Thanks for all the informative posts and research, this is...

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eastwest101

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31/03/24

18:54

Post #: 73131376
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Originally posted by 2ic: ↑

Proble is everything in the RE Magnet supply train needs subsidising against China's technalogical, industrial, economies of scale and generally much lower operating costs in downstream production. RE mine feed concentrate or even MREC is not the bottleneck or real issue. china requires and is happy to do offtakes for RE feed imports, and there are huge number of large, long life RE deposits that can provide relatively low cost RE feed (some cheaper than others obviously). Not just lots of LT RE deposits to match potential demand growth forecasts, but larger the scale of annual mining rates the lower the unit cost for those deposits...

The west has very little REO seperation facilities running or being built, those that are like ILU will be much higher cost than China operate, and even fewer REo to metal and then into RE Magnets production capacity. All the downstream production required to break from China's supply grip needs to be subsidised or tarrif protected and will take many years to implement and build out. All the while the biggest and best RE deposits will be subsidised enough to get up and running but probably in a low margin to profit less situation with an oversupply of RE feed vs downstream offtake capacity.

HAS recognised this and hoped to jump ahead of other RE deposits to the front of the queue with a 20% NEO Performance share holding. Obvious problem was that NEO remained an independent company whose strategic imperative was to partner with the lowest cost, and therefore most reliable ongoing suppliers of RE feed (and specifically MREC at minimum not raw monazite). Sensibility western governments are subsidising projects that produce MREC if not actual final Seperated REOs because those downstream products are much more fungible and easily sold to futurewestern magnet producers.

What are the 'best' RE deposits that will supply future demand growth for RE Magnets such that it is? The list imo includes:

mineral sand miners where monazite is a free byproduct (eg BSE Toliara)
Ionic clay deposits with the right low cost leaching
very large hard risk deposits like Mountain Pass, Mt Weld, Kangakunde, Halleck CK and host of others
novel sources of RE from say fly ash, phosphogypsum, new RE metallurgical breakthroughs

In summary, the west is not short RE deposits and certainly not at the sort of LT RE prices HAS requires to make mining development profitable on the Capex and opex in remote WA as it is. China will happily buy any cheap monazite feed, but I don't think the tolling agreement HAS signed is realistic or will even be allowed by China if it were wever actually put to the test. Why would Oz or US taxpayers subsidised a Capex and probably opex lossmaking mine to supply China with unprocessed monazite? At least ILU will get their monazite for free after zircon and titanium credits then process it into Seperated REO here in Australia...

Good luck

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Thanks for all the informative posts and research, this is surely on a wing and a prayer and there is no chance of a white knight Australian taxpayer rescue to simply provide China downstream with loss making oversupply feed. Twiggy has completely lost the plot here and will take a substantial bath, as the asset won't be allowed to be vended to China. I have never seen such a top-heavy board and senior management for an uneconomic 20% constructed pipe-dream and their metal price assumptions are just not realistic.

Your observations about global supply and China controlled downstream is exactly spot on.

HAS Price at posting: 43.0¢ Sentiment: Sell Disclosure: Not Held
3 Upvote

0 Great analysis

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