EDITOR: | June 8th, 2015 | 7 Comments

GeoMegA’s Britt on the looming rare earths shortfall and price debate

| June 08, 2015 | 7 Comments
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June 8, 2015 — In a special InvestorIntel interview, Publisher Tracy Weslosky and Simon Britt, President and CEO of GeoMegA Resources Inc. (TSXV: GMA), talk about heavy rare earths, permanent magnets, and Chinese domination of the market. It is noted that though China controls roughly 95% of the market in refined rare earth oxides, they only have 20-30% of the deposits. They go on to discuss the increasing tensions between China and Japan over the Spratly Islands, the recent deal between Molycorp and Siemens and the need for a sustainable industrial metal supply chain in North America.

Tracy Weslosky: Simon the reason I wanted to talk to you here is I wanted to get your opinion on the overall rare earth sector right now. You’re one of the few that have managed to survive the 155% collapse in 2011 in the overall rare earth sector. I want to start by asking you about the Siemens/Molycorp arrangement because we think it’s a big deal.

Simon Britt: I think the key comment there was the sustainability aspect of Molycorp’s development. Another important factor is that it’s been about a year and a half into Molycorp’s production stage. This is where Siemens decided to step in and sign the long-term agreement. We can see two things here, sustainable extraction and also reliability of the production that Molycorp has been doing.

Tracy Weslosky: I also think that GeoMegA has been ahead of the game in understanding the supply chain issues and industrial metals strategy for sustainability in North America. Can you talk to me a little bit about this?

Simon Britt: Well the tough part was to remove the acid deliveries out of the equation. For that we inserted a regeneration facility directly on site. Subsequently to address the supply chain, governments are looking for local employment. We didn’t think that selling a critical metals concentrate would do the trick to go into production. About 3½ years ago we addressed that — we started to address a solution with developing a physical separation process. We showcased excellent results early in 2014. As we moved towards the scaling up of the process we hope to showcase more excellent results.

Tracy Weslosky: For those of you in the audience that may not be familiar with this, right now the Chinese control 95% of all of the processing of rare earths on the planet. With regards to that a lot of companies are currently looking to make partners out of China, but doesn’t that defeat the overall purpose?

Simon Britt: Well, we think so. They control a huge amount, 90% plus with, in our estimate, maybe 20% maybe 30% of the resources. Now they do that with the separation process, the solvent extraction, which they master, a chemical process so it’s very difficult to compete with China, with all the environmental controls, more expensive chemicals and know-how that they’ve developed and they keep secret.

Tracy Weslosky: The Tesla Powerwall battery announcement that was out this month, how do you see that affecting rare earths?

Simon Britt: I see it as a successful story in the industrial mineral sector. How does it affect rare earths? Time will tell.

Tracy Weslosky: We see rising prices, a big rising price trend because of the increased tensions between China and Japan, and China looking for imports, you know. With everything that’s happening globally, for instance the German Resource Alliance that was recently announced ….to access the complete interview, click here

Disclaimer: GeoMegA Resources Inc. is an advertorial member of InvestorIntel.


Tracy Weslosky

Editor:

Tracy Weslosky is the CEO of InvestorIntel Corp., a company formed to provide investor relations in 2001 that today now provides online media marketing, social ... <Read more about Tracy Weslosky>


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Comments

  • Tony

    Sustainable rises in rare earth prices won’t occur until both Molycorp and Lynas has been put out of business. Just how I see it unfolding unfortunately.

    June 9, 2015 - 7:43 AM

  • Mr. kean

    I mentioned awhile ago that this won’t be the year for rare earths. But the pump blogging analyst on here had ever one believe it was a turn around

    June 9, 2015 - 8:23 AM

    • Tracy Weslosky

      Watch it Kean, we do not have a “pump blogging analyst” – we have the top ranked journalists and analysts in the industry. Add something worthwhile, or do not comment.

      June 9, 2015 - 8:31 AM

  • asrms

    While I agree that MCP could well go BK, I don’t think that this will be the case with LYSCF. As the article points out military/economic tensions are ramping up between the West/Japan and China. Siemens (and I think lots of others) want non Chinese LREE product; that’s apparently why they did a 10 yr contract with MCP (though strange they would do this with such a potentially BK company – some now suggesting they may even invest in MCP??).

    However, Lynas has been specifically supported by Japanese money for years. If MCP goes BK then there is no LREE product AND process supplier outside China. Buying 50% from non Chinese source but 50% from Chinese still makes you Chinese dependent. Customers, I think want out of China entirely.

    Therefore, I believe if Lynas can continue there cash flow positive results based on increased Japanese buying (and others), they could in fact become a ‘moat’ company for LREE. After all, where is risk financing going to come from (outside of a govnm’t or major industrials who might take a chance) for other juniors re., LREE production; especially, after watching the trials and tribulations of both MCP and Lynas over the years.

    Only my take and the next two quarters will provide answers re., the continued existence of MCP and Lyscf, and as you suggest as a holder of both these companies I might still ‘go down in flames.’

    June 9, 2015 - 8:24 AM

  • Tim Ainsworth

    Lol Tony, trotting out that old dinosaur again, you must be one of the Dysy 1.01 crew.
    Act 1 was wiping ROW competition.
    Act 2 was leveraging that for ROW capital & IP – but they overplayed their hand with clumsy manipulation and wrecked half the industry.
    Act 3 is about rebuilding sustainability in the primary industry, with downstream value add/employment the principal goal.
    You don’t think they’ve worked out alternate/supply security might be rather important to ROW demand recovery, most likely at all levels of manufacture? Certainly sponsored a great deal of ROW research to reduce/eliminate REO, particularly Dy.

    June 9, 2015 - 8:51 AM

  • Tim Ainsworth

    asrms, I wonder if Japan’s rekindled support for Lynas has anything remotely to do with China’s efforts on illegal/smuggled RE, particularly the more obvious exit points? Regardless it’s tangible, and I imagine LAMP is doing something to substantiate it.
    Re Siemens, they went to some lengths in their Roskill’s preso last Nov to stress “alternate” supply, mentioning China, Lynas & Moly, and quite openly stating they knew they had to pay higher prices for sustainable supply. Consider their fairly recent decision to focus on NdFeB based DD going forward and a full order book, do they really care where there Nd for their magnet manufacturers comes from, as long as it is reliable and economically priced? Alternate sources would clearly be their strongest position.

    June 9, 2015 - 9:47 AM

  • Mr.Jimmy

    Thank you Tracy for your two interviews with Simon. As a long term investor in GMA I appreciate the updates. 43-101 on the way for the company this month…..it’ll be interesting to see the numbers it shows. Cheers

    June 9, 2015 - 1:04 PM

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