The rebirth of a Western Rare Earth industry

Unlocking the Rare Metals Industry in the United StatesMolycorp’s shares are trading at the lowest point yet; they have crossed the negative side of the ‘not so magical’ USD 6.00/share floor this week, finding bottom at USD$ 5.73/share on the last Thursday in February and started to recover a little on the first day of March. Many stocks experienced a topsy-turvy trading week and many could attribute the moody pattern to the fears about the results of the Italian elections and their impact on the Euro – and as a result on prospects for a European economic recovery. However, Molycorp has no such luxurious excuse; its stock has been feeling the impact of its decision to postpone the filing of its fourth-quarter report with the Securities and Exchange Commission.

Molycorp needs more time to calculate – or perhaps to prepare investors’ stomachs – the sum of a goodwill impairment charge that will be noted for the fourth quarter related to its USD$ 1.3 billion acquisition of Neo Materials (Molycorp Canada) last spring. This news stings all the more given how it contrasts with news that Lynas Corp (ASX: LYC) has officially launched production. Apart from Molycorp, then, Lynas is the only listed company outside of China able to supply rare earth metals, from mine to finished product, in 2013. Indeed, Lynas is producing rare earths in Malaysia, with ore from its own deposit material in Mount Weld. The level of production will soon rival Molycorp as the Company expects to produce 11,000 tons of REE in the second quarter of 2013.

Accordingly, Lynas shares rose by at least 4.3%; Molycorp dropped by twice that percentage. Nevertheless, is Molycorp actually the one that should be blamed? Perhaps not. Demand for rare earths exists. The U.S. Department of Energy estimated in late 2011 that there was a real risk for the production of wind turbines with synchronous motors using permanent magnets treated with dysprosium. These engines are very popular because they are much more efficient than induction motors using copper, improving performance and usability – given that they can function with less wind. Then there are the heavy rare earths (europium, terbium and yttrium) powder phosphors needed in video screens and light bulbs. In 2010 China produced 81% of magnetic alloys for permanent magnets; 13% were made in Japan and North-East Asia (i.e. South Korea), 2% in the United States on foreign license and 4% in the rest of the world including Europe.

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A similar pattern explains the geographic distribution for producing powder phosphors. China is not the one to blame for its dominance – and why should it? After all China was handed the rare earths industry dominance on a silver (perhaps masquerading as dysprosium) platter. Europe and the United States, in contrast, have sinned by lacking vision and strategy; they have squandered their expertise and scientific knowledge and not just in rare earths. Indeed, the technology for processing rare earths has completely American and European (mostly French) roots.

The chemistry to separate rare earths speaks was developed in France thanks to the experiments by Paul Lecoq de Boisbaudran (1838-1912) who discovered samarium and dysprosium and Georges Urbain (1872-1938) who discovered lutetium and invented fractional crystallization. Then there is the Manhattan Project, which resulted in the atom bomb while also leading to devising a hydrometallurgical process (ion exchange and later solvent in 1953) to process rare earths. The Manhattan Project first explored the separation of lanthanides before separating radioactive actinides. In Europe, there was the good sense to maintain separation and purification technology at La Rochelle. Molycorp and Lynas were supposed to help reverse the trend, also because China itself may soon to go beyond its domestic rare earths supplies. Technology is increasingly controlled by China. This is odd because the patents for separating and processing rare earths are owned in the West (and Japan). General Motors and Sumitomo announced discovering the process to make neodymium-iron-boron magnets in 1982.

Magnequench, originally a subsidiary of General Motors, was established in 1986 to produce Nd-Fe-B magnets in Anderson (Indiana). Then there was the beginning of the end of the western dominance. In 1995, Magnequench was sold to Sextant Group, an American but Chinese controlled company, which then promptly moved the production line to China in 1998, shutting down US operations. Magnequench returned to the West through Neo Material Technologies, a Canadian corporation acquired in 2012 by Molycorp, whose concentrates required for the production of permanent magnets are still exported to China.

The Molycorp woes are, in a sense, keeping the United States dependent on China for neodymium-iron-boron. Hitachi of Japan now owns the original Sumitomo patents after the 2007 merger between Sumitomo Special Metals Co. and Hitachi Metals. There are also agreements between Hitachi and cross Magnequench. Overall, the framework is favorable to the rebirth of a North American or Western rare earth industry. For Molycorp, the question now is to what extent the write-down will affect its long term business. If we assume that the mine-to-magnet business is the right approach, then the write down will have very short term impact and one probably already absorbed by the market over the past two days. Molycorp’s strategy may yet pay off; however, it will only become a winner if the West changes its attitude to technological know-how – sending it off to cheaper labor markets simply to save a buck has been a short-sighted policy and not just in rare earths.


  1. “Nevertheless, is Molycorp actually the one that should be blamed? Perhaps not.”

    Tell me this is a joke right?

    I mean honestly – how can you possibly write that “Molycorp’s strategy may yet pay off”?

    If that is the case, they might want to let the shareholders know just exactly what that strategy is? You know the shareholders that bought at perhaps 20,30,40 dollars. All the while having people write articles like this.

    You should join forces with Jason Burack et al – another one of the MCP “they just need to execute” brigade. Execute all right…..the shareholder

    or

    It will be a winner when the West changes their attitudes towards technological know-how?

    Molycorp was bought down because of “the West’s” attitude.

    I dont wish to sound offensive but this article is simply disgraceful.

    • Wake up to the reality Steve. MCP was its own worse enemy. Blaming others will get you nowhere. Look at Great Western Minerals of Canada and you’ll learn something.

  2. Alessandro,
    Your statement ” Lynas is the only listed company outside of China able to supply rare earth metals, from mine to finished product,” is not currently correct. Lynas will only be producing rare earth oxides and carbonates at the LAMP in various configurations. The LRE will go directly to market ATM and the SEG/HRE will be sent off for final separation by a toll agreement. Not confirmed but La Rochelle would be a good guess given the Rhodia relationship. Lynas have recently indicated that developing the ability for HRE separation is a near term objective and given the indicated volume of HRE from Duncan that makes a lot of sense.
    At present Lynas has not indicated any plans to produce RE metals directly but rather is forming a JV with Siemens for magnet production. With first production confirmed we will perhaps hear more on this shortly but it is a pretty safe assumption that Lynas will achieve “mines to magnets” with approx 30% of Molymess’s capital outlay.
    A little comparison with the Molymess business plan that I wrote elsewhere:

    “Mines to magnets is a wonderful business plan but is it appropriate to the Mt Pass product suite? With 50% Ce & 32% La relative to 12% Nd & 4% Pr the bulk of Mt Pass production is destined to the low value polishing, autocat & FCC markets with a relatively small 16% available for magnets, and Mt Pass has virtually none of the key, and most valuable, magnet material in Dy. I’d suggest that was one of the reasons Hitachi walked earlier.

