"I have questions about the LT deals Lynas has made, about the wisdom and timing of setting pricing in stone in this environment. Looking to learn; no other agenda."
If you want to learn go study AL's transcripts, and perhaps note her original CV on appt as a Director. Apart from the exceptional organisational & team building skills she has demonstrated her core experience was listed as Marketing & Pricing Strategy.
For anyone with the vaguest concept of state of play RE, a tiny, emerging & incredibly immature business segment, I cannot think of two better skills/experience now production is consistent & the cash situation settled.
This is an industry that not so many years ago was run by carpetbaggers & horsetraders, middlemen who would buy 20t of this & 50t of that then hawk it around wherever they thought they could sell it. Once had the opportunity to sit among a group recounting stories of the good ol' daze.
China has sought to create a more orderly mkt with the establishment of the Baotou & Sthn Exchanges with considerable success with supply now largely 6 SOE but plainly the horsetraders/speculators still have influence as witnessed the stupid price action H2 2017.
Lynas customer base is tiny, but volume, you don't want rats & mice when you are scheduling 16ktpa of multiple products in a continuous flow situation, you want large blocks of material locked in well in advance. That means scale, Global 1000 companies, and there just ain't that many of them that buy REO and they demand both supply & pricing surety.
Within an economic threshold HIGHER pricing is not so much the issue rather pricing shocks. High/low pricing parameters can be locked into forward production forecasts, Lynas would be looking to lock in its minimum threshold to provide an adequate return on production while offering the purchaser surety over maximum prices within the time period agreed.
The notion that Lynas would pre sell at current prices is naive, a little thought would demonstrate the potential for Lynas to lock in a PREMIUM over current prices in exchange for a cap over maximum prices.
All part of Lynas strategy to engage downstream customers, develop a far more mature business platform, as the AGM presentation states:
"Lynas is no longer a challenger we are a market leader"
When investment mkts finally work thru the cluttered thinking expressed here they will probably be astounded just how far Lynas is out in front. They are creating a template for the industry, incl the Dragon, one that will leverage NdFeB growth substantially.
(20min delay)