Belfast will be profitable, even at todays prices.
I would also be expecting a premium for our product....particularly from defence.
A mate of mine is an asset manager who works on Collins street, and came across an article this evening, from a UK investment bank which was posted today.
They recently visited Belfast.
Ionic Technologies is currently running a demonstration plant with the capacity to produce 10tpa separated magnet REOs. From its inception, Ionic has produced 500kgs of rare earth and feasibility study allowing (due 3Q24), Ionic expects to continue running the demo plant 24/7 before scaling up 40x to a full commercial scale operation (400tpa REOs from 1,200tpa feedstock) in 2026. Previous feedstock prices have come in at c.$15/kg – although given the current weakness in rare earth prices, we see potential for future deals to be negotiated lower. Opex is expected to come down from initial costs of c.$30-40/kg to c.$25-30/kg, and as for the price received, it varies by composition but current spot Chinese prices span $45/kg for spot neodymium oxide to $680/kg for terbium oxide (which Ionic has successfully extracted).
This is what I was trying to work out the other day. Feedstock $15 ( and declining)+ processing $30= 45/kg cost, which will come down with efficiencies and tuning, as well as locking in cheaper long term feedstock prices.
The prices I was looking at with a 25% margin, look roughly close for the cheaper Nd Pr, but way off for the heavies
The profit on Terbium will be US$630kg The profit on Dysprosium will be US$183/kg at SMM prices, much higher for Tradium prices
I would be tuning the ligands and favouring the recoveries primarily for the higher margin oxides, although they do make up small percentages of a magnets composition. That is where they will need to set up a plant optimisation strategy.
From here, Ionic has big ambitions – they expect the modular nature of the plant will allow it to be easily farmed out globally via JVs and commercial partners. At present, Ionic is the only producer of rare earth oxides via recycling in the Western world, and its in-house development means its IP is well protected, making it an attractive proposition in markets that have a supply of magnets/swarf and a desire to separate themselves from the supply chain dominated by China - 60% of mining, 87% of processing, and 99% of recycling. It would be remiss of us not to mention the magnet market in general – NdFeB magnet demand is expected by Proterial to increase 60% from 220kt in 2023 to 350kt in 2030, with auto drivetrain (+12% pa) and wind turbine (+17%) both key drivers. Rare earth use in defence technology, and the premium Western governments have demonstrated they will pay for REEs sourced outside of China, should also not be ignored.
As discussed, Ionic Technologies has the first-mover advantage in ex-China REO production via recycling, and the pace of development and milestones reached demonstrates a hunger to make the technology work at scale and keep moving forward. Belfast Harbour seems to be the ideal place to build out a recycling hub – close to offshore wind (8.7GW of installed wind turbines within 150 miles of Belfast - that’s a lot of magnets), plenty of space, and most importantly, a local government and landlord keen to encourage development and who are already building a renewables hub. We also think it reasonable to assume a REO oxide produced ex-China will be able to attract a premium as governments and OEMs prioritise security of supply. From here, we look forward to seeing the feasibility study and understanding the associated costs. We believe Ionic will likely be able to take advantage of myriad renewable and new technology grants available, and it has made it clear that it is courting various strategic partners as it irons out the capital needed to move forward.
I reckon Brett and Tim were there during this visit.
So, we were already looking at decent revenues for Belfast, which more of less have now been loosely validated and are better than I expected..even in today's market. We have a a local government and landlord keen to encourage development and who are already building a renewables hub. We have proven technology, with proprietary tech safeguarded in house. We have western governments who will pay a premium We can short circuit the Chinese supply chain and bring sovereign capability to the UK. We will likely be able to take advantage of a myriad of renewable and new technology grants, of which we have been previous recipients. And we have made it clear that we are courting various strategic partners and are ironing out the capital needed to move forward.
Going forward, I hope this was a productive trip for us and hope the boys have made some headway with the new government to progress avenues of funding and securing debt facilities.
And of course, the PFS will give us a lot more clarity around those numbers I threw around earlier.
Let's see....
IXR Price at posting:
0.9¢ Sentiment: Buy Disclosure: Held
(20min delay)