Iofina Share Discussion Threads

[bocker01] 20/11/2014 08:47

Super/Che, I think that's dead right SQM will be after those mining assets and that will take 6-12 months. By the time they get round to examining whether to acquire IOF, the price of iodine will have rocketed as will our production. The Japs will be looking at significantly increasing iodine prices and be very desperate not to face an aggressive Chilean monopoly. It all adds up to a very good take out price for us at our time when we are in a much stronger position.

[che7win] 20/11/2014 08:32

Solid buys, two batches, all timed within seconds of each other.
Seems we have a keen buyer this morning.

What a bargain we were these past two weeks.

[woodpeckers] 20/11/2014 08:30

Based on what you have uncovered re SQM's strategy, what do you think their strategy is to 'cope' with Iofina's 'strategy'?

[che7win] 20/11/2014 08:19

Superg,
That's very true, SQM surely will be interested in taking over both companies imo, take your point on the nitrates business but if they own the iodine assets then they will control much more of the market.
Ultimately that allows them more control on long term iodine prices, makes good business sense.

They probably will take over IOF in the end, but they might find the Japs equally interested!

[superg1] 20/11/2014 08:11

Che

Yes if you go back to SQM comments some time back it now seems very apparent what their strategy is.

The one thing that didn't make sense was a small sector of the market affecting the price. RB and Cosayach can't supply the entire market.

The only way for SQM to get rid of the small players was to take the price down.

SQM were on the verge of a T/O of the Cosayach assets when the State street bank case appeared many years ago. It's now apparent it wasn't finalised and has taken all these years to get to a result.

SQM knew this was coming, that's $190 mill to pay to 2 banks and the IRS case has appeared at the same time with offices raided. I suspect the raids will identify continued tax fraud through 2013 and to date.

For SQM they will be most happy that the iodine price is low, as it considerably lowers the value of any assets Cosayach or RB have.

On top of that SQM know Bullmine, ACF Minera and Algorta have higher costs due to seawater use.

Right now I'm betting both RB and Cosayach will fold. I suspect SQM will seek to gain the Cosayach assets. More for the nitrates and potash as SQM lost quite a lot of leases to them in a court case.

[che7win] 20/11/2014 08:00

Superg,
I agree, SQM turning the screw by stating they are going to recapture their 30% market share, RB and Cosayach are up against it, the last thing they need is SQM playing bully but they intend to wipe out competition.

IOF have known this strategy, I was told from IOF that they were aware a few quarters ago what was happening in the market, hence they have focussed on cutting costs and increasing efficiencies before rolling out their growth strategy.

All the right moves have taken place to leave IOF in a healthy state.
Our production feeding into the derivatives business leaves us building up cash, I think they should expand derivatives as part of their plan or take over some U.S. derivatives businesses.

Water news a couple of weeks away, so things are hotting up.

[superg1] 20/11/2014 07:35

There have been a a regular stream of new uses for iodine but this one caught my eye.

Iodine deficiency is a big problem but also large doses can be damaging. However someone has found a way to convert it for large dosage which includes cancer treatment. It's not down the road stuff as the FDA have just approved it's use.



EDIT

Having re-read it, it seems like a big medical breakthrough for a range of health problems.

Perhaps they should try it for Ebola. Not thinking of the business, it would be great to see that stopped.

[arlington chetwynd talbot] 19/11/2014 22:57

Is it boring to talk about the weather?

[cyberbub] 19/11/2014 22:34

Demand might be growing only moderately, but supply is clearly set to reduce substantially... and our production costs will be virtually the lowest worldwide...

[woodpeckers] 19/11/2014 21:53

Meb, RB says "During 2012 to 2017, world demand for iodine is forecast to rise by an average of around 3.5%py and reach 36,300t."

[bogg1e] 19/11/2014 21:41

I have the growth rate at about 3% or 1000 tonnes per year.

[meb123] 19/11/2014 21:27

Per FC global demand 30K mt increasing by 1K pa . Thats about 3% growth rate . I thought it was a bit higher . Can anyone confirm this ?

[rogerbridge] 19/11/2014 21:26

Yes crosseyed, I agree, chem division is added value but I was thinking more about the future.

