Iofina Share Discussion Threads

[superg1] 07/6/2014 10:37

Cosayach

The rumours I have heard over the last year or so re Cosayach included-:

Producing more than they are allowed to in recent times, and post 2011 33 well shut down of illegal wells they had dropped from 6000mt to 1800mt.


Just found this from some time back (2007)

"The implementation of the initiative considers the exploitation of nitrates and iodine extracted 3 mining operations of Cala-Cala, Negreiros and Soledad, a total of 320,000 tons and 6,000 tons of nitrates. annual iodine ", explained in the DIA.

Note that according to Resolution No. 0804/1994, the SERNAGEOMIN, Cosayach facilities, are authorized to produce 320,000 tonnes / year of Nitrates and 1,800 t / y of iodine, only to plant Cala Cala unspecified productions and Negreiros Soledad iodine which would justify the submission of the project to the System of Environmental Impact Assessment.


So by 2011 and the closed 33 wells whatever they were doing, seems to have been against what the second paragraph says and fits the rumour that they dropped to 1800mt.

The Negreiros area has never obtained an EIA approval so that should never be in operation in seems and forms part of the recent case. So imo Neg has now gone completely.

That leaves Cala Cala and the unknown factor re Soledad. Cala Cala also formed part of the recent case.

SQM achieved their goal by claiming Cosayach in the Pozo Almonte area were withdrawing water from aquifers where SQM have rights, hence the 'theft of water' case.

Clearly that case impacts Cala Cala, but the point left was does it affect Soledad.

Fortunately I found a route via the SEIA site to bring up map locations. Cala Cala is right next to the town of Pozo Almonte, Soledad is just 12 miles south of that.

In the SQM 2013 report it says (in relation to their Neuve Victoria mine)

'and use new water rights of up to 570.8 liters per second'

Their Neuve Victoria mine is in the Pozo Almonte area south of Soledad, Cala cala is a further 12 miles north, so Soledad is closer to SQM than Cala cala.


In the Soledad research it did state somewhere that Cosayach could not interfere with existing water rights of something like 574 litre per second, but Cos had some sort of water purchase going on of 80 to 100 litres P/S.

SQM have vast leases, so in short it would seem that the two places Cosayach could produce (Cala cala and Soledad) they were stealing SQM's water, having no water rights of their own. SQM seem to have tied up all the water rights in a lengthy environmental assessment.

Negreiros could also well be in the water rights zone as it's 20 miles north of the Cala cala site, but has no EIA permit anyway, Cosayach withdrew the application last year.

At best, it would seem, Cosayach are left with 100 litres per second buying in from somewhere, but as they had 38 illegal wells I do wonder if they bothered, as they were getting it for free stealing from SQM, so does that option still exist?

The more I look the bigger the potential impact on Cosaych seems to be.

With the new water laws to be proposed within weeks, it's going to get interesting.

[monty panesar] 07/6/2014 10:32

Been away but a cracking update. Looks like IOF are heading in the right direction.
Just scanned the posts. Did I read SQM's biggest mine is 6k tonnes per year and only has 7 years left. If so will make the decision to build a seawater pipeline to it a non starter.

[engelo] 07/6/2014 01:12

psycho: that'll be Cosayach's AGM :-)?

[phsycho] 06/6/2014 23:27

Well the story is going to be v interesting over the next few months.

Ty for your reply SG and I echo many other posters in my sincere thanks for your efforts on all fronts.

It certainly is clear Chile production will be affected, maybe severely,

I look forward to the AGM.

[superg1] 06/6/2014 21:48

Phsycho

The expansion was form under 2000mt post 33 wells shut down, up to a rumoured 3,750 mt.

As stated previously, they have 3 areas and had to apply for EIA permits post 33 well shut down.

Neg EIA application withdrawn Oct 2013.

Cala Cala, EIA approved 30th Aug 2013.

Soledad exact cirs not yet known.

Cala Cala is right next to Pozo Almonte where SQM have just won the water rights case, as SQM have their biggest mine in the Pozo Almonte area.

Neg they can't they can't produce at but may have been hence the imprisonment and environmental damage case.

Soledad court docs said they could only use the 100 litres per second that they looked like buying from a company, and instructions not to touch the 570 lite P/S water rights in the area.

Soledad is also in Pozo Almonte.

33 wells last time knocked off 4000 mt of production and clearly affected Neg and Cala Cala.

38 wells closed this time and they were on around 65% of previous production.

So the expansion was the attempt to get back to old levels but it seems they were doing it illegally by extracting water without rights, and in an area where no EIA permit was in place. Then on top of that you have SQM claiming damage to their water rights in the area.

As far as I can see, Cosayach have no water rights, hence the case of theft of water.

Hopefully it's material production loss

[phsycho] 06/6/2014 21:14

"which is expected to hamper capacity expansion this year."

expansion.. not production... is that a hopeful quote to the paper from Cosayach.. a crass comment by the journalist.. or are Cosayach still on current production levels..

[superg1] 06/6/2014 19:55

Finally the industry experts have caught up.

Industrial minerals

"Privately owned Cosayach, one of the biggest iodine producers in the world, has been found guilty of illegally extracting groundwater from Chile's Tarapaca province, one of the driest places in the world. The company has been ordered to close 38 wells, which is expected to hamper capacity expansion this year."


So it would seem it is affecting production. That said I have had my ear to the ground and no one yet knows the full extent of the potential disruption.

It won't hamper production quite simply Cosayach have no water, so they can't produce iodine in that region in the way they have since April last year.

