Lynus MC is $5.43B, page-33

Just to clarify and broaden the statements about Malaysia. It is true that Lynas suffered from continual protests and court challenges, instigated mainly by Wong Tak, (who I have met and discussed his concerns, back then it was flooding, it never happened, now it’s radioactivity) but, these have been put to bed with the cracking and leaching being relocated to WA, which was made by Dr Mahatir due to political pressure.

This dates back to the Mitsubishi mine that left toxic waste and a bill for the government to clean up. This was the root of concerns and was pushed to gain power and Malaysian views on colonialism was also riled up to get support from the ignorant masses. Also Malaysia has different radioactivity levels compared to the world accepted levels, currently being updated to UN standards from memory.

The current waste needs to be stored and will be stored in time for the deadline set by the government. But, Lynas has been de risked to a certain degree and there are bigger risks for Malaysia if they don’t agree to what they set up and agreed to with Lynas, sovereign risk for other investors. Lynas did at one stage risk being a going concern due to the political issues in Malaysia, the PDF will be the final risk to settle.

Nick Curtis who was then the CEO chose Malaysia for the labour costs and access to the Chinese market the biggest consumer of REE, with the conviction the 50 year government of Malaysia would remain in power. The replacement government proved to be unstable and Malaysia being such a multicultural nation has far more political and religious views and disagreements than we do here in Australia.

The Chinese, Malaysians have a powerful political force in the country and some won’t even rent a house to a non Chinese Malaysian so racism and nepotism are a part of the fabric to the country, so this leads up to the next step.

China tried to buy Lynas and currently control 90% of the worlds supply, this some predict will lead to a supply deficit and China will need to import, this could be a reason why Lynas was being squeezed, maybe to send it broke, maybe to buy up the plant and IP once Lynas was forced to liquidate, it could be either or both, but the point is that now with COVID-19 countries are looking at their own supply chains and critical metals are one of those, defence, why Lynas are building in Texas, EV, which HAS a higher percentage of magnet metal materials.

So back in 2011 the market for EV was no where near where it is now. There was more of a concern for Cerium to polish LCD tv screens and to make energy saving lightbulbs, the rise before was over territorial disputes with Japan and China cut off supply to Japan, that sent prices to the sky and negatively affected demand for some REO as users found alternatives. (this can be expanded for other REO if prices go crazy as the end users will adapt away which will affect long term price stability)


Fast forward to today and the world outlook for wind power, EV is unlimited. Governments are committing to stopping Internal combustion engines and having pure Electric Vehicles, this along with China dominating world supply and geo political issues with China makes governments nervous and investors grin with the outlook hard to predict, for the upside.

It’s a rules based world order at the end of the day and China being a mercantilistic country will not be allowed to dominate critical metals for defence or monopolise an industry, we are talking trillions in flow on effects.

LYC will most likely end up being a Rio Tinto or BHP of REE, HAS could possibly be the FMG, time will tell but neither in my view are over valued and face less of a risk from China as they will derive their income from Japan, USA, Korea and Europe.

FMG needs China and if you pay attention the media reported yesterday that Sleepy Joe said Australian businesses need to support the Australian government with their disputes with China. How do you think that will end? I’d say LYC and HAS are less risky than FMG as once Vale expand and China takes Sundance old Ore from Africa and others the dynamics of Ore seems shaky, this is being reported also that China wants to end their dependence on Australian ore. Most of the rest of the world want to be dependent on a country like Australia for resources, including REE. China didn’t ban ore as they need it right now, but if they could drop it they would and where will FMG be?

So different risks different returns and comparing FMG to LYC and HAS is strange to begin with.

For returns to live on, sure have some dividend paying stocks, but we are here not only for franked dividends but also capital gains and growth and LYC made it through a massive hole like Swiss cheese and came out on top. Once their plant if running in Texas and WA and hopefully value adding other companies ore, the figure you quoted to make LYC market cap what it is will be a memory. LYC was valued at 5B with Nick Curtis as CEO as he made the weekend business mag at the time and we weren’t on the cusp of an energy and EV reset.

HAS just needs one or two more off take agreements and some finance and its full steam ahead.
Risks to that not happening? I don’t see any, considering the support for the last CR and my view is no company really gets a run until the institutional investors are in place to benefit the most. Europe needs a source of magnet metals for their EV revolution.

I hope this brief background to LYC and RE can bring some context to your statements about Malaysia and FMG and to be honest I do not understand why you would bother if you don’t hold a stake or even a sentiment in HAS or LYC, so it just seems to me that you have another agenda or just like stirring the pot.

P.S, I have been holding and accumulating LYC since about 2008 through all the capital raises and 10 for 1 downgrade and monitored the political history of Malaysia that whole time, plus my equivalent profits from LYC to this date have been invested in HAS and HASO.

I don’t lose any sleep about my stake in HAS. If I held FMG, I could wake up tomorrow to a ban on ore from China.