I was just wondering, with the revelation of massive corruption in the fe business in China what reprecussions it will have on the smaller fe producers in Oz.
From what I can understand some of the smaller steel mills in China had to pay "good deed" money to secure their supply of ore. Now that this practise had been uncovered will it mean that the smaller mills can deal direct and buy their ore straight from the suppliers.
Apparently it is common knowledge that the smaller mills have to pay $1 a ton to some "middle men" to get their ore. It is estimated that these "middle men" have siphoned off 100 billion yuans. Now that this practise had been uncovered I wonder what the end result will be.
One possibility is with the demise of the "middle men" the smaller mills will be allowed to source their ore directly with the smaller fe producers since they are too small to deal with the likes of BHP & RIO.
Does this mean the smaller fe producers like MGX etc.... will now get their fair slice of the cake? In the past the smaller Chinese mills could be getting their ore from BHP & RIO through a middle man and pay a premium, they were not able to deal direct or have the purchasing power to deal with a supplier of their choice. Some sources have speculated that they have been paying up to a 50% premium.
This is my opinion gathered from bits and pieces of what I have read from the media. Dollar for your thoughts.