Investigative Investing: Is HCMI better than traditional forged media?
Today I write to share with my fellow AIA investors a report that I came across while researching AIA's advent into the mining space. It contains a purchasing strategy study conducted by a college student for KGHM. KGHM is one of the largest producer of copper and silver in the world.
**Link to the report:**
<a class="attachment" href="/uploads/default/original/2X/5/54003f0015c528b31ef3c2d9d7849af6ce466d5e.pdf">Developing a purchasing strategy for high chromium grinding media.pdf</a> (1.1 MB)
This study was conducted in 2012 and 2013 and on page 35 I have highlighted where the study mentions VEGA, India a subsidiary of AIA. The report does not contain the outcome of the sampling study so we do not know whether KGHM went ahead to source HCMI from AIA or not. Even in AIA's annual reports I could not find KGHM mentioned. But this report offers a great insight into what miners look for in a supplier for high chrome grinding media. You can read it on page 15 - 17 of the report.
I am researching this topic because I like to attack my investment thesis brutally and I need to understand that if HCMI is such a big opportunity then why are bigwigs like Molycop (global leader in grinding media) under the Arrium group who manufacture forged media right now which HCMI will replace are not doing everything they can to thwart AIA's plan.
Based on a preliminary search I have found Molycop to mention High chrome in 2011, 2012 and 2014 analyst presentations. All three times they say that, "high chrome grinding media has limited overlap with Molycop as their natural fields of application are different: cement industry for Magotteaux’s high-chrome balls, base metal ore grinding for Moly-Cop’s forged balls."
They also say, "Because of their much higher relative price, High Chrome Cast Balls have a narrow field of application in cement grinding and ultrafine wet regrinding operations where corrosion may be the predominant wear mechanism." (As you will read in a study down below HCMI has better corrosion resistant properties than forged media.)
I also found in the same presentation that HCMI grinding balls are generally of a smaller size (grouped as small & medium) when compared to forged and cast balls which are medium to large size. My understanding from this is that HCMI is used in a regrinding process for finer grinding applications after the forged media grinding.
**Links to the presentations:**
https://www.arrium.com/~/media/Arrium%20Mining%20and%20Materials/Files/Presentations/FYEnd2012/Mining%20Consumables%20Analyst%20Presentation%2021%20March%202012%20ASX%20release.pdf
http://www.onesteel.com/images/db_images/news/Mining%20Consumables%20South%20America%20Analyst%20Site%20Tour%20Presentation%20-%207%20June%202011.PDF
https://www.arrium.com/~/media/Arrium%20Mining%20and%20Materials/Files/ASX%20Announcements/FY2015/Mining%20Consumables%20Presentation%20and%20Site%20Tour%2024%20Nov%202014.pdf
Further researching the advantages of HCMI over forged media I came across this report from **International Mining.**
<a class="attachment" href="/uploads/default/original/2X/8/8a5fde6d5f5a87c98762fd2c72d9b6c3f06834c6.pdf">International Mining Report.pdf</a> (1.4 MB)
**You can also read it online (not highlighted) version here:**
http://www.min-eng.com/comminution/316.pdf
The report is a very interesting read that reassures you about what AIA's management have been saying that HCMI is a superior product to forged media. (Never take management's word at face value, do your own research) I have highlighted the important portions of the report if you want to do a quick read but I would suggest to read the report thoroughly from page 3 to 6.
On page 5, first column last paragraph they mention a research study conducted by Magotteaux employees. I must say the study is very technical and anyone without a scientific frame of mind or an engineering background might not understand it. I have highlighted a few sentences that are relevant to your AIA investment.
**You can find the study here:**
<a class="attachment" href="/uploads/default/original/2X/0/05f5acb10447501f9777e621bec04448c14c4d13.pdf">The-Application-of-High-Chrome-Grinding-Media-at-MMG-Century-Mine-for-Improved-Grinding-Media-Consumption-and-Metallurgy-Performance.pdf</a> (620.9 KB)
**You can also read it online (not highlighted) from Magotteaux's published papers website:**
http://www.magotteaux.com/wp-content/uploads/2013/07/The-Application-of-High-Chrome-Grinding-Media-at-MMG-Century-Mine-for-Improved-Grinding-Media-Consumption-and-Metallurgy-Performance.pdf
Overall, after conducting this research I am more at ease with my investment in AIA. Hope this piece provides the same benefits for you.