    It is difficult to understand how Moly adds value to Neo’s JV operations inside China when they are able to purchase Nd at domestic prices $52.88kg v ROW $80kg. Moly needs to ship Nd behind China’s quota, tax & tariff barrier and compete at much lower prices. Even with Neo Canada they need to compete with market price and cannot supply the key Dy component.

    To produce meaningful amounts of magnet material Moly have scaled the Mt Pass plant to a colossal 40ktpa at a cost of $1.42B to date, it is not yet complete. That capacity probably exceeds total global RE demand circa 20% ATM, a fact that now has been recognised with the postponement of Phase 2, the second 20ktpa.

    While the key component of Moly’s low cost claims, the Chlor Alkali plant, is not yet operational and their tech is unproven the simple fact remains that Mt Pass is massively over capitalised to 82% low value Ce/La & only 16% Nd/Pr, with dubious potential for value add without adding to Neo’s cost base.

    To illustrate Moly’s dilemma, Mt Pass will produce 10ktpa Ce at the Phase 1 run rate. The major market Japan/Sth Korea is only importing 5ktpa of RE for polishing, and Moly will be competing with Lynas’s signed offtake agreement with Japan, & the total US RE market is only 10.5ktpa. Moly recognised this problem at the outset and tried to deal with it’s excess Ce through SorbX but this appears to have gone nowhere.

    Moly appears to have vastly over capitalised a low value product suite (at $26kg basket it is the second lowest of 54 recognised deposits) without identifying a market, let alone a profitable one, for the vast bulk of it’s production. In trying to band aid the situation with a grab bag of final processing assets, directed at only 16% of production, they have compounded the situation with $1.8B of liabilities plus the recent $300M of dilution & debt.

    Nowhere have I seen a creditable business plan to turn the above into a cash positive operation and with little chance of any near term prices increases anywhere near sufficient to drag them out of the whole they have dug.

    If Moly is able to reach Ph 1 capacity they will produce 2700tpa Nd/Pr by comparison Lynas have built a 22ktpa plant for $800M, with a “soft” loan from the Japanese Govt. of $200M, capable of producing 5400tpa Nd/Pr + 26tpa Dy. Lynas plans to leverage a portion of this through a 45/55% JV with Siemens for magnet production.

    Lynas also has another 5000tpa Nd/Pr + 300tpa Dy potential from it’s Duncan deposit.

    With the ROW RE market currently only 35ktpa and weak demand Moly does not have a lot of time to get it’s business plan sorted out and present some credible strategy for return to positive cash flow, sans bubble prices.

    A break up between Molymet & a Con K consortium is looking the most likely outcome IMO.”

    • Great summary Aus. But it’s worth mentioning that Lynas is moving on metal production: for example they recently obtained patents for RE metal production by electrolysis.

      • Please state their current plans for metal production of any sort if you know of any. There are none I am aware of at this date, and the Loi with Siemens has had no mention of any progress since it was announced in July of 2011, 18 months ago.
        GWMG announced similar plans within a couple of weeks of that date in 2011, finalized their JV with GQD in January last year, acquired land for an SX facility and has planned it, which is momentarily awaiting full permitting by the South African bureaucracy, and the beginning of construction. Lynas has done nothing but say they would like to do the same.

        • Good for you Poncho, hope your GW comes thru with the current equity intact.
          There was actually further mention re the JV from Siemens shortly after the feral SMSL turned their vitriol on all Malaysian companies associated with Lynas, banks, suppliers, Siemens and the local news agent. A Siemens spokesperson made some wishy washy statement that denied nothing but acknowledged nothing. With a very considerable business in Malaysia Siemens have had their head tucked in their arm pit ever since. You are right, it does need to be confirmed but I’d suggest either the lead up to the election, as part of Najib’s Vision 2020 plan, or immediately after might be fair chance.
          As Jan suggests Lynas have recently acquired some patents, and while nothing has been announced, I really doubt they were for the benefit of the tea lady.

          • Tim…I did see the second Siemens release when it appeared, but when looking the other day for it on the Siemens Drive Technologies press release archive, I could not find it. It may have been pulled. As you say, it was very vague as I recall, wishing luck and expressing confidence etc. But no commitment of any kind. In any case, there has been no further mention of the JV, which I’m sure you know was a 55/45 JV with Lynas as junior partner anyway.
            GWMG is 75% owner of their JV with GQD, has complete control, and is set up as a tolling facility to be operated by GQD essentially as a contractor with 25% participation in profits, and a performance payment system which requires them to get the work done to receive those payments. GWGQD, the SX company, will never at any time own any of the materials they will process. That ownership will be held by GWMG’s sales division after the concentrate leaves Steens until it is sold as either La or Ce carbonates or Oxides(essentially surplus un-needed by LCM) or actual metals or alloys from LCM production. GWMG has, and will have, full control of all steps of the production process, mine to market, proving to customers that their supply line will be well and truly secure when in operation.

          • All Kool-aide Poncho.

            The only company slower with progress than GWM is GQD. And the only entity slower than them is GWGQD. That joint venture is paper only after a year and a half. Why? My guess is the Chinese realized the fraud at Steen and have left the idea on paper only. GW has no intellectual property that Rhodia and the Germans lack. They have bought several and never developed a mine. They have contracted their engineering out to the Chinese and seen no progress. So why is the full property, plant and equipment worth $10+ mil according to GWG’s own financial records? Because the substance is minimal when they are forced to file a document with the authorities. In other words, GWG is not mine to magnet, they are magnet with story only.
            Please do some research Poncho. The Kool-Aide gets old after a while. And your Lynas hacks are aimless innuendo and repetitive.

          • Lol Poncho, we can agree on something! In the absence of any announcement to the contrary I’ll take the glass half full approach and suggest the Siemens JV is still in place. As your no doubt aware there have been some very nasty public campaigns running against Lynas in Malaysia, where Siemens have spent some 40 years building a considerable operation. I’ll suggest Siemens have been keeping well under the radar to avoid any stigma by association and you can only presume no further progress has been made. It is an important one for Lynas but I’d suggest equally so for Siemens to secure a direct Nd/Pr/Dy supply. Further speculation is pointless, let’s hold off for the announcement, and with the protesters largely irrelevant and the election pending we may not have so long to wait.

  3. It’s amazing how many readers, investors and analysts simply refuse to acknowledge what Great Western has done and is about to accomplish. For one thing it’s the only vertically integrated Co. in the West that has brought products from the mine to the final users, and it is about to do that on a grandeur scale than anyone ever imagine. This article is one of the few that pays tribute to that Co., and all readers here above would rather remain in denial and talk about the “would have been”. In a few more weeks, Great Western will make you wish youo woke up much, much earlier.

    • The article does not mention GWG at all. All it does is to jump all over the place making incorrect or misleading statements.

    • GW is likely to be a nice niche producer. But, to put it in context, IF all goes to plan their total resource amounts to 18 months production by Lynas.