[woodpeckers] 19/11/2014 21:24

They may only be producing enough iodine to supply IOC at the moment crosseyed, but think of the number of mobiles they could quickly put in to action using money from a water JV/sale.... :-)

[crosseyed] 19/11/2014 21:19

I doubt that IOF have any spare capacity beyond supplying their (very profitable though largely insured against iodine's market price) derivatives production. Indeed, cost and price metrics would suggest that they are best to expand IO Chem to use all the iodine they can produce in the short-term, though building up customers for raw iodine might be a strategic option.

c

[woodpeckers] 19/11/2014 21:11

OMG, one day...!!!!

[che7win] 19/11/2014 20:35

O/T

For a crazy movement on AIM, take a look at FITB.

Up from 0.4p to 26p in last few weeks, crazy stuff, whoever bought earlier today at the height is down 50%.

Mad.

[rogerbridge] 19/11/2014 20:29

The trick is to produce the optimum amount of iodine at the lowest possible cost for resale at the highest margin we can make, without the price going up too much to make our competitors operations profitable. At the same time supplying all the needs of the chemical division.
I believe IOF can balance our output and drive the competition into the ground.

[woodpeckers] 19/11/2014 19:52

Starting to look less like a question of should they go it alone or JV on water and more like should they JV or sell and pocket the cash to achieve the ambition they have kept banging on about "becoming the global leader in iodine and iodine
derivatives".

All the pieces appear to be coming together at the most opportune time.

[the fat controller] 19/11/2014 18:54

Superg,
So Cosayach are having their capacity reduced by 3,000T.
What are RB Mining and SQM reducing capacity by?
The world demand is 30,000T rising by 1,000T pa.

It looks like a perfect storm gathering, once the inventories are exhausted. It also begs the question as to whether IOF should be committing to increasing their production capacity ASAP to fill this void.

And a nice cash injection from water, JV or sale, would allow them to do this. N'est pas?

TFC

[bocker01] 19/11/2014 18:44

Che/Super, SQM want prices up. Cosayach sound finished. If SQM buy them, it'll be to take capacity out of the market. If no one buys them, same result. What ever way you cut it there's gonna be a lot less capacity around next year, Bullmine, RB all dead, Japs at capacity with reducing resources. Hold on tight and wear your safety belts...... Next year's coming up fast! And the iodine price is going to get a rocket under it sometime soon.

[superg1] 19/11/2014 17:12

More on Cosayach

I couldn't work out where State Street bank came from with that recent $120 mill claim.

It is all perfectly clear now as it's the very same case that would have finished Cosayach in 2001.

Here is the 2001 comment

According to the reports, Boston-based State Street Bank and Trust is suing Inverraz in New York courts for US$100mn, and funds raised from the Cosayach sale would be used to settle the case, which was filed on April 16.
Errazuriz reportedly said he would pay the banks, represented by State Street, US$75mn and resettle the balance in an out-of-court settlement.



This link spells out the case against Cosayach

[superg1] 19/11/2014 16:15

AOTN

SQM have been in a 15 year battle with Cosayach. Way back Cosayach nearly went belly up on under $100 mill to pay, SQM were on the verge of a take over at the time.

In the last few months they have been prosecuted for forced labour (workers from Paraguay).

The German bank that has sued them and for non payment ($70 million) and it's been awarded.

Now we see another bank has won a case for $120 mill in the last week.

The IRS are after then for the false claims about $82 mill of losses, Fines can be up to 4 times the amount of the fraud.

Cosayach were prosecuted in 2011 for illegal water extraction and their production was decimated. They built back up by doing the same thing and got prosecuted again in May this year with well closures.

Way back this is what happened and nearly ended up as an SQM T/O

Chilean industrial minerals producer SQM (NYSE: SQM) is going ahead with the purchase of rival Cosayach despite the latter's financial and legal problems, SQM CEO Patricio Contesse told a conference call Friday (May 11).

SQM agreed in principle earlier this year to pay US$140mn for Cosayach, which produces iodine and plans to start producing nitrates, subject to due diligence.

Chilean media reported over the weekend that Cosayach owner, entrepreneur-politician Francisco Javier Errazuriz, is negotiating with US creditor banks to settle a legal dispute concerning debts of US$50mn-65mn incurred by Errazuriz's investment holding Inverraz between 1994 and 1996.


As we can see the situation looks a lot more serious this time.