PS: My next research topic is what new technologies could displace HCMI in the grinding process.
Have a great weekend.
**Link to the report:**
<a class="attachment" href="/uploads/default/original/2X/5/54003f0015c528b31ef3c2d9d7849af6ce466d5e.pdf">Developing a purchasing strategy for high chromium grinding media.pdf</a> (1.1 MB)
This study was conducted in 2012 and 2013 and on page 35 I have highlighted where the study mentions VEGA, India a subsidiary of AIA. The report does not contain the outcome of the sampling study so we do not know whether KGHM went ahead to source HCMI from AIA or not. Even in AIA's annual reports I could not find KGHM mentioned. But this report offers a great insight into what miners look for in a supplier for high chrome grinding media. You can read it on page 15 - 17 of the report.
I am researching this topic because I like to attack my investment thesis brutally and I need to understand that if HCMI is such a big opportunity then why are bigwigs like Molycop (global leader in grinding media) under the Arrium group who manufacture forged media right now which HCMI will replace are not doing everything they can to thwart AIA's plan.
Based on a preliminary search I have found Molycop to mention High chrome in 2011, 2012 and 2014 analyst presentations. All three times they say that, "high chrome grinding media has limited overlap with Molycop as their natural fields of application are different: cement industry for Magotteaux’s high-chrome balls, base metal ore grinding for Moly-Cop’s forged balls."
They also say, "Because of their much higher relative price, High Chrome Cast Balls have a narrow field of application in cement grinding and ultrafine wet regrinding operations where corrosion may be the predominant wear mechanism." (As you will read in a study down below HCMI has better corrosion resistant properties than forged media.)
I also found in the same presentation that HCMI grinding balls are generally of a smaller size (grouped as small & medium) when compared to forged and cast balls which are medium to large size. My understanding from this is that HCMI is used in a regrinding process for finer grinding applications after the forged media grinding.
**Links to the presentations:**
https://www.arrium.com/~/media/Arrium%20Mining%20and%20Materials/Files/Presentations/FYEnd2012/Mining%20Consumables%20Analyst%20Presentation%2021%20March%202012%20ASX%20release.pdf
http://www.onesteel.com/images/db_images/news/Mining%20Consumables%20South%20America%20Analyst%20Site%20Tour%20Presentation%20-%207%20June%202011.PDF
https://www.arrium.com/~/media/Arrium%20Mining%20and%20Materials/Files/ASX%20Announcements/FY2015/Mining%20Consumables%20Presentation%20and%20Site%20Tour%2024%20Nov%202014.pdf
Further researching the advantages of HCMI over forged media I came across this report from **International Mining.**
<a class="attachment" href="/uploads/default/original/2X/8/8a5fde6d5f5a87c98762fd2c72d9b6c3f06834c6.pdf">International Mining Report.pdf</a> (1.4 MB)
**You can also read it online (not highlighted) version here:**
http://www.min-eng.com/comminution/316.pdf
The report is a very interesting read that reassures you about what AIA's management have been saying that HCMI is a superior product to forged media. (Never take management's word at face value, do your own research) I have highlighted the important portions of the report if you want to do a quick read but I would suggest to read the report thoroughly from page 3 to 6.
On page 5, first column last paragraph they mention a research study conducted by Magotteaux employees. I must say the study is very technical and anyone without a scientific frame of mind or an engineering background might not understand it. I have highlighted a few sentences that are relevant to your AIA investment.
**You can find the study here:**
<a class="attachment" href="/uploads/default/original/2X/0/05f5acb10447501f9777e621bec04448c14c4d13.pdf">The-Application-of-High-Chrome-Grinding-Media-at-MMG-Century-Mine-for-Improved-Grinding-Media-Consumption-and-Metallurgy-Performance.pdf</a> (620.9 KB)
**You can also read it online (not highlighted) from Magotteaux's published papers website:**
http://www.magotteaux.com/wp-content/uploads/2013/07/The-Application-of-High-Chrome-Grinding-Media-at-MMG-Century-Mine-for-Improved-Grinding-Media-Consumption-and-Metallurgy-Performance.pdf
Overall, after conducting this research I am more at ease with my investment in AIA. Hope this piece provides the same benefits for you.
PS: My next research topic is what new technologies could displace HCMI in the grinding process.
Have a great weekend.
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