Iofina Share Discussion Threads

[superg1] 01/6/2014 10:14

SQM

Until more is known about Cosayach, I suggest any thoughts of shorting SQM imo should be put on hold.

[superg1] 01/6/2014 09:51

General iodine circs

SQM look as if they have dropped at least 2,500 production.

Sirocco 500 mt.

That balances up the 3000mt the newbie Algorta claim to be doing.

Cos was rumoured to have gone as low as 1800mt but more recently 3,700mt.

Bullmine relatively new, 600 to 1000 suggested so will call it 1000 at least.

If Cosayach have been hit they could be back down to 1800mt, or could be completely wiped out.

Potentially giving cos 1800mt, the drop from last year on production is 4,900mt.

4000 added by Bullmine and Algorta over the last few years, 1900mt added recently by Cos making 5,900, meaning an over-supply situation v 2% demand rises (600mt) over the last year.

3% plus demand increases (1000mt) forecast this year.

New circs if Cosayach conclusions are right, mean the over-supply by 400mt will now become a 1500mt deficit, plus the demand rise meaning a 2,500 mt deficit.

If Cos are finished add another 1800mt to that.

If it's all wrong re Cosayach, then the 400mt over-supply becomes a 600mt deficit which would be nicely filled by a performing IOF.

If Cosayach are screwed, it seems the price of iodine is going to go up.

Sirocco have an 800mt inventory, which is about 11 weeks worth of what Cosayach were doing in total.

Ben Isaacson (sector guru scotia bank) said all but one Chile producer had reduced production. I suspect the one was Cosayach.

Interesting times head. Water law proposals due in weeks.

But for now without further info on Cosayach I'm betting the iodine market is going to get tight this year meaning price rises, possibly very tight.

By the way the US fisheries spend about $20 mill plus on the lamprey issue, and this year is an active year on treatment due to the lamprey life cycle. That should mean a few $mill for IOF chem div, revenue which was non-existent last year as explained in news releases.

[superg1] 01/6/2014 08:50

Cosayach :-)

(the usual long and boring post but probably very important to the iodine industry currently, so for those interested keep reading))

I know some city folk are interested in the Cosayach situation and potential impact on the iodine market.

The following is guesswork based on some research completed. It seems to strongly indicate that the current news of wells to be closed will have an impact on Cosayach. I found some new media comments from 2013 that help understand it all.

The basic history is that Cosayach had illegal wells back in 2011, around 20 were closed down by the authorities. Cosayach production was known to be hit hard and those in the iodine industry suggested they had gone to under 2000mt from over 6000mt.

The important point there is the authorities closed them down.

Some time last year I found details to demonstrate that Cosayach had gained access to new water and thus could increase production. They did so at pace, and when I asked some time ago it was suggested they had hit 3700mt, and were responsible for the cheaper iodine in the market, rapidly selling and under-cutting others to get cash.

Well now the reason for that now may well be perfectly clear.

I have gone on for months about Cosayach being listed in the Supreme courts but i could not find out why.

That recent case is the reason, and it's now obvious why it was listed.

It is a different case to the original local authority closures. This case is about SQM pursuing Cosayach for water extraction which was depleting water that SQM had rights to.

Here is the change in 2013 which opened the door for Cosayach to ramp up production.

target='window'>http://translate.google.co.uk/translate?hl=en&sl=es&u=

As "disastrous" environmental partner groups rated the judgment of the Supreme Court established that the holder of a mining concession may build wells to draw water from underground aquifers, located in the area of ​​leave without pay.

The resolution, which favored the Mining Law Society NX One of Peine, linked to businessman Francisco Javier Errazuriz, would remove the water resources indiscriminately, citing the alleged exploration of minerals that are underground.


Basically it seems in April 2013 there was a ruling that Cosayach could fill it's boots and extract water as demonstrated.

However it seems SQM have then stepped in, and started to seek a case against Cosayach as extraction of that water affected their water rights.

That would explain the supreme court listing that has been popping up for many months.

SQM have just won that case and the court order is the supervised closure of 38 wells. The original local authority action in 2011 was the seizure of pumping kit for 20 illegal wells.

So it would seem Cosayach have been banging out iodine as fast as they can to get as much cash as they can, knowing the court case was coming and that they were likely to lose. Making hay while the sun shines.

38 wells closed v the impact of 20 illegal wells previously tends to suggest Cosayach have been hugely impacted by that recent case, possibly finished them.

Based on the above info it seems highly likely that the recent findings are not linked to the old case, but is in fact a current case by SQM against Cosayach that they have just won, and they have forced the closure and reversed the situation from April 2013.

It is my opinion but when you read deeply enough, it looks like the recent court case is relevant to the amount Cosayach can produce now.

Why else would they order the supervision of the closure and sealing in of 38 wells.

SQM will know the impact of that.

The court case clearly was near conclusion early last week, and since then the IOF share price mysteriously took off.

I'm just wondering in light of the possible Cosayach situation and the general situation re Chile, water laws pending too, that anyone casting eyes on IOF, may well have started to move, and hence we have an aggressive buyer.


