IXR (ASX) General Chat / Discussion

Originally posted by Koproskilo: ↑

Well, well, well....China's biggest rare earth company (by volume) profit, has dropped by 97%.

https://oilprice.com/Energy/Energy-General/Chinas-Grip-on-Rare-Earth-Industry-Tightens-as-Prices-Drop.html

This comes on the back of Lithium producers Tianqi and Ganfeng posting massive losses last quarter.

This protracted period of oversupply and depressed pricing is finally starting to bite in Chin, as well as increased imports and recycling.

China Northern Rare Earth (Group) High-Tech, the top rare-earth miner by volume, barely turned a profit in the first half of the year, with a sharp profit decline of 95% to 97%

If this is true, because you never know what to believe coming out of China, then there will come a point where they have to let the price rise, to stop their RE industry collapsing.

When the news about Tianqi and Ganfeng surfaced last week, many were sceptical, presuming this to be a manufactured narrative to keep worldwide sentiment low.

If China can't make money here, what chance do we have?

However, we are now seeing miners of various commodities in China beginning to suffer.
This is of course all in aid of China's end goal, being global auto domination, and their willingness for other links in the supply chain to suffer, as long as they dominate EV sales worldwide.

China has seen a gradual consolidation in their rare earth sector, with nationalisation tipped to continue the trend.

This will of course lead to total state control, but what will it do for pricing?

Well, I guess they could push it anywhere they choose, up or down.

The key for ex China players like us though, is NOT price.

I'm not saying price will not be a factor, but it will not be the be the definitive factor that it now is.

Security of supply will be.

Particularly-
If military tensions increase with China and skirmishes begin around Taiwan
If tariff wars escalate, leading to either a ban on Chinese rare earths, or them being heavily penalised by import tariffs
China instituting a retaliatory export ban, in effect weaponising this commodity.
ETC...
ETC...

Many here quibble about price daily and direct their focus to the viability of Makuutu.

But what I hope that many here realise, is that all these movements, shift in policy and posturing, is leading to one thing.
And that is the weaponising of rare earths as a commodity.

Then the west will lean on incumbents such as us, for production from Makuutu and recycling from Belfast.

Threats and Supply bans have already been made and this is all setting up to the point China could pull the pin.

So, China might not care about price, but they sure do care about control.

Remember, this is the commodity they have described as their oil, so they will not want to give this up easily.

As for the EU and the US, surely they must realise by now that we are at a very time critical point in the evolution of the Rare earth market.

A commodity like many others such as lithium, that we have allowed a single sovereign entity to control, mostly due to price, and also due to lack of governance and environmental controls.

We need to decouple.

A decoupling that should have started 10 years ago is now on their doorstep, and the time for committees and debates is over.
Now, it's time for action, and time to heavily invest in building an independant and local supply chain.

In broad terms.....Resource, MREC, oxide, metal/alloy, magnet....it HAS to be done.

I just hope, they have come to the same conclusion I have.

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Its all starting to unravel