Astra Resources outlines business model targeting continued global expansion

Diversified mining company Astra Resources PLC (Code: 9AR), which is the UK parent company of Astra Mining, has outlined to the market the company's business model - which is aimed at developing the company into a major participant in the global resources market.

The primary focus of Astra’s business model centres on its revolutionary T-Steel technology, an area supported by worldwide activities in mining and related opportunities.


Overcoming the traditional business model

Astra CEO Dr Jaydeep Biswas says the company’s low-risk philosophy, backed by its vastly diversified project base, sets Astra apart from most resource companies currently in operation.

“Many companies focus on one particular area, such as the exploration, development, mining or export of one raw material, leaving them at the behest of buyers and market volatility,” Dr Biswas says.

“To compound this, companies at the exploration stage with a long pathway to revenue require substantial time and investment into geology, licensing and logistics infrastructure.

“The lack of financial resources available means this is not always achievable, resulting in companies attempting to sell these underutilised tenements to larger players.”


Strategic rationale to its low risk philosophy

Dr Biswas says the company’s mid-to-long term strategy to diversify its portfolio and ensure the company is financially robust means they have strategically identified a number of high value projects.

These include the production-ready mining of steel-related raw materials, exporting of high grade iron ore, hedging where possible commodity pricing risks with investments in precious metals mining, and investment into carbon-efficient technologies.

The development of strategic ancillary businesses in the mining and steel industries as well the company’s core focus, the globalisation of the commercially proven T-Steel technology, also play an important role in Astra’s diversification strategy.

Together with the future acquisition of a coal conversion IP, this portfolio of proven, game-changing technologies and assets in the steel and energy value chains in diverse locations, sets Astra apart from many other resource players.


High value project map

Dr Biswas says that by implementing Astra’s T-Steel technology, old and underperforming steel mills with low profitability can begin to produce high margin premium grade steels without major capital expenditure. 

“Our dual strategy is to acquire and upgrade old plants for T-Steel production, and to license the technology worldwide,” Dr Biswas says.

“To capitalise on our plan, Astra is securing the supply chain of raw materials related to the production of steel.

“This enables Astra to create its own internal market, insulating us against fluctuating commodity prices. In effect, we have reduced our risk of business by hedging our business operations."

In order to keep initial set-up costs low and maintain Astra’s low-risk philosophy, all mining projects considered by the company must be logistically close to market, require minimal infrastructure infusion, are licensed or within 12 months of operation, and are in known resource areas where open-cut operations can take place.

Astra is actively seeking an appropriately priced coking coal mine in Australia, a major ingredient in steel making.

To this end Astra intends to develop key relationships with rural and indigenous stakeholders to ensure any such acquisition has local support, and is consistent with the company’s corporate social responsibility program to identify employment and training opportunities.

Astra further insulates itself against the risk of fluctuating commodity prices by actively seeking viable gold, silver and copper mining assets for acquisition.

A gold mine has been identified in the Ratanakiri Province in north east Cambodia, with geological reports on the site suggesting the area has the potential to host a world class Intrusion Related Gold System that may be developed into a significant open-cut, low-cost gold mine in line with Astra's low-risk selection criteria.

With similar systems overseas typically hosting between one and three million ounces of gold,  opportunities such as these will play a pivotal role in hedging the commodity risk of the fluctuating US dollar value.


Business diversification worldwide to reduce risk

Astra’s Managing Director Silvana De Cianni says the company is well aware of the risks of focusing all their energies in one area.

“The growing number of participants in the resources industry combined with the recent financial crises in the US and Europe have led to a decline in profit margins and a stagnation of growth prospects within certain individual sectors,” Ms De Cianni says.

“Astra recognises the advantages of diversifying its mining operations and other associated businesses so we can cross-sell complementary products to improve our business risk profile and lower the company’s risk of volatility.

“With mining being cyclical in nature, the scope of Astra’s business activities allows the company to endure any individual resources downturn.”

Astra is seeking a project base that is diverse in both product and location with projects spanning from Australia and Hungary to Nigeria, Southeast Asia and India. 

This includes developing 5,000 hectares of land in Rockhampton, Australia, to service the growing needs of the mining industry, the production of T-type steels in Hungary, thermal coal mining in Nigeria, gold excavation in Cambodia, and iron ore mining and exportation in Orissa, India, as well as other southeast Asian locations within close proximity to China. 

By working in partnership with developing countries, regardless of location, Astra is able to maintain its long term diversification plan.


Green Technologies to Future-Proof the Business Model

Dr Biswas says Astra is also looking into a number of secondary opportunities that fit under the company’s technology platform, including carbon efficiencies, green technologies and coal conversion.

“These technologies are proven and commercial game-changers and not only hedge Astra’s commodity risk but also change the shape and cost structure of the end products in the value chain,” Dr Biswas says.

“This provides Astra with a substantial marketing and cost structure advantage.”

Astra has made headway with its green technologies interests through its 76% intended stake in Carbony Pty Ltd, a carbon dioxide reduction technology, and a majority interest in GreenGum, a patented rubber technology that provides carbon credits and large margins in converting waste from rubber tyres into fine and superfine rubber granules.

“While our green projects are at an advanced stage, the inclusion of coal conversion is something the company is also aggressively pursuing,” Dr Biswas says.

“Targeting a coal conversion strategy will enable countries with a heavy reliance on coal to use locally mined, usually poor quality, coal reserves for power generation. 

"This has immediate effect in countries with a heavy reliance on coal imports which is unsustainable long term due to the expense and process of importing.

“Coal conversion technology will help turn low quality coal reserves into useable product."

Astra will continue to seek further opportunities that complement its diverse product base and low-risk philosophy. 

Astra Resources’ global portfolio includes gold interests in Southeast Asia, coal mines in Africa, iron ore in India and the Philippines, the production of the high-strength T-Steel technology in Hungary, and the provision of mining services housing in Rockhampton, Queensland.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/23395/astra-resources-outlines-business-model-targeting-continued-global-expansion-23395.html