Good post on Stockhouse by lou64

http://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=29663259&l=0&r=0&s=FNC&t=LIST

Why Baosteel Interested in Chrome

lou64

5/3/2011 11:30:36 AM | | 83 reads | Post #29663259

Low-cost Non-nickel Stainless Steel Wins Favor of Domestic Customers

4/19/11

A commitment made two years ago has become reality today. This year, a new ferritic stainless steel product which Baosteel specifically tailors for domestic solar energy companies is successfully applied in the world's second largest solar energyenergy water heater manufacturer in Shandong and replaces traditional 304 stainless steel product. This not only solves the company's long term raw material cost trouble due to nickel price fluctuation, but also effectively improves the chloride ion resistance which is key to solar energy water heater.

In recent years, with the increasing state support to new energy industry, China's solar energy industry meets with new development opportunities, domestic market demand for solar energy water heaters is in rapid growth. Relevant data show that China's current annual production of solar energy water heaters have been over ten million units, with an annual growth rate of about 10%. Domestic solar energy industry is growing fast. However, there is a long-term trouble in the growing solar energy industry. Solar energy water heater requires high corrosion resistant liner, generally made with 304 stainless steel containing nickel. In recent years, due to sharp fluctuation of the international nickel prices, the price of 304 stainless steel is also in fluctuation. Stainless steel raw material cost has become the Growing Pain for domestic solar energy industry.

In 2009, in solar energy industry customer forum held in Baoxin, Ningbo, many customers expressed such a problem. The customer's problem is Baosteel's problem! Baosteel promised to solar energy industry customers to solve this problem. In september that year, Baosteel responded quickly; it set up production, sales&research team composed of stainless steel department, Ningbo Baoxin, Research Institute's stainless steel technology center and relevant departments in Baosteel International to develop new product which can replace the traditional 304 stainless steel.

That year, the production, sales& research team developed a low carbon, nitrogen ferritic stainless steel product with independent property and declared a national patent. Compared with traditional 304 products, this stainless steel material does not contain nickel, and strict sea-water test shows that its chloride ion corrosion resistance is much higher than 304 product. However, due to low carbon and nitrogen content, there is difficulty in smelting and rolling. With the help of the production, sales& research team, Baosteel overcame smelting and rolling technology bottlenecks, and optimized forming and welding performance. Last year, a customer in Shandong made first trial application of this new product.

According to customer feedback, this product completely replaced traditional 304 steel and manufacturing cost was also reduced. This year, the customer's liner adopts this new Baosteel product material and it forms a good demonstration effect within the industry. Currently, several well-known domestic solar energy manufacturers will, after rigorous trial and testing, adopt this product in large volume from the second quarter on.

http://www.baosteel.com/group_e/01news/ShowArticle.asp?ArticleID=2291

In case some didn’t connect the dots…

Stainless steel

http://en.wikipedia.org/wiki/Stainless_steel

Inmetallurgy,stainless steel, also known asinox steelorinoxfrom French "inoxydable", is defined as asteelalloywith a minimum of 10.5[1]or 11%chromiumcontent by mass.[2]Stainless steel does not stain, corrode, or rust as easily as ordinary steel, but it is not stain-proof.[3]It is also calledcorrosion-resistant steelorCRESwhen the alloy type and grade are not detailed, particularly in the aviation industry. There are different grades and surface finishes of stainless steel to suit the environment the alloy must endure. Stainless steel is used where both the properties of steel and resistance to corrosion are required.

Stainless steel differs from carbon steel by the amount of chromium present. Unprotected carbon steel rusts readily when exposed to air and moisture. This iron oxide film (the rust) is active and accelerates corrosion by forming more iron oxide. Stainless steels contain sufficient chromium to form a passive film of chromium oxide, which prevents further surface corrosion and blocks corrosion from spreading into the metal's internal structure

This places Probe and Fancamp in Jeopardy

Though still possible that Baosteel wants Noront for nickel, it’s more likely for Chromite. The other ore is a bonus. This places Probe in their targets.Where FNC’s 200meters of 43.5% Cr203 and chromite to iron ratio of 2.09 raised Cliffs eyebrow (because everyone says they have more than enough), now with Baosteel’s presence, I’m sure there is more interest. Not only are we a proximity play (as always) but were also an extension of the Cliffs own jr partner’s properties, which I doubt they want in another major’s possession. Or can you imagine Cliffs telling Baosteel, you go ahead and take Probe, Noront, and Fancamp’s property, in fact go ahead and own a percentage of KWG and surround our land with your land, we’ve got more then we need here with FWR and SPQ acquired land.

There’s a lot more I need to learn, and a lot of the bigger picture I don’t understand. However, their 2010 third quarter report creates a gut reaction: If ever we were in jeopardy of a large company seeing a jr. at .45c with 97mil shares outstanding and possibly wanting to own it, now is the time.The sooner we get Lac Lamalee and Magpie IPO’d and shares distributed to investors, the better.If we have gold at Beauce, then IPO that one as well.

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Exerpt from Baosteel 3rd quarter report

http://tv.baosteel.com/ir/pdf/report/3Q2010en.pdf

“In the first three quarters of 2010, the Company seized the opportunity of market recovery to expand its scale of production and sales. As a result, the Companyregistered a total profit of RMB 13.81 billion, an amortization of fixed assets RMB 9.96 billion, and EBITDA RMB 24.95 billion. Due to the enlarged production and sales, as well as the increase in production cost and sales prices, the monthly revenue and cost rose by 33.9% and 28.7% respectively as compared to 2009, which resulted in a rise of RMB 6.65 billion in inventory cost, an increase of 22.6% compared with that at the beginning of the year 2010. In the reporting period, the net cash inflow from operating activities of the Company was RMB 14.07 billion”

-StockGreed