In short it looks like Cosayach are screwed.

[1madmarky] 01/6/2014 08:18

Remember the iodine can be recycled, IOF should get close to 1m kgs next year and any take up of a new battery type would be slow. Plus the take up of electric cars has also been slow. So slow take up in a slow moving market, l don't think supply will be a problem. Aimho

[bobsworth] 31/5/2014 23:19

The papers I have read do not mention the quantities needed. Looking at my notes on a completly diff battery system - the lithium-iodine battery system for the electric car, 1 kg per battery is noted which again does not look feasible with ref to limited supplies

[bogg1e] 31/5/2014 22:53

Dont they use about 1 kilo of iodine per battery atm?

[bobsworth] 31/5/2014 22:29

Bogg1e I see your point but if its to happen and that's a big if, it will not be to replace the non chargeable 15 billion alkaline batteries the world consumes every year but for a very limited range of rechargeable lithium ion batteries like the ones used on planes etc

[bogg1e] 31/5/2014 21:21

Bob cheers, but the problem is this, there are only 30,000 tonnes iodine produced every year and if supoerg is right about the Chilean miners then we are looking very soon at a cutback to perhaps 24,000 tonnes per year, most if not all of which will already have a long list of repeat customers ready to buy it. Now how many lithium batteries are going to be made? How much iodine is required per battery? I don't think battery manufacturers will want to use any element too scarce to guarantee mass manufacture.

[bobsworth] 31/5/2014 19:28

Some interesting research news for you!

A significant new battery development has recently been announced that involves the use of potassium iodide with a new conductor, Lithium borohydride, that could prevent lithium-ion battery fires.

Article 1
"Lithium borohydride could become the basis for future batteries
By Tim Hornyak | 22 May 14

Japanese researchers have developed a new type of lithium-ion conductor that could help prevent the kind of lithium-ion battery fires that grounded the Boeing 787 Dreamliner aircraft last year.
While easily rechargeable, lithium-ion batteries contain flammable organic solvents that present a risk of fire, as seen in a recall of Apple MacBook Pro replacement batteries
Read more:
hxxp://www.pcadvisor.co.uk/news/pc-components/3521094/new-conductor-could-prevent-lithium-ion-battery-fires/
....................................................................................................................................
Article 2
LiBH 4 For Safer Solid State Batteries
Asian Scientist Magazine-28 May 2014Share
Scientists have managed to stabilize high-pressure lithium ... Through doping a cubic lattice of potassium iodide (KI) with LiBH4, the team .,,, paving the way for the development of new solid state lithium batteries.
Read more:
hxxp://www.asianscientist.com/in-the-lab/libh4-safer-solid-state-batteries-2014/

[cyberbub] 31/5/2014 18:34

Yes seems prudent to review costs of everything in the current low iodine price environment. 2 years ago when the price was twice what it is now, there was probably less emphasis on cost control and more on getting the plants built. The good news is that if they can reduce both construction and operational costs now, this will all feed straight into the bottom line when the iodine price starts to recover to more sustainable levels!

[che7win] 31/5/2014 17:47

Crosseyed,
Enjoy your analysis, I think you were right on employee numbers, I believe they had crept up to around 100 this year (from ~40 last) as Dr Fay was building IOF into a large organisation, before being stripped back.

On the plant costs, they did look at switching sites, costs seem to have escalated, hence the RNS 27th March:

"This review, scheduled for completion in the autumn, will include considerations for improvements to construction methodology, reduction in total cost, improvement in time to complete, and optimal plant sizing."

[crosseyed] 31/5/2014 17:28

A few weeks back, I posted my thoughts on as derived from the Annual Reports 2011-2013 indicating a cost of $3.5 million per plant.

That was qualified by report summaries that some of those costs may have been expended elsewhere:

a) As mentioned, some costs were spent on IOChem in general improvements though they were not distinguished from overall Equipment & Machinery or the intermediate Construction in Progress.
b) RUGRAT in the excellent posts on Google investigations (starting at post 21194) suggested that at least two cleared sites with concrete pads already laid looked very like early stages of further IOsorb sites from last year that may have been postponed. If so, the capital expenditures for construction work and leases, would have already been sunk and presumably absorbed into capital expenditures.

Thus, there is a case for reducing the expected cost per plant. Perhaps $3 million per plant might be reasonable; still somewhat more than was thought earlier (at $2-2.5 million).

c

[alfie4048] 31/5/2014 16:40

o/t

Boggle,GVC is my largest holding now, it's just an incredible story, just keep compounding those quarterly dividends.

[monts12] 31/5/2014 16:36

What about the shale prospects? Curiously there was no mention of them in the latest Annual Report. An injection of funds from sale of the rights or even a farm out to an oily would be very welcome to accelerate iodine production and boost rate of growth.
All conjecture at this point.

[writz] 31/5/2014 16:14

Bogg1e, thanks for the clarification. I had a specific thing in mind, but it may be there are other ways to the same goal.

[freshvoicem] 31/5/2014 15:06

ISE



?




?

