Stock of Molycorp, a rare earth producer, spiked after the deal was announced, up 11 percent at $29.97 on the New York Stock Exchange.

Molycorp will own 30 percent of the joint venture, which will produce sintered neodymium-iron-boron magnets at a facility in Nakatsugawa, Japan.

Work on the new facility will start next month, with plans to expand to the United States eventually, Molycorp said.
WHAT DO U THINK OF THIS JACK???

Hello Dear All,

It’s my first message on your blog. Thank you very much for the great information and analysis you provide to the whole community of rare earth fans.

Concerning a possible “triventure”, at the head of which GW would perform the separation and further value chain steps, I feel still quite unconfortable with their capex assumptions, especially when we compare them with Molycorp and Lynas … and even without taking into considation neither scale effets nor technical complexification of the process at the Lynas scale of production.

You explained that these low capex (30M$ for a 2500tpa separation plant – I assume we shall add to this the mine refurbishment, the concentration plant, and all studies, enginnering and project management costs …) may be explained by the experience of their chinese partner.

However, Lynas also entered into a partnership with Rhodia (that has operated for years a separation plant in France, and that still operates 2 separation plants in China) to help them develop the separation and oxides refining process. Several chinese engineers are also working right now on the LAMP construction plant. As a consequence I don’t understand well the GW competitive advantage on Lynas as the Capex point is concerned.

What are according to you the key parameters that influence the “per ton” capex necessary to develop separation plants ? Is the type of mineral a key point ? Or this parameter is only key for the concentration value chain step ? What shall we look for according to you when analysis the different projects to guess whether they are suitable for low capex separation plants or not ?

Thank you very much !

1.) I have not seen you discuss Lynas Corporation and their position in the upcoming REE supply chain… Lynas is the closest to the production of substantial quantities the entire range of REO’s and has a number of contracts in place… Could you take a little time to comment on this?

2.) In your proposal of a Triventure REE project you say:

“All you will need is access to capital and negotiating skills to iron out differences among the three current managements.The synergies among the companies are striking.”

In looking at the balance sheets of all three companies you are proposing to merge the book value (and cash on hand), varies greatly as between the companies and none of these companies has significant capital resources to begin such a venture…

Of course, as you allude to, capital raising activities can be conducted to begin such a merger but it is unclear to me just which venture would be selected to develop first… That said, if I was an investor in one of the acquired juniors, I just might object to taking a back seat to another companies resources being developed before my own… It seems to me that a merger would not have any advantages unless all resources were developed concurrently which would be a monumental task…

3. A question… Little is discussed about Erbium an REE who’s use is accelerating every day… The applications for Erbium are many and just one use, in the doping of fiber transmission media (i.e. Oclara, JDS Uniphase, or Finisar) to amplify light signals used in internet applications… Obviously the quantity of Erbium necessary for these applications will grow with this rapidly expanding industry… Can you shed a little light in this area?

Thanks for your article and I am looking forward to your response….

jjL2u,

I don’t know Dr Leeb. I may have met him on the trail, but I don’t recall that either.

Jack

Robit,

Last March I spoke to a meeting of the SAE International’s Hybrid & Electric Powertrain group in Indianapolis. Ther topic, chosen for me by the SAE, was “Is neodymium becoming too expensive for OEM automotive applications?” My answer was “No.” The problem is secuirty of supply. At that meeting there were at least 4 large-scale electric drive motors using non REPM technology on view. Ther was a detailed technical discussion of the various types of automotive drive motors, which concluded that REPM using motors are a bit more efficient and significantly lighter in weight than motors using ferrite type magnets or electromagnets.

I do not understand why the DoE is doing what it’s doing, because the ultimate choice fo such motors will be made by the OEM automotive industry, which is spending, along with its suppliers, quite a bit already on such development. These non REPM motors are not from your faher’s Oldsmobile they are up-to-date electrical engineering wizardry. I sometimes think that government think tanks run on empty. I wish the DoE would put into domestic American mining and refining of rare earths the money it has thrown away on soalr and battery research that has led nowhere.

Its politics I know, but its still disheartening.

Just curious about whether you’ve heard of, or had any contact with Dr.Stephen Leeb? He wrote the following article, and just like you, has concerns, ideas, and opinions, about how the US may find ways to become self sufficient, with regard to REE’s in the future
.
http://seekingalpha.com/article/284147-consequences-of-the-debt-extension-resolution-for-commodities?source=yahoo

Previously, in comments/exchanges from his readers, he initially poo-pooed GWM, as a pretty much, non-issue, mere .70c stock. When he made those comments, it was pretty clear that he really didn’t know much, if anything about the company. He was looking at larger, macro issues, and not so much concerned with smaller players, even if they might eventually be part of the overall solution for the US (again, he wasn’t up to speed on GWM, imo). He was more focussed on AVL and QRM, companies with large deposits, but facing many obstacles/challenges still in the way, as far as being any part of the solution in the near, or even distant term.

That said, he appears to have changed his tune a bit, and included GWM within the conversation (and his recent article) of which REE companies may be worth a look going forward. Again, just curious as to your thoughts, and if you’ve had any contact with this individual? I value your opinion in this sector, and think that if anyone could or should point out where GWM fits in the overall equation, who better than you to do so?!

The reason for my question is because he apparently has been involved with “think tanks” and the like, relative to arriving at possible courses of action for the US to take domestically, with respect to future REE self sufficiency. Again, I’m just curious if two of the greater minds working on the same problem, are comparing notes, or going to in the future? Thank you again, for your input, time and consideration, it is very much appreciated. Take care.

My personal gripe I read this article several days late. Why not notify the TMRI members when a new article by either you or Gareth is posted on the TMR open site