      • Jan– 18 months production by Lynas of La and Ce carbonates and mixed didymium and other mostly LREE product is not likely to produce anywhere near the profits per share of the smaller quantity of pure metals and alloys produced by GWMG.
        Keep in mind too that GWMG has just over 400 million shares outstanding Vs the nearly 2 Billion shares of Lynas that will dilute their profits even further. It’s not how many tonnes you produce, it’s what they are worth in profits per share that count, IMO.

          • Bob– They have currently approximately $50 million on deposit for these projects. A PEA is due to be released within the next 30 days which should clarify their position regarding capex/opex of their projects. The recently enlarged and due to be updated further NI 43-101 resources from Steenkampskraal should facilitate funding any shortfall, if necessary. Multiple options exist to accomplish this from debt instruments to those that would include dilution, which would be the last choice. Considering the recent funds raised by less promising projects, it seems unlikely that the rather modest amount that would be needed could not be raised from some source.

        • Actually Poncho, I agree Steen is a grets little deposit despite its difficulties such as high thorium and being a vein deposit.
          But one piece of nonsense I must challenge is your implication that Lynas is a LREE deposit. It’s worth having a look at the TMR data: the Lynas CLD has a distribution (and basket price) about equivalent to Steen while the Duncan deposit is clearly better. Sure we could quibble: Steen has more Dy than CLD while the latter’s Eu is much better and so forth.
          Finally, I agree that GWM’s metals capacity is very impressive and something that Lynas will aspire to. Similarly GWM have a lot of catching up and proving up yet to do with the hydrometallurgical and SX facilities compared to the LAMP’s current ramping up.

          • Re: “difficulties such as high thorium”.

            The major difficulty for a company with a high thorium/uranium REE deposit would be to get the necessary Environmental approvals.

            It’s not an issue for GWMG. Besides, maybe unexpectedly for some, GWMG may have some potential strategic advantages.

            From GWMG web site:

            “Also of significance is the Nuclear Authorization held by the Steenkampskraal site for the handling of radioactive material including the storage of thorium.

            This is, to best of GWMG management’s knowledge, unique in South Africa.

            The ability to store thorium in casements, back underground in a recoverable form, will be of clear benefit in dealing with the thorium as it is removed in the processing stage at site.

            GWMG plans to investigate the potential to access monazite from tailings of other types of mining operations.

            The monazite could be processed at Steenkampskraal with the thorium inherent in these types of tailings stored at the Steenkampskraal site.

            The companies from which the tailings will be obtained have, in the opinion of GWMG management, no other available alternatives for such storage.

            This could create a compelling reason for them to enter into an agreement with GWMG for the processing of their monazite, hereby potentially creates access to additional monazite supply for GWMG increasing rare earth production at Steenkampskraal.”

          • On a related note, some curious bits of information:

            GWMG owns 23.9 percent of Steenkampskraal Thorium Ltd. (STL), a company that is developing a “pebble bed” nuclear reactor (PBR).

            STL owns 15 percent of Thor Energy, the Norwegian company that is developing thorium fuel.

            “The Norwegian government, in concert with U.S.-based Westinghouse and Norway’s Thor Energy, is facilitating a trial of what could potentially be the energy source of the future: thorium.”

          • Lol, as the guys below point out Steen was a Th mine long before it was a RE resource so there’s always something to fall back on I guess.

          • Jan– You realize of course that the “lot of catching up to do” will not be that hard in that GW will be building a 5,000 TPA SX plant to feed LCM. Lynas is contractually bound to build out phase two to arrive at a 20,000 TPA capacity, and MCP’s Phoenix one is similar at 19,050 TPA. GW only needs to feed LCM and be able to expand LCM, the SX plant, and Steen’s production simultaneously in the future to generate increasing production of much higher priced metals, alloys, and profits, while MCP and Lynas capacity will force an ROW price war for their products. Just to make it a little bit worse, GW will be selling it’s “surplus” La and Ce into that same market, but it’s survival nor it’s primary profit engine comes from those products.

    • Aurelius,
      They don’t refuse to acknowledge it. It’s more like the story does not add up and the history creates doubt. Hoidas is still a great story that never became anything. Steen needs money and now has a fraud issue. LCM has commercial product a year after first pour, but will not make GWG profitable. GWG sold metals and never was profitable as REE prices went to the moon and back. GWG makes great claims but has the worst balence sheet in the business which includes:
      More non-current (non-producing and under funded mining properties plus 2 mil in goodwill) than current assets (which are mainly cash from the convertables @ 8%). Total property, plant and equipment are $10+ mil yet we should see LCM as some big game changer? And since the GWG Kool-aide drinkers lover to tout presentation lines so much, how about some equal time on the risk side? Here are some risk lines from last 51-102F1 (when the share price was about 50% higher):
      Financial performance
      For the nine month period ended September 30, 2012, the Company recorded a net loss of $6,521,005 or $0.016
      loss per share versus a net loss of $10,276,921 or $0.028 per share for the same period in 2011. The Company’s
      revenues for the nine month period ended September 30, 2012 and corresponding gross profit, both fell by
      approximately $700,000 from the prior period.

      Despite revenue increasing from the manufacturing services segment, net loss from the prior period
      increased by approximately $1.3 million. Contributing to the increase in net loss was an increase in cost of sales due
      to the product mix and general increases in costs as the Company grows.

      The Company does not currently have sufficient financial resources to undertake by itself all of its planned
      exploration and capital development programs.

      There is no guarantee that the Company will be able to build and operate the SKK mine or the associated
      RECl facility or Separation Extraction Facility as planned or on budget.Failure to achieve commercial production by October 4, 2014 will also cause a
      downward adjustment in the conversion price of the Company’s bonds.

      The Company is relying on a number of third parties to provide services and expertise which will enable it to
      complete the expansion projects that are being undertaken. (Engineering Companies and the Chinese GQD noted in the risks).

      Substantial expenditures are required to establish ore reserves through drilling, to develop the appropriate
      metallurgical processes to economically extract the metals or elements from the ore and to develop the
      mining and processing facilities and infrastructure at any site chosen for mining. No assurance can be given
      that minerals will be present in sufficient quantities and grades to justify these development expenditures
      or that the funds required can be obtained in a timely fashion.

      Mineral exploration and development involve a high degree of risk, and few properties ever advance to
      commercial production. There is no assurance that even if a body of commercial ore is discovered on the
      Company’s properties, a mine will be brought into commercial production.

      The exploration, development and mining of the Properties will be affected to varying degrees by:
      government regulations relating to environmental protection and worker health and safety; mining laws;
      taxes and tariffs; land use; and aboriginal land claims. Steen has the highest radiation counts of any rare earth project.
      http://www.gwmg.ca/images/file/2012-Q3-GMWG.pdf
      Many of these risks are standard and shared by many REE stocks. But I don’t think anyone is ignoring the GWG story told ad nauseum by the GWG kool-aide drinkers. I think it is more that the numbers make the story much less exciting.

