Seniors buy for two main reasons. The first is to secure the resources to boss there reserves and make money. The second more subtle reason is to buy to prevent somone else from acquiring the resource.
With base metals, especially nickle, the senior producers are fully integrated from mining to smelting, to primary product fabrication. They make money at every stage and sell on long term contracts to their business clients (in contrast most gold producers sell their gold to a refinery and that is the end of their involvement with the gold). In base metals, protecting your industrial markets by keeping potential competitors out of your market is part of the game.
For us the second reason can be more profitable. To keep a contender out of a market a company like Vale may pay more for NOT then somone that is just looking for the resource. Of course the opposite may also be true and a big customer like Capital Steel in China may buy it to get out from under the control of some one like BHP.
At the end of the day whoever is willing to pay the most will get the prize. If the prize is reallly big it just means that they will offer more in the way of shares than cash. We have a long way to go before the likes of Vale, BHP, Rio Tinto, Xstrata, Sumitomo etc would have to even stretch to swallow us whole.
... Been There
