China producing most of the world's RE-magnets is a conundrum more than a mystery. There is no global shortage of RE now, not likely to be in the immediate future, or longer term if a lot more RE deposits and downstream processing is subsidised in the west to reduce reliance on China (which there will be). In any market that is well supplied to over-supplied the price hits an upper limit... so any new RE developer needs to produce under, or at least close to that upper price limit to justify funding even with large dollops of government subsidies. Yangibana is simply too high-cost to make it closer to that realistic NdPr clearing price imo, and the market's finally agreed over the last 12 months.
Meanwhile, unlike say lithium where there simply isn;t a near term alternative for EV batteries, there are both short-term alternatives (advances in EV motor tech using lower strength ferric-magnets, induced magnetic motors of various types (no permanent magnets used)) and long term substitution potential like iron-nitride magnets. Therefore, EV companies have started to baulk at RE-magnet supply chain risk (catastrophic risk as opposed to margin risk) and/or RE-magnet cost pressure risk by turning to ferric-perm-mags and induced-magnetic motors to bypass these risks. A small drop in performance avoiding RE_P_Mag is acceptable to both EV manufacturers and EV consumers, where 5% of lower performance drop is un-noticed when battery-motor efficiency is growing at a compounding rate of ~10% annually anyway.
I never got around to answering @roughie12 question on RE stocks, but it's pertinent to the situation at HAS obviously. The west needs a certain amount of RE supply ex-China for military and other non-substitutable requirements, plus as much extra at long-term 'cheap' prices it can make because RE-P-Mags are still very nice to have. This ex-China supply build out is limited as much by the time and technology required to develop the downstream REO processing and RE-mag production the west simply doesn;t yet have in place. As that RE-mag production capacity is developed it needs to be matched with RE mine supply, sensibly from the lowest cost deposits.
In the scheme of things, RE deposits are often very large verses annual production, including the lowest cost deposits. Mt Weld's current Reserves are enough for another 25 years at 12,000tpa NdPr after increasing plant capacity to 1.3Mtpa. A recent 1000m deep drill hole across the central pipe deposit demonstrated the potential for another 400Mt @ 2.7% TREO down to ~500m below the pit in a 500m diameter primary carbonatite pipe. LYC can build a new primary float plant of say 5Mtpa producing ~20,000tpa NdPr for the next 80 years in a low-cost super-pit. MEI Brazilian ionic-hosted clay deposit will likewise be in the >500Mt Reserve category that can support another 10,000tpa NdPr low-cost. Mountain pass will bring 5000tpa NdPr back to the west, ILU will add 5000tpa min sand monazite NdPr, LIN's Malawi carb deposit has excellent met recovery it seems at >2% TREO and could be another 8000tpa NdPr over 2-3 stages of expansion.... then we have Peaks Ngualla, Pensana Longojo, Arafura's Nolan, Sierra Verde's Brazilian ICD, many min sand RE-rich deposits, Rainbow Rare Earths Phalaborwa phosphate tails, a host of other competitors, new discoveries to be made, maybe even coal fly ash and other completely different suppliers etc.
The market is well supplied REO now, reflected in the ~US$70/kg NdPr-Ox. How high that needs to go to induce enough ex-China supply (obviously somewhat higher), and how high EV manufacturers will accept before changing EV motors etc are questions for HAS. The latest DFS 'confession' on Yangi capex and opex requires a NdPr price towards US$200/kg NdPr to be robust, so the market is balking at such price requirements, as are financiers and equity funders by the looks (ex-Aussie guv). Ultimately HAS is a binary gamble... it either gets funded and into production or it slides inexorably to nothing. Even if it gets developed through subsidies, does it actually make enough money for shares to stop falling towards nothing and becoming a zombie producer anyway? Doesn;t look like a very good bet to me, or the market, or the management that have continued to leave for better opportunities over the last 12 months... and management inside HAS will have a much better idea of how things actually stand than us on the outside.
On the upside, the world is gripped by ex-China subsidy fever and politicians have huge debt funded check-books, and little care what checks they write so long as it brings jobs and votes today. I suggest HAS shares would be much lower without the hope of some political bailout that at least gets them into production and holders the chance to exit on a relief rally. Where's there' is media narrative, public demand and dumb politicians, there's hope...
GLTAH
HAS Price at posting:
$1.36 Sentiment: None Disclosure: Not Held
(20min delay)