      • “Hoidas is still a great story that never became anything” – If you do just a little bit of research you will see that the company made a conscious decision to concentrate all available capital in those areas that will provide returns in the shortest term. Hoidas is a great property but will require substantial capital to be developed while on the other hand, investing in the upgrades made in LCM will produce results right away. The same is true for concentrating in Steen instead of Hoidas.
        “Steen needs money and now has a fraud issue” – In order to develop any mine there is always the need for money. In the case of Steen GWG has 55 millions and might require more money but this is normal. In respect to the “fraud issue”, I do not understand why you keep changing the known facts. The only facts we have so far is that an employee was caught committing a crime against GWG and the company acted on it. If you want to speculate, go ahead.
        “LCM has commercial product a year after first pour, but will not make GWG profitable” – The first pour was a test of the new equipment. Did you expect that the company will start selling a product right after the first test? This is a process that requires testing, tuning not only by LCM but also by the downstream customers. The second part of the statement is pure speculation and lacks any basis. GWG is not embarking in huge investments at the mine level, instead you will see that they are concentrating on the expansion of LCM capability since this is where the profit margins are the highest. The main reason for GWG to invest in the mining portion of the business is to secure the supply of raw materials needed by LCM.

        • By the way…I’ll be happy to see Lynas, Molycorp and others succeed in producing the quantities of rare earth oxides needed by the marked. If this happened the downstream customers will have the assurance that there are enough producers and would not have to worry about a lack of materials when investing in products using rare earths. This in turn will increase demand, in particular for alloys. If GWG had a secure source of row materials at a reasonable price, it could make a huge profit without the need to mine by themselves.

        • Esteban,
          You are the one lacking research on these points. If you know the history of GWG it has been an endless shell game from one failed investment to the next. The company has failed to make a profit for over thirty years! All the while they claim to be making investments for the quickest return possible.

          The recent press release referrred to $13 million in invoices and said Mora and “a few people “. True this project has been going on for years and is now more than a year overdue now. I agree the press release was vague and lacked transparency like most GWG press releases (and most frauds for that matter).

          Endahl specifically answered when asked as CEO last year on the Canadian business channel that GWG will not be profitable till Steen is providing feedstock. Your CEO’s speculation, not mine.

          • Paul– you have misrepresented the facts of the release. Quote:
            Investigation into the activities of East Rand Engineering Services (“ERES”), the contractor that was awarded the earthworks and mine refurbishment contract, led GWMG to terminate its contract with that company (see GWMG news release November 26, 2012). The Company has paid ERES approximately C$10.62 million to date out of an invoiced amount totaling approximately C$13.32 million (exclusive of VAT). The Company’s quantity surveyors and engineers are assessing the completed and partially completed works and GWMG is pursuing all available options, including the commencement of civil claims, to recover any damages which may have occurred.” End Quote.
            One employee, who has been detected, investigated, charged and arrested for fraud and money laundering was involved. He apparently had some kickback scheme going with one of the contractors, ERES. The 13 million was the total for the contract, and only 10.62 million had been invoiced. On a typical scheme of this type, perhaps 10% max could be skimmed for the culprits, so losses, if any, would come to about 1 million, with civil suit available to recover the loss from ERES.
            GWMG detected the fraud, reported it to the police, who arrested the miscreant. That’s what happened:
            Quote:. (“GWMG” or the “Company”, TSX:V – GWG) today announced that as a result of an internal investigation into the activities of Vincent Mora, who had previously provided services to the Company as Project Director and was terminated for cause, suspicions were raised about invoicing, purchasing and contracting activities. Because irregularities were found during the Company’s review, GWMG filed a complaint and cooperated with the South African police to investigate the possibility of criminal activity. As a result of this investigation, police have arrested Vincent Mora on suspicion of fraud and money laundering.”
            Big deal. Detected internally and dealt with correctly.

          • Poncho,
            I did not misrepresent facts. Your conclusions are unsupported, have almost no chance of being correct and represent the absolute minimal amount of harm based on a first press release regarding the topic.

            I have NEVER seen these things open and shut in one press release with zero climb in harm from an initial minimum level of harm. I really don’t even think that was the goal of the CEO in the release. The CEO offers a wide spectrum of possibilities and says it is under investigation. That is all he can do. And as usual you give the Kool-Aide drinkers an unsupported rosy view that is once again met with a diving share price.

            To make this post AFTER the Kennedy resigned from Steen for an advisory position is pitiful. He is walking away from a great deal of money and prestigue as Steen CEO for a reason. I think he does not like something and does not want his name attached to it.

  4. Alessandro– I am a fan of your recent articles, but I believe you may want to re-phrase what you said today in your piece, “The Rebirth of a Western Rare Earth Industry.”
    You said, “Apart from Molycorp, then, Lynas is the only listed company outside of China able to supply rare earth metals, from mine to finished product, in 2013.”
    That is not correct. Lynas LAMP only has the ability to produce 2 separated carbonates, La and Ce, and a mixed REE product containing Nd, Pr, and small amounts of some other elements. They have no capability to produce any metal, at all, and have only a LOI from Siemens. The following is from their website regarding their finished products, which they will attempt to sell:
    “Step 3:
    Product Finishing
    In the final stage of the process,
    the Rare Earths elements are
    precipitated as carbonates,
    hydroxides or oxalates.
    Some are calcined to the
    respective oxides.
    Finished products
    The LAMP produces the
    following finished products:
    » Lanthanum-Cerium
    Carbonate
    » Lanthanum Carbonate
    » Cerium Carbonate
    » Samarium Europium
    Gadolinium (SEG) + Heavy
    Rare Earths (HRE) Carbonate
    » Neodymium, Praseodymium
    (Didymium) Oxide.” End Quote.

    Additionally, Molycorp’s acquistion of Neo Materials processing and metal making capabililities, in terms of tonnage,are essentially located inside China, and thus also fails to meet the test of being a “Rest of the World” mine to finished product(metals and alloys) company, though they do own Silmet in Estonia, and Tolleson in Arizona. Silmet is hardly integrated in any meaningful way with Mtn Pass production, at least so far, and Tolleson produces a very small output. Technically they are integrated, but not to any significant extent. Add to this the fact that they own no Heavy Rare Earth resource, Mtn Pass only possessing LREE elements in commercial quantities, and their claim to “mine to magnets” integration is pretty weak.
    There is one company which is as close or closer than Lynas in the “Western World” which currently produces rare earth metals and alloys from Chinese separated products, owns a near production mine in South Africa which has ample resource at the world’s highest REE grade, and which contains both HREE and LREE in commercial percentages. The further expect environmental permits to build a modest SX facility near their Steenkampskraal mine very soon.
    If Western Rare Earths production of truly non-China sourced mine to market product is to become a significant reality within the next 18 months or so, Molycorp obviously has the early lead, but must get their act together, Lynas cannot achieve metals production in that time-frame, with nothing in development at this time, and the third company, Great Western Mineral Group seems to be actually on track, with customers already buying their metal and alloy products from newly expanded subsidiary LCM. Their secure non-China supply line concentration and separation facilities are currently in advanced development, and fully expect within 90 days or so to be in construction phase on the processing facilities, planning and permitting having been underway for a year. Planning for only 5,000 TPA output from the SX facility to LCM, the initial size, cost, and time to production of these plants is expected to be much less than the other’s larger plants needed.
    GWMG is the only company outside of China that will have full ownership or control of every phase, mine to market(metals and alloys), of it’s production supply line when complete, no known major obstacles to completing it’s integrated supply chain, AND a good chance to achieve significant profits per share from those integrated operations, which is, after all, the bottom line of this exercise.
    The SUCCESSFUL rebirth of the Rare Earths Industry outside of China may very well be better represented by this small Canadian company than either of the other better known “first producers”.
    At least it looks that way to me.