At some point there should be some comment appearing from producers in Chile spelling it out.

[engelo] 06/6/2014 17:01

'Angel of the North' end of day markdown back again :-)

[freddievas] 06/6/2014 16:24

Do you mean Pinochet Graham?

[phsycho] 06/6/2014 14:18

One of SQM's executives is the brother of mining minister Hernán de Solminihac.

That probably is why SG.

[superg1] 06/6/2014 13:34

In the case of Cosayach I was told some time back they were struggling and needed cash. With the court case pending (assuming they have had production hit) then they would have been churning it out and under-cutting others to get cash flowing, knowing the gravy train was going to derail once the case came up.

Cosayach was said to be the cheap iodine problem..

Time will tell if SQM just solved that problem.

Good spot J4ck

Ponce married Pinera's daughter (since divorced). while Chile it should be called TOWIC, the only way is corruption, absolutely riddled with it.

One judge who stood against them in those years could never progress because of his stance. With the new gov he has been included as a judge for the Supreme court.

SQM got huge 'favours' in the Pinera era.

[crosseyed] 06/6/2014 13:24

I wonder for how many of those Chilean producers iodine is a major component of their revenues?
c

[diggulden] 06/6/2014 13:14

I did hear that a few Insti's cleared off over the last 12 months due to the constant miss on targets under Lantz & Co. Lance will be working hard to get Insti's back onboard I am sure, will be a busy week next week and I fancy some good news.

[1madmarky] 06/6/2014 12:32

On the subject of stock, it would make sense to wait until the price goes up. However if you are operating in Chile then by now you know you are going to need a lot of cash in the short term. So you could wait but if prices don't go up cos your main competitors are selling all you are doing is wasting time. They are getting on with it. Alternatively they are not making much per kilogram so perhaps they have no choice just stack it high and sell it cheap. Aimho

[che7win] 06/6/2014 12:26

That chart is looking strong, I wonder if there are many presentations next week?

[bocker01] 06/6/2014 11:58

THe iodine prices quoted could easily be 60-90 days in arrears allowing for the time lag following ordering, shipping and reporting.

[che7win] 06/6/2014 11:42

neddo,
yes if they worked in 'cartel mode', but one of them might be too desperate or near insolvency to be forced to dump iodine at any price.

[joestalin] 06/6/2014 11:42

If they are about to get fined, they might wish to run down their assets and get the money offshore ASAP.

[neddo] 06/6/2014 11:31

would be better hanging on to it, to create a shortage to increase the price?

[meb123] 06/6/2014 11:17

Re the gradual drift downwards of iodine prices- could it be that the Chilean miners are trying to dump their high levels of stock sharpish to get the money in as they realise replenishment at previous rates will be problematical given the problems facing them ?

[j4ckster] 06/6/2014 09:18

An update to SGs' post below.

It appears that the vote was passed by the House of Representatives on Wed to create the commision of inquiry into former President Pinera and the Chairman of SQM, Mr Ponce.




superg1 - 30 Apr 2014 - 10:00:22 - 20529 of 21775
Worth a read

SQMs recent declaration re the charges being faced by their bosses, the final paragraph covers the potential damage, which could be significant imo. May take time but it's a storm approaching.


We could be adversely affected by the negative outcome of pending proceedings against our Chairman of the Board and certain other named defendants
On September 10, 2013, the SVS issued a press release disclosing it had instituted certain administrative proceedings against Mr. Julio Ponce (in his capacity as chairman and ―controller214; of entities with direct or indirect share ownership interests in the Company (the ―Cascading Companies‖)) and other named
defendants, including the son of the Company's Chief Executive Officer, lleging violations of Chilean corporate and securities laws (the ―Cascading Companies Proceedings‖).

SQM has been informed that Mr. Ponce, who is Chairman of the Board of the Company, and related persons, beneficially own 29.92% of SQM's total shares. See Item 6.E. Share Ownership. On January 31, 2014, the SVS added a
number of financial institutions and asset managers, and certain of their controlling persons, executives or other principals, as named defendants to the Cascading Companies Proceedings. The SVS alleges the existence of a scheme, involving the named defendants, whereby, through a number of transactions occurring between 2009 and 2011, the Cascading Companies sold securities of various companies, including securities of the Company, at below-market prices to companies related to Mr. Ponce and to other named defendants, which companies, after a lapse of time, sold such securities, in most instances back to the Cascading Companies, at prices higher than those at which they were
purchased. The SVS alleges violation by the defendants of a number of corporate and securities laws in furtherance of the alleged scheme.

[gadolinium] 06/6/2014 08:49

Latest figures for May from the Zauba website for Indian imports show the iodine price for 99.5% grade at $38.29/kg. So, no sign of any average price increase as yet. Monthly prices ($/kg) for this year so far are as follows:

Jan (43.75), Feb (40.87), Mar (38.97), Apr (39.08) and May (38.29).

Obviously these prices may lag current prices somewhat since they presumably reflect earlier contract rates and the 30 day sea transit time from the ports of Antofagasta (Chile) to Nhava Sheva (India).

[superg1] 06/6/2014 07:36

Did you notice the short chart? a build in early May when some were rather vocal, then it looks like some were caught as over 500,000 had to close after the rises.

The Cos circs if material won't be welcome news for some. Chile water law proposals are getting some media comments.

This happened in the last few weeks too-:

"Two water reservoirs have dried up in Chile's northern region IV, which is undergoing its worst drought in over a century."

Everything I read in relation to the water reforms seems to indicate it will have a material impact on those miners that rely on fresh water.