Key Strengths

Experienced management team

Prosperity Minerals Holdings Limited (“the Group”)’s Chairman and CEO, David Wong, has more than 30 years’ experience in the cement and building materials industries in the Greater China Region. Over the last 18 years, David has built the Group’s iron ore trading business, operating through Prosperity Minerals (Asia) Limited, Prosperity Materials and Prosperity Macao.

The Group’s CFO, Patrick Li, has more than 20 years’ experience in the banking and financial services industry and has acted in a variety of financial and risk management roles before joining the Group. Patrick’s hands-on experience addressing finance and risk management issues in the resources sector give the Group a strong focus and robust approach to achieving its strategic objectives and complement David’s extensive experience and contacts.

Johannes Petrus Mulder is an executive director of the Group. He is responsible for overseeing the strategic planning of iron ore trading and the potential iron ore mining businesses of the Group. He brings to the Group extensive experience in the iron ore, steel and mining industries.

The iron ore trading team have, on average, more than ten years’ experience in the iron ore trading business. Their extensive experience and continuous on-the-job training enable them to provide effective customer solutions through understanding customers’ needs and industry trends.

Stable supply of high quality iron ore

The Group’s sourcing capabilities are the key to the success of its iron ore trading business. The price the iron ore supply secured on these contracts is fixed in line with industry benchmark prices on an annual basis, meaning that the Group is not as exposed to the price fluctuations on the supply side that affect trading companies which source all of their iron ore on the spot market.

Prosperity has successfully diversified its iron ore supply from the traditional long distance suppliers in Brazil and South Africa to include shorter distance suppliers in South-East Asia.

The Group has consistently exceeded the minimum annual order volume agreed with its key suppliers enabling it to establish close relationships with them and secure a stable supply network, the benefits of which are illustrated in periods of tight supply when it still receives a reliable supply of iron ore on competitive terms. In order to fulfil customer orders that exceed the volume available under its supply contracts, the Group retains the flexibility to enter into spot purchase contracts with iron ore suppliers when it obtains orders from customers that require additional iron ore supply.

The iron ore trading business usually sources any iron ore that it requires in excess of its secured supply on the spot market or from the same suppliers as under its supply contracts but on a spot basis. The majority of the iron ore that the Group supplies contains an average iron content in excess of 65 per cent, giving the Group the ability to deliver a stable supply of iron ore that is of the high and consistent quality that its customers require.

Strong risk management culture

The Group’s iron ore trading business maintains a conservative risk profile through its centralised risk management and decision-making structure. The management team’s experience in the iron ore trading business helps it to effectively identify and manage operating risks while its management of counterparty risk is enhanced by its credit procedures. The iron ore trading business’ risk management system is designed to address various forms of risks arising from activities across the entire iron ore supply chain, such as counterparty, credit, quality and output risks. The ability of the Group’s iron ore trading business to secure letters of credit or other security against non-payment on a back-to-back basis also allows it to reduce payment risk.

Established customer relationships

The Group’s iron ore trading business has specifically focused on developing strong relationships with key customers within the PRC and they account for a significant volume of its orders annually. The Group’s major customers are large Chinese steel mills, so is able to devote more time to its customers and deliver larger, more profitable shipments.

The Group is a committee member of, and is currently the only iron ore trading business invited to attend, the Southern 20 Steel Enterprises Committee in the PRC, an annual trade conference that is attended by representatives of twenty steel mills from central and southern areas of the PRC. Representatives of the Group’s iron ore trading business have attended these meetings since 1999. Prosperity’s access to the annual Southern 20 Steel Enterprises Committee meetings allows it to establish and strengthen customer relationships with key steel mills in the PRC. The Company’s senior management also frequently attend international iron ore conferences and other industry meetings to establish new, and strengthen existing, customer relationships.