your Post #: 40412071Demand and supply. Rare products usually...

your Post #: 40412071
Demand and supply.
Rare products usually have small markets and if you flood them things go really pear shaped. Things get even more critical if financials are done on the the high prices (which looked 'normal' at the time) as is evidenced by Lithium & Graphite which you have identified in your post 4041207 on a different thread.

A good example of how this applies to Silica is this Table from 2014 the point is not the $ numbers (I have deleted) but the market size for the different grades.
With this data at 2mtpa theoretically Muchea might be able to supply the whole world by itself but what happens with all the current suppliers? Double the supply and it kills the price and any company that depended on that price....

	Type or Application	SiO2 minimum %	Other Elements maximum %	Other Elements maximum ppm	Market Size Mtpa	Typical price US$/tonne
1	Clear glass-grade sand	99.5	0.5	5,000	>70	US$30
2	EMC, LCD and optical glass	99.8	0.2	2,000	2
3	Intermediate HPQ	99.95	0.05	500	0.75
4	High grade HPQ	99.99	0.01	100	0.25
5	Ultrahigh HPQ	99.997	0.003	30	<0.1
6	Hyper HPQ	99.999	0.001	10	<0.1

Hence why top shelf products are usually mined & marketed differently to say Construction sand, glass sand, or gold where the more you shovel the better.

Your original concerns were on the right track IMO (but only with high grade products) which is why its better/necessary to base calculations for everything on the most conservative prices - not as much fun to dream about, but pretty much ensures you have nice dividends and not nightmares later.

All In my opinion only and happy to be corrected.