      • Bob– I answered that to your earlier comment listed above.
        “Bob– They have currently approximately $50 million on deposit for these projects. A PEA is due to be released within the next 30 days which should clarify their position regarding capex/opex of their projects. The recently enlarged and due to be updated further NI 43-101 resources from Steenkampskraal should facilitate funding any shortfall, if necessary. Multiple options exist to accomplish this from debt instruments to those that would include dilution, which would be the last choice. Considering the recent funds raised by less promising projects, it seems unlikely that the rather modest amount that would be needed could not be raised from some source.”

        What makes you think Lynas or for that matter molycorp has sufficient funding to achieve profitable operation? They are both overextended, and will be depending on bulk sales of low priced products that will instantly become a glut on the market when in actual production.
        GWMG, on the other hand, will continue to be selling metals and alloys that sell per unit for revenue and profit margins much higher, and will be from at-production-cost internal secure supply. And, if you follow them at all, you know that they have already made sales from their new strip casting flake alloy furnace, and have on hand at least one repeat order. Their second strip casting furnace, which is currently being shipped to LCM from the manufacturer, will double both LCM’s overall manufacturing capacity, and it’s current strip cast alloy production. It is doubtful that they will not be able to raise whatever funding will be necessary to support the creation of the remaining portion of the Western World’s ONLY secure full spectrum(LREE+HREE) supply chain. At least it looks that way to me.

    • Larry, just gotta luv your sarcastic “small amounts of some other elements”, lol.
      According to the DOE CMR numbers supplied by Dudley Kingsnorth those “small amounts” represent 84tpa Eu v GW 2tpa, 21tpa Tb v GW 2tpa & 21tpa Dy v GW 18tpa. Now I appreciate these are 2011 numbers and GW have had a bit of an upgrade since but watch out who your calling small buddy. And if you wanna get tuff I’ll get my big brother Duncan to stomp all over you. Try 300tpa dy on for size.
      BTW, why don’t we continue the discussion when the SA mine workers union is actually pulling stuff out of the ground and feeding it into the Chinese processing plant?

      • Tim, sorry to be pedantic, but there IS no “Chinese processing plant”. There’s a PEA (http://www.gwmg.ca/html/news/media-releases/index.cfm?ReportID=203474).
        It’s a very worthy document. They reckon with a bit of luck their total Steen resource will equate to 2 years of Lyas production. There’s more drilling to be done, and they’ve made some Chinese friends but of course they’re still working out how to extract their REE. Still they must be way ahead of Lynas who are currently ramping up the LAMP’s production.
        The very best bit of Poncho’s ‘contribution’ is “What makes you think Lynas … has sufficient funding to achieve profitable operation?”. Well Poncho, Lynas have enough cash ($200m) to operate for 2 years without cash flow as if that’s needed. Their plant is built and running and the customer contracts are in place.
        What does GWM have? A good resource, some good intentions and a plant that’s neither designed nor funded.
        What nonsense.

        • Jan– The problem Lynas has, is that the LAMP was not designed and has no capability in it’s current form to produce those HREE contents in any really commercially attractive form. See my earlier post to see what they actually will produce when in operation. They will have to invest considerably more millions to move any of that production further downstream to translate it into actual increased revenue. They are even talking about building yet another facility in Australia to handle the Duncan Deposit’s output. That would be years and probably another $500 million to accomplish.

          • Poncho, Lynas have had tolling arrangements in place for LAMP SEG/HREE for several years and they will be contributing to revenues second half. The 84tpa Eu is actually the LAMP’s second largest profit contributor after the Nd/Pr. You really should research your facts before banging away here.
            Details of tolling held in confidence (and I couldn’t be bothered with the rationale there) but I suggest Rhodia La Rochelle is a safe bet given they’ve just restarted the full 18 units of their SX circuit and BTW, our brand new CEO is the former President of Rhodia Silicea. Fancy that mon ami!

  5. I can’t respond to every comment; however, I have noticed a preponderance of Great Western fans. This article was in no way meant to praise or criticize ‘this’ over ‘that’ rare earth mineral company. I was ‘inspired’ to write it thinking about the two big stories of the week involving rivals Lynas and Molycorp; I want both to succeed and my point was to advocate a return to the West making things, designing, them developing processes and manufacturing especially when the technology and science originated in the West. Comapnies have been to quick to outsource and te trend has moved from basic manufacturing to a very disturbing one involving the training of engineers and scientists to design things…talk about shooting yourself in teh foot. At this rate, we will never speak of an economic recovery in the West, only in the east. The UK’s shift from manufacturing to financial services has been disastrous. The rare earth industry serves as a kind of metaphor for the industrial-scientific-business-mangerial mistakes made in North America, Europe and even Japan over the past 25 years. For GWG fans, I hve written ore than a few articles about them; and I’m sure I will write about them again in the near future. Best regards

    • Agree Alessandro, it is a critical point and probably best illustrated by the spider graph from Lynas’s presentation last Nov. showing China had sucked in virtually 80% of 4 out of the 5 main demand segments for RE. Page 10:
      http://www.lynascorp.com/Presentations/2012/Roskill_Presentation_14_Nov_2012__FINAL.pdf
      The growth since 2007 is frightening and little wonder ROW has only drawn 50% of Chinese quotas the past two years.
      This also represents the challenge facing Lynas & Moly to build the ROW RE supply chain to support remaining demand, and hopefully coax some back out of China, but with an urgency as both need to turn cash flow positive in the not too distant future.
      Apart from cash reserves & low debt Lynas is far better positioned by product suite. Nd/Pr + Dy = magnets, Eu + Tb + Y = phosphors.
      Moly has half the Nd/Pr and little else, rather a broken supply chain.

      • Great graph, Tim. Thank you for pointing it out, even though it scares the heck out of me! Here’s hoping that it is wrong. I’ve seen factual mistakes before.

    • Lol Alessandro, you’ve certainly inspired an “interactive” website! Sounds like it’s going to be a v interesting year for RE.

    • Alessandros, maybe you should do more stories on Great Western, I think you would have plenty of readers. Including me whats up with this company? sounds like they may be ahead of the REE pack.