[cyberbub] 31/5/2014 14:29

Boggle, your post about farming out, we already have a patent pending in Japan, so the route to exploitation in that market is obvious - traditional royalties!But perhaps there might be a Japanese producer thinking of 'doing a Victor Kiam' instead?NAI

[bogg1e] 31/5/2014 13:00

Writz, the buy/sell tags are metadata. All the related info is processed into a massive excel spreadsheet, but it also has charts etc, if you wish to see moving averages of various types vs volume, momentum, strength etc such details are in the tools or can be calculated from the data available, once you've used the filters to focus on the data and the stocks which are of interest. Some people dont get on with it. Others swear by it. I found it indispensable for stock selection and investing, for trading perhaps other packages are better. Its good for number crunching though and of course nothing beats researching a company properly. One of the things i like about it is for finding shares that are due to break out. Ive put a t20 down on GVC yesterday, which Festario tipped a while back. Vectorvest data confirms it is undervalued, rising in price and breaking into new highs with a buy recommendation, so as a tool, it is quite versatile in how you can use it. Cheers.

[superg1] 31/5/2014 12:59

Just trying to nail this down a bit more by looking at the lengthy SQM 20-F forms.

There is some interesting stuff in the older documents.

EG The El Toco mine closing at the end of 2013 is not a new thing. It has closed down before. The reason it was opened again was the high iodine prices.

In other words it proves El Toco is not a viable mine at the these prices and higher (going on the closing time).

I found this comment

"Our total iodine production in 2012 was approximately 10,900 metric tons: approximately 6,000 metric tons from Nueva Victoria and Iris, 3,200 metric tons from Pedro de Valdivia, and 1,700 metric tons from María Elena."

add on this bit

"we operated three mines in this region: Pedro de Valdivia, El Toco (mining site of Maria Elena production facilities) and Nueva Victoria."

then this

"including the Iris facility as part of the Nueva Victoria facility"

plus

"Production of iodine at the Iris plant was stopped during October 2013."

plus

"Operations at the El Toco and Pampa Blanca mines were temporarily suspended in November 2013 and March and 2010 respectively"


In other words El Toco is Elena Maria where 1700mt was being produced in 2012, now closed.

The iris plant showing as doing 1400mt way back with a 2,200mt capacity is now closed.


Neuve Victoria does not produce nitrates so all opex is against iodine, and they have closed the iris plant at that location ??.

Taking the 1400mt plant production as it was when they bought it for $100m and the el toco 1700mt. There is the 3000mt guesstimate of SQM reduced production, possibly proved with some figures.


So the "Ums and ers" during difficult questions in the conference call are covered in their 300 page plus reports.

Ben (scotiabank)

They won't increase production to drive prices down and "clean up the market a little" because they have high cost mines that are not viable.

That's why they are giving custom away it's loss making it seems at these prices.

Neuve Victoria accounts for a large portion of their iodine production (6000mt). It relies on 570 litres per second water rights.

Is the SQM BS unravelling.

[writz] 31/5/2014 12:32

... but missed the spreadsheet bit. Will go back and look again. Thanks.

[writz] 31/5/2014 12:31

Bogg1e - thanks. It looks to me as if VV do all the thinking for you and come up with buy and sell signals, so it's not quite on target re volumes for what I'm looking for. I guess the mechanics would be a search changes in EOD volume EMA, which would be fairly complex.

[superg1] 31/5/2014 12:18

An old piece of info re that now closed SQM Iris plant.

In SQM's financial report they mention the closure of that in late 2013

16 January 2006
Chilean lithium, nitrates, and industrial chemicals producer Sociedad Quimica y Minera de Chile SA (SQM) is in discussions to buy the Iris iodine plant from Netherlands-based Royal DSM NV.

DSM Minera's 2,200 tpa capacity plant near Iquique in Chile's Region.

They also closed the El Toco mine. So it would seem the figures suggesting they have lost 2000mt to 3000mt of production is about right.


Back in 2006 the iodine price was $22.80. It looks like SQM were prepared to pay $100m for a 1400mt plant back then.

Chilean industrial minerals producer SQM (NYSE: SQM) is in talks to buy Dutch company DSM's Iris iodine plant in the South American country, Santiago business paper Diario Financiero reported.

The plant, considered to have a market value of US$100mn, is 130km southeast of Iquique and produces 1,400t/y of iodine, although it is capable of expanding to rates of 2,000t/y, according to the newspaper.

[bogg1e] 31/5/2014 12:15

WRITZ, you could try vectorvest. It tracks the entire market and updates daily. As its in a spreadsheet format you can filter on trading volume amongst many other data types.

[superg1] 31/5/2014 12:07

Roger

No they went onto RB energy if you have a look. Due tot their lithium interest I do see RB energy as a possible growth stock over the next year or so.

There are far more around than Lundin. They are not so obvious as they have fingers in many pies, but most appear in Roskill reports.

Chile is seeing a few turning away due tot heir rocketing costs.

At some point due to the nature of the steady growth in the iodine market, and scarce resources, IOF delivering as a material producer should stand out like a sore thumb.

There was no real interest in iodine until about 3 years back.