Eddie
Almost all of us long haulers have good arguments on each side of this RE debate, and I appreciate yours.
Not debating every point (at this moment), I would like to give you my thoughts about my comments and hopefully touch upon your themes.
I was studying a real-time business model that has crashed and burned and has nothing to do (directly) with the RE industry. It involves those Scooters that are on every street corner. The company with most market acceptance was BIRD (at least here in the U.S.A). It dominated the entire Scooter industry. There was also a little unknown called LIME, which was virtually unknown. I am in my 50's and drive a Mercedes, but I thought the idea was great and even downloaded the app, thinking I would be cool and try this out for local "jonts" to the local store. Then came COVID-19. All of a sudden, people were not moving about, and no one wanted to touch the handles of the scooter left by a stranger.
BIRD pressed on saturating every market they could find. in effect, burning their cash on a soft market. All a while, LIME withdrew from the market, saving their cap-ex and maintaining their presence in a select few markets, Los Angeles being one (and the city I live).
As we came out of COVID-19 and reopened, BIRD was completely dry of cash, while LIME has capital to invest in redeployment and extending to new cities. BIRD was dead in the water. Today, BIRD is dust. Just got sold for US$15 million. While LIME is still a private company, planning its IPO, and has a value of 2+ billion.
18 months ago, LYC had a record reporting quarter. ALL proceeds from our LAMP. Now, we are told that the LAMP has undergone significant upgrades. SO, in an environment where our REE industry is under extreme pressure and low commodity prices, why keep investing and burning cash just to "overproduce" for better days?.. Simply maximize your utility of the LAMP, and halt Kalgoorie until production issues are resolved and demand requires additional production.
Eddie, you may know that I am in the agriculture industry. Mainly dairy. I dont make cheese. I dont milk cows. My job is to develop strategy for maximizing international dairy growth. I tell billion dollar dairy groups what to market for the next 3-5 years. This is why many of my posts come across as theoretical and presumptive.
I watched the meltdown of MP yesterday and today. I said many months ago that it may have trouble as an "ongoing concern" moving forward. Losing 35% in two days is its harsh reality.
These days, I am focused on Ford and Byd.
https://youtu.be/m68ZQEx2KAQ?si=n0f34A0oIDIRrC_2
This YouTube video demonstrates that Ford is walking away from EV autos. Im not making this up. Simply copy and waste it. Entrepreneurs are in the battle, but the majors, including Mercedes and others, are walking away from EVs. My God, even Air New Zealand dumped its climate pledges today. So, if Ford is dragging its feet, and if Air New Zealand has thrown in the towel, why does LYC run at full speed towards that brick wall, which is climate change inertia. Why not reduce expenditures and growth until there is demand.
That was my larger point. I have no interest in LYC anymore. But, I would like to. This is why I stick around and drop a note here and there.
I would be thinking about my free cash if I were LYC. I would be thinking about how to utilize it at the moment that momentum turns in our favor. I would not be spending my cash on Kalgoorie when I have no placement for my production.
China will continue to overproduce to help its EV exports. Its economy demands it. If I were LYC, I would not pick a battle with the CCP with the expectation of winning.
Have a good weekend. I enjoyed our exchange and will comment again.
For now, I need to figure out a policy for Israeli sheep's milk exports in a world that is increasingly boycotting their products and a supply chain in jeopardy due to imminent conflict.
GLTA
Expand
(20min delay)