  6. Sure you will have to write about GWG because Lynas and MCP will have troubles to survive.
    Ce La Carbonat prices are currently well below 10$/kg – and production cost is far above 20$/kg.
    So about what business model we talk ? The only question is how fast MCP will be chapter 11 and Lynas bankrupt. Compare that with proven production cost at GWG’s LCM Alloy facility and the prices for alloys.
    And then recognize the newly installed strip casting alloy furnace and the much higher prices for this alloys. We talk about cost 25$/kg and selling prices of 160$/kg. It is really funny to see that most of you still talk about MCP and Lynas. Mcp’s worth is Neomaterial. Lynas has a production facility but at these prices no chance to survive.

    • 4Now I’ll concede that GWM is world class at one thing: ramping on the discussion boards.
      Care to cite a source for the fanciful numbers you quoted?
      Care to comment on the fact that less than 25% of the basket price is contributed by La and Ce? That’s about the same proportion as the Eu!
      Care to comment on the Gareth H’s basket breakdowns: where Lynas CLD and Steen are about the same @ $38/kg with Lynas Duncan a far better $50/kg?
      Care to tell me where the money is coming from to build your cracking and SX plants, and who’s providing the expertise to design and run them?
      Care to quote some profit figures from your metals division?
      etc.

  7. Basket prices. Have you ever recognized that Basket prices are for separated oxydes?
    But Lynas does not produce separated oxydes. From -11000t 7500t are different ce and la carbonates and the rest is didymium. And they do not separate the mid and hree because they can not do it at LAMP. So it is completely wrong to use Lynas Basket for calculation. Lynas is very good in creating illusions.
    Like Jake Lifton said. “They told me they will make money ” – What a joke,…
    But keep your money in… And learn the lesson.

    • $Now let’s start with the 5 errors in your first 5 lines.
      0. It’s oxides unless you’re French..
      1. Both oxides and carbonates are valued the same based on the contained RE content. Since CO3– weighs more than O– the per kg value is a bit lower. The production figures are REO equivalent.
      2. Phase 2 will produce oxides.
      3. Phase 2 will separate neo and praseo.
      4. Phase 2 will separate the SEG (mid REE). Only the heavies will need tolling for the time being.
      (ref: Roskill presentation last slide.)
      Phase 2 will be ramped up this year.

      As for profitability, when do you think the Lynas business plan was approved and funded by hard-nosed bankers? Well before the price bubble when the basket price was about $15/kg so current REE values look pretty good. During ramp up the COP will of course start high and drop over ~9 months as the plant is optomised: the most credible steady state esiimates I’ve seen were $10 and $16/kg. Plenty to make a profit.

      One final note: For the record I think GWM has a good chance of being a successful niche player. I don’t feel any need to denigrate them just because I happen to be invested in Lynas.

  8. And whenever Lynasinvestors recognize that they cant make money they talk about duncan .
    The problem is duncan has no metallurgy. CLD metallurgy was done by chinese. But it is not very likely that they will do it again for duncan. No metallurgy = No project. Or a project at western cost. And the result you can see at Mountain Pass.

    • Last Lynas annual report on Duncan: “We are now proceeding with a definitive feasibility study to evaluate potential process plant locations and optimising the metallurgical process flow sheet.”
      Or perhaps the announcement last June (although things have moved on from then) “The detailed feasibility study will focus on direct chemical beneficiation with demonstration at pilot scale. Preliminary bench top test-work conducted for the scoping study achieved a recovery of approximately 84% for non-cerium rare earths to mixed rare earth chloride by direct chemical treatment of the ore.”.
      You can’t optomise what doesn’t exist.
      By the way the metallurgy was done by Rhodia which is a French company. They do have a big Chinese prescence. Rhodia are firing up their (French) La Rochelle SX plant which has been part dormant for some time: to toll Lynas HREE? If you’re curious ask Eric our operations manager. He used to run Rhodia’s REE division.

  9. Great Western Minerals Group is expected to release its Pea by the end of march. It should address many of the questions raised here about the company in detail. I would suggest you all study it closely and then determine how the company fits into the world outside China market. The one thing that attracted me to GW in the first place is the fact that their LCM and GWTI factories are producing and selling the end products now as we speak, in contrast to both Lynas and MCP.

  10. 4now,
    You really should spend a little more time researching and a little less typing. A lot of the early metallurgy for Mt Weld was actually done at ANSTO who have gone on to do further work for Alkane, Hastings and many others. http://www.ansto.gov.au/ Google Jack Lifton on his impressions after a visit a year or so ago.
    As Jan suggested Rhodia were also involved as part of the design process for the LAMP, which appears to have made a nice start BTW.
    Again, back to your lack of research, perhaps you missed JL’s response here at PEW: “Their (Lynas LAMP) research and development staff is outstanding, and is headed up by a Chinese (Lady) who started out in Baotou working for a group directed by Prof ChunHua Yan, zwho is surely China ‘s pre-eminent separations chemist.”
    As Jan mentioned Lynas’s COO, (IMO CEO in waiting), Eric Noyrez was President of Rhodia Silcea which includes their RE division.
    Now Jack’s not exactly known for pissing in anyone’s pocket so when he says “outstanding” I’m thinking Lynas has well and truly got the required expertise in house.
    Tech wise they’ve got the runs on the board at the concentrator and now 90% recoveries thru the LAMP, best estimates $28kg “realised” prices over $16kg total CoP should result in positive cash flow second half to support further development at Duncan, Siemens and whatever else they have up there sleeve.
    As I said above, come back when the SA MWU are actually feeding ore into GW’s Chinese processor and we’ll compare apples with apples.

    • Tim….Just a couple of points…As I recall, some Lynas spokesperson just recently stated they expected profitability sometime in 2014, not in six months, and you have to factor into their sales figures the possibility/probablility that as both Lynas and MCP say they are going to have sales within months, what the arrival of 30,000 TPA of mostly the La/Ce carbonates onto the market will do to prices, and their ability to sell what they produce. I don’t think your $28 per Kg figure will hold up in that scenario. It looks to me that as they ramp up production to get the tonnage they need to make money on low value product, they depress the price at exactly the same time. Every other factor that might help their situation carries with it additional expense (development of Duncan, expanding the LAMP to separate REE) which they do not look to afford without profits going forward.
      I have posted many times that I believe that the ROW REE sector needs successful companies to expand, and provide a balanced world REE market. I have invested in the past in Lynas, though not lately, and I really hope they survive and prosper. I wish the same for MCP as well, but I have little faith in their prospects until some viable plan emerges from the smoke and confusion. It looks to me that one or the other will fail, and the other will then have the chance to survive. It’s also possible that like two mighty stags, if they are evenly matched, they may just fight long enough that both succumb.
      This is where I point out that GWMG is not in this fight for tonnage of oxides and carbonates, they will not need hundreds of millions of dollars to complete their modest supply chain, and the metals and alloys currently produced even today, has generated revenues which the company, which has been in business for 20 years, has plowed back into expansion into the flake alloy market, whose sales bring well over $100 per Kg, and that expansion has been driven by their existing European, Japanese, and US customers asking for it, as they do not wish to continue to depend on China for nearly all their materials.

