Commodities and Industrialisation

I will give you this eg of Kumba Iron ore and ArcelorMittal South Africa (Arcelor has these agreements globally).

With the Kumba one, the iron ore assets were effectively written-off to zero and spun out…

…what the steel operations held on to was the supply of this production to support steel (& expansion) at a cost+3% agreement.

If I was a data center, power player or whatever; I would be making it my priority to unlock projects whereby I have equity in new copper projects – you can then slice that production entitlement various ways eg cost+, offtake nomination, etc!

A fundamental shift in thinking required – just some real world egs

1. DFI – equity side super excited and CIO already going “yes, we are going to use our platform to bring in other DFIS” – Head of another division has never done mining or Africa – vetoes it – AFRICA IS TOO DIFFICULT / WE DONT HAVE ENOUGH RESOURCES

2. OEM – strategy on board and understand why it makes sense but procurement vetoes it because they need the metal for this order book

3. Downstream player – Group CEO pushing for it but Precious metals CEO goes “we are specialists in these precious metals, for them you dont need any additional supplies…so I dont see the value you guys would bring”

FUNDAMENTAL SHIFT IN THINKING…can we get there before the Chinese gobble up all tenements on the Copper side? The Ethiopia and Malawi turnkey agreements tell me that they are ready to move when it comes to pre-MRE Copper projects; you think the issues with Rare Earths is huge, this will be magnitudes of that!

I previously shared how we would value the cost+ agreement – separate from equity: