CBMM has been undertaking a major expansion taking production from 100,000 tonnes/yr to 150,000 t/yr, to meet growing demand for product. In 2019 sales were 122,000 tonnes with a lot of inventory used, hence the giant spend on increasing production to 150,000 tonnes/yr.
According to the numbers presented (Argonaut), if 32kt/yr is 15% of market, then total market is ~213,000 tonnes, with 182,000 tonnes from other players. Take off CBMM 150,000t still equals 31,000 tonnes from other players, that are currently producing 10-12,000t/yr.
CBMM would be well aware of the grade of our mineralisation, knowing we will be able to have a high grade product at relatively low cost, so could withstand any type of price war. It would be the others with low grade mines that would be in danger. I haven't seen CBMM starting a price war with any of the other new producers, so why would they bother now?
Much more likely to work in co-operation with us, and us with them. The niobium market is growing at 4-5%/yr, meaning another 5-10,000t/yr needed to satisfy market, without driving the price up to levels to quell demand. Plus new uses, like batteries are being found for niobium. These new uses are likely to drive up demand by another 1-2%/yr in a 'few' years.
Does anyone think CBMM want to spend another $US1-2B increasing production again in a few years, to have a price war and lose money on every tonne of niobium sold?? I certainly don't. Far better, cheaper and more profitable for them to work with us, or even buy a percentage of the operation, or the company.
32,000t/yr is way beyond what anyone would be thinking to start the mine, unless we had solid offtakes for that quantity, much more likely around the 10-12,000t/yr to start with, then expand after a few years from cashflow. It's also the smartest way to go.
Using a 60% recovery, and I would expect at least that level, a 1Mt/a plant would produce 12,000t/yr. At current prices $US45,000/t and assuming $US15K/t costs (way above CBMM), would still give well over $A500M in annual profit, before any by products are taken into consideration. Then a couple of years later doubling production, using a lower average ore grade, to provide a sustainable mine for decades, with the increase production only meeting part of increased growth rate of niobium use, would be the game plan IMHO.
Trying to produce 32k tonnes/yr first up assuming recoveries of only 45% would require a 3.5Mt/a plant and waste a lot of our high grade niobium, assuming they go with a 2% grade to start with. There is no way they would do this unless they had solid offtake agreements with up front contracts and agreed pricing. Way too risky to just build that size up front, plus a huge cap investment relative to a smaller plant.
If you read the CBMM sustainability report it gives you a fair idea what CBMM are all about.
https://cbmm.com/assets/sustainability-report-2021/a-cbmm/en.html
Get the complete report in the top right hand corner.
CBMM are planning to double sales dollars by 2030 with the increase of 50% in plant size. That doesn't sound like a company interested in a price war..
(20min delay)