      • Poncho, maybe you should read GWM’s latest financials.
        http://www.gwmg.ca/images/file/2012-Q3-GMWG-MDA.pdf
        Let’s take the 9 months to Sept ’11 and ’12 figures. Revenue down from $13.6m to $12.9m. Losses down from $10.2m to $6.5m (p3).
        “The majority of the increase in cost can be attributed to the increase in interest and finance costs related to the convertible bonds.” p5 .
        Who’s got a debt servicing problem??
        But of course revenue is being plowed back into development. Such as the cracking and SX infrastructure. Guess how much? On p 6 the figure is given: $0. (Yes, about $13m was invested in SKK and LCM.)
        Are you serious about GWM being a major player overshadowing Lynas who will soon be producing 22,000,000 kg at a (very conservative) profit of $10/kg?
        It’s delusional.

        • Jan…. Your math is a little fuzzy. If Revenue dropped $700,000, which was related to relocating the LCM facility to larger expanded quarters resulting in lower production, but losses dropped from $10.2 million to $6.5 million, that means that LCM had a positive change of $3.7 million of revenue in a quarter that they did not even have full production due to the move of equipment. You already know these facts if you did read the financial report, and you do yourself no credit to cherry pick and attempt to mis-represent it’s factual content. For anyone desiring to check this out, here is the Link to the GWMG release of that report:
          http://www.gwmg.ca/html/news/media-releases/index.cfm?ReportID=203465
          Now the things to notice about this report, which covers both LCM and GWMG as a whole is, that for except for the final reported quarter, GWMG’s overall losses decreased every period (year over year), and total corporate losses were less than a penny a share even in the most recent low production quarter. When you look at LCM’s results, you see that this subsidiary has been profitable every quarter except the final one, which was the time of the move. Here’s what the CEO had to say about that:
          “GWMG Interim President and Chief Executive Officer Robert Quinn said, “In the face of some tightening of the global rare earth market GWMG and LCM did manage to achieve higher revenues in the 3rd Quarter of 2012 compared to the same quarter of 2011. LCM EBITDA and earnings were reduced in the past quarter and year to date primarily as a result of the move to a new plant as well as the costs of installation of the new strip cast furnace. Both factors now provide a platform for improved financial performance going forward.”

          Jan…Please post the total sales revenues of Lynas Corp to date since inception, any profit from any division, it’s total expenditures, it’s indebtedness, the number of shares outstanding, and the date that the company believes they might make their first dollar from sales. Remember, this company required 2 cash infusions last year alone totaling over 400 million dollars just to keep the doors open. They brag that they have funds to operate for two years more without revenue from sales. Why would they need to say that if sales and profits are imminent? Of course Nick Curtis did admit they had lost customers previously signed due to the year’s delay of the LAMP approval.
          At least Nick Curtis departure is a positive sign, IMO. I’m pretty sure you would agree with me on that.

          • Poncho I did no maths, I quoted some numbers that speak for themselves.
            As for “you do yourself no credit to cherry pick and attempt to mis-represent” that’s clearly unfair.
            As for posting the Lynas numbers you request: you’re just as capable of doing that as I am.
            So just a simple summary: GWM is producing and losing money, Lynas has just started up and has yet to sell product and also, for now, losing money.
            The numbers were from the top 2 rows of the first (and most crucial) table in the report. I could have used the 3 monts comparison figures (same table) that look worse but felt 9 months gives a clearer picture.
            But the fact that LCM is consistently making losses wasn’t really the point I was trying to make; in fact I’ve expressed a belief here and elsewhere that I expect GWM to be a modest success.
            My real point was the sheer scale difference between the two companies.
            GWM: revenue under $20m pa on those figures. Expect expansion of course.
            Lynas: 22m KG of production at a very conservative profit of $220m profit.
            While we’re doing comparisons what about debt levels compared to revenue?
            GWM: Debt $76m about 4x current revenue.
            Lynas: $400m or about 1x revenue in full production (based on an unrealistically low realised price of $18/kg).

            Of course we can’t compare frofits until one or both of the companies is making some!

          • Jan, if your talking $400M debt for Lynas it’s actually $221M with capitalised interest in the “soft” Sojitz (Japanese Govt) loan not due for principal repayments until 2015. The balance is the Mt Kellet bond holders (at a little over 2% coupon) where there is a reasonably solid prospect of them converting to equity, with resulting dilution of course.
            Liabilities impact on Lynas cash costs is virtually zero in the first two years of production.

      • Poncho,
        Firstly, the Australian FY starts July 1st so when Lynas says cash flow positive year 14 they mean the financial year from July 2013. Hopefully it will be first half, reported Feb 14, but that will be a function of demand as you suggest.
        Can you supply your calculations behind the statement ” I don’t think your $28 per Kg figure will hold up in that scenario.”? While I totally agree it is a buyers market and demand is tenuous, particularly at the outset in establishing supply chains, the Lynas spot or basket is currently circa $37kg v Molymess’s $25kg and Molymess’s recent 8-K for Q4 shows a realised price of $19kg. Now the $28kg I quoted above is taken from JPM estimates but is totally supported by the proportional discount in Molymess’s basket to actual sales. I note elsewhere you neglected to factor any SEG/HRE income into your assertion so I guess you’ve always got that to fall back on.
        Regarding Molymess, they are of course currently making sales but appear to have fallen well below the 10ktpa Q4. Currently they are still trucking reagents out into the middle of the CA desert, somewhat appropriately halfway between Hollywood and Vegas, with best estimates of their Chlor Alkali plant coming on line next Q, they are dealing with $150M of “faulty” work and in the last verbals we had from Con K he indicated they were now dealing with “bottlenecks”. CoP must be in excess of $20kg and with 82% of production in Ce/La, 16% Nd/Pr and nothing much else in the way of credits how much do you think Molymess can AFFORD to produce this year? I’d suggest their stated intention of achieving a 19ktpa run rate by mid year will be filed in the same place all of Mark Smith’s pronouncements went, when the SEC is finished with them of course.
        I’m not being flippant just for the sake of it, the Molymess business plan is marginal at best and it’s been corrupted by debt to the point it’s unlikely to survive long as a single entity IMO. A breakup between Molymet and a Con K consortium seems highly probable. In that scenario a Molymet Mt Pass stripped of liabilities (and current SH equity) could be viable if they can get the CoP down around $12/15 and look to largely service the domestic market at a run rate around 10ktpa.
        To contrast Lynas you’d be better off going thru the most recent presentation: http://www.lynascorp.com/Presentations/2013/Investor%20Presentation%20March%202013_final%201200976.pdf
        Note page 19: confident of placing all Ph 1 production and “substantial portion” of Ph 2 – 8500t is under allocation via Sojitz to the Japanese market.
        Page 16: some caution expressed re demand “Ramp-up of Phase 2 in Q3 2013 in line with customer demand”
        Page 17: total cash costs excluding corporate $14 -15kg at steady state.
        It’s certainly not going to be easy in this fractured market but I think there is enough there to suggest they’ve got a good shot, particularly if their LT contracts hold up OK volume wise over the next 6/12 months.
        Totally agree that any further development is very dependent on positive cash flow from the LAMP but once that’s established there is little impediment to fast tracking HRE separation, Duncan, etc. Probably shouldn’t get too pumped on Duncan ATM but the potential output is extraordinary with a further 5ktpa Nd/Pr + 300t Dy – do the numbers against a $600M projected CapEx. Mainly a large capacity chemical beneficiation plant at Mt Weld to handle 500ktpa throughput & Ce discard and most likely a stand alone HRE SX circuit as a third module at the LAMP.
        All doable based on a solid start over the next 12 months and I really don’t see where there is any conflict or even competition with GW, other than in the minds of posters here, lol.

