You might be right Thistime about there eventually being only one operator, but if Baosteel increases their ownership of Noront to 19.9% (they have that right for one year commencing April 18th 2012), then it will be harder for anyone else to consolidate this area.

Cliffs itself is a takeover target trading at around 6 or 7 X cash from operations after deducting capital expenses. According to Bloomberg, that is less than any other Canadian or US mining company. Cliffs is probably around a $10+B market cap and with another 30% premium, they could sell in the 14B range.

Although Baosteel is listed on the Shanghai exchange, it may be difficult for them to use their shares as currency in foreign acquisitions, as not everybody would be willing to hold RMB demoninated currency. Their option may be better served by a direct investment in Noront and/or off take agreements. Basteel Resources just finished raising $2B in the first ever private debt sale by a private Chinese company.

Baosteel's 10 million warrants from their first investment in Noront are good for 24 months with a strike price of $1.16. In they use their option starting in April to increase their ownership to 19.9% , they would still be left with these warrants (and any others they aquire in another round of financing) to bring total ownship in Noront somewhere closer to 25%