not resume until the ground is sufficiently dry to eliminate surface damage by construction equipment.'

On that basis the completion of such a depot is reliant on completion in dry seasons.

Of course that refers to pipelines only, and a 'depot' could be built, but it would be useless without pipelines going to it. So there is no point battling through the Montana winter to build a depot, probably at higher costs, due of the weather.

On top of that the original guy LB, in the first presentation, said it would be built during winter. Maybe he did read the document.

[superg1] 26/8/2014 14:01

Bot or not, it's looking more healthy since you posted CF (not Chris Fay :-))on the bid and they weren't there earlier, so maybe they have the buyer.

[bogg1e] 26/8/2014 13:52

Cheers for the continued research SG and well done Mr Big for getting into the spirit of things. Good man.

Cezary, hope you had a good hols.

[bogg1e] 26/8/2014 13:41

This is really annoying, my two fave holdings Quadrise and Iofina both have important results/expectations for mid october. They will probably both go up at once without the ability to profit from one move it into the other etc. Schmooo.

[superg1] 26/8/2014 13:25

Water hearing

Just going on what Leggit posted re 90 days for a decision, I looked up what I could re generals timelines.

The trouble with water hearings they can be on entirely different uses, amounts, locations and so on, some can be approved and rejected then reinstated.
While they are all different the laws surrounding them remains the same

However the last one I found was 66 days from hearing to a decision but is nothing like the circs of IOF.

Leggit states 15th July for the hearing with the 90 days taking us to 13th October. 66 days takes us to just past mid September.

A bit like TA it could take longer, it could be less :-)

Either way, it's closer than it was yesterday.

[awolagain] 26/8/2014 13:23

I also see our bot is not active today....buyer finished maybe for a while?

[superg1] 26/8/2014 11:05

Interesting that this week started just like last week.

Early last week in the morning the bids disappeared and it drifted to 60 ish on the bid, and the bid side looked very lean, but a few hours later the bids appeared. It looked like an attempt at a tree shake.

The same happened this morning, virtually nothing on the bid, a drift down towards 60ish, and now the bids are back.

Who said they don't play games.

[engelo] 26/8/2014 10:37

Ref to perovskite solar cells and where iodine comes in:



edit: gadolinium you might like this one: mixture of lead iodide and methylammonium iodide used.

But OT brings in my favourite chemical buckminsterfullerine :-)

[superg1] 26/8/2014 10:12

The link re the recent SQM/Cosayach court case.

It's about SQM trying to overturn/block the award of environmental impact assessment permits.