        • Tim– sorry about the confusion on my part re the Australian FY. I don’t recall whether it was stated FY 2014, or calendar 2014.
          We completely agree on a couple of important things. One is that comparing the markets that Lynas and GW will be selling into are completely different, and there is very little direct competition between the two. The other is that the success of one could very likely benefit the other by improving the image of the sector(ROW REE producers).
          The reason for my concern over Lynas’ getting a profitable price has more to do with competition from MCP with twice the capacity, and a need to sell even larger quantities of the same products. That usually means cutthroat competition and lower than full production demand may place even more pressure on those buyer’s willingness to pay. Sales figures for LREE oxide and chlorate products have not been strong recently, and the possiblility of a price ware between the two big ROW producers, if both survive.

          • Poncho, your concerns re Lynas/Molymess were possibly relevant at some point in the past, but probably only briefly. Most likely at the time they opened a Japanese sales office with the thought of competing for Ce sales, and maybe some Nd/Pr. IMO it’s highly unlikely Mt Pass will get anywhere near the Ph1 run rate of 19ktpa under the current equity. The cash burn sub 10ktpa is horrendous and how often can they go back to the market for OpEx? My mind has turned to trying to work out what Molymet has planned for Mt Pass and what the synergies are. At least initially I imagine they’d run it roughly in line with the volumes of Ce they can place and try and get it cash flow positive before expanding, probably 8/9ktpa. The Lynas business plan has always been about developing LT, blue chip customers rather than the spot market. Highly unlikely Molymess has any price advantage and certainly no image of security to compete for Lynas customers.
            Both GW & Lynas are about rebuilding ROW RE supply chains and there is every chance they could feed off each other’s success and possibly even share some common customers (lol, until Lynas starts producing metals of course).

  11. To further clarify why some of us think that GW’s LCM would be able to produce serious profits soon:
    1. LCM completed the change to a new facility last year (thus a lower output for 2012) and, more importantly, they worked on upgrading the finish product they sell to the magnet producers, at the request of these customers. LCM will now be able to produce flake alloys which command a much better price, plus they will produce some actual REE metals. LCM didn’t sell this kind of products before so past performance is not really indicative in this case.

    2. While others thought about ramping up their production at the mining and REE oxides level, GW plans to ramp up their production at the LCM level, where all the money are to be made. They are close to receiving their second furnace which produces flake alloys and up to 5 more could find their way during the next years if everything goes according to plan. Note that the increase production at LCM would be possible with the “modest” resources from SKK mine in South Africa, as you only need a smaller quantity of REE to produce one kg of flake alloys.

    3. If others think that the economy of scale is good for their business at the mining and REE oxides level, GW thinks that the economy of scale will work so much more in their favor at the more profitable LCM level.

    • Steaua,
      Great news for GW and hopefully they’ll get the downstream operations on line quickly as well. Your point really highlights the way most “Lynasheads” think, GW is not a competitor, totally different markets, and in fact possibly complimentary in trying to rebuild ROW supply chains. Even if Lynas does eventually progress to metals the competition will be predominantly China.

      • I disagree Tim. I think I’m a Lynashead and I believe GWM likely has a positive future. My problem is with the GWM heads who want to claim that their company is going to be a major player and that Lynas is broken. Its nonsense.

  12. Seeing as the discussion – as any vibrant one eventually does – has turned to the merits of GW vs those of evil Molycorp vs Lyna as if we are discussing football/soccer teams in an Italian cafe or English pub after a Sunday match; last week a Russian uranium miner, SC Atomredmetzoloto (ARMZ Uranium Holding Co.) — the major shareholder of Uranium One Inc. (TSE:UUU), started ti process REE bulk concentrate in Lermontov. Mind you they ar looking for scandium oxide and alumino-scandium alloy, but I hear there’s a good market for that. I would love to see more commetns on the need to encourage scientific and industrial developments in the US & Europe to regain technological supremacy – r at least competitiveness. Certainly, with the focus on financial “engineering” (ie financial alchemy) that started in the 90′s, many valuable scientists have been diverted from science to finance, inventing wonderful derivative ‘products’ that brought ’2008′. There will be plenty of room for more ‘world cup’ of rare earths championships banter in forthcoming articles; i promise, but let’s see if we can get some insights on the bigger picture.

    • I think you are absolutely right, Alessandro. I enjoyed and learned from this thread, but I do think you are step ahead of us investors — that the real issues are not company ones, but policy ones about “industrial-scientific-business-managerial mistakes made in North America, Europe and even Japan over the past 25 years.” That might be beyond us investors, though. It is long, long term problem, one that can be fixed only by education first and foremost, and we are short to medium term. We could be right as rain in analyzing it, but it ain’t gonna make us any money.

      Like you, I also do not understand the fan attitude toward companies. Even if I were a fan, I would be happy to hold my nose if I had to invest in some “awful” other company if it were, gee whiz, going up in price.

      Great weekend argument, though, everyone. Appreciate it.

  13. Paul Hampel….Apparently the max messages was reached on the other string of comments. In any case, Please take an hour or so to familiarize yourself with the GWGQD SX plant plans, expanded Vredendal site, and progress of the full range of environmental approval applications available in the Savanahsa website below. They are the contractor managing the applications, which are essentially complete, as you will find, and awaiting final approval. If the link does not work, just cut and paste it into your browser.

    http://www.savannahsa.com/projects/project.php?project=161

    Please compare with zero progress of the Siemens/Lynas JV, and note that there are 22 statements and appendices detailing all aspects of the project, with photos etc, including the final submitted version of the Basic Assessment Review, which concluded it’s final public review period Feb. 18th, and is simply awaiting the agency’s approval or rejection notice. In order to speed the process, the application was made by RARECO, GWMG’s South African Subsidiary, which also owns SKK mining and other assets in that country, on behalf of GWGQD.

    Sure takes up a lot of pages for nothing, if you think that is the case.

  14. Rebirth my ass… For more than a year now, rare earth stocks have fallen and fallen. And the rare earth stocks have fallen, did I mention that? On this blog it’s all talk about the needs for these metals, but why doesn’t that result in better share prices?

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