Great analysis. I see you are using a long-term NdPr price of US$150/kg in this. I am no commodity analyst, but my simple understanding is mining commodities are dictated by supply vs demand, where supply is defined by the production cost of the marginal producers. High commodity price = lots of producers are profitable which brings on lots of supply and commodity price corrects. Lithium recently is a very good example of this.
Given that, we know many RE projects need a long term NdPr price between $106 and $135 to be able to achieve >15% IRR and get their projects funded (ignoring here for the government picking winners) - ILU, ARU, HAS, ASM, LIN, PEK etc. So essentially, a long term NdPr price above ~$110 would allow a huge amount of supply to come online, thereby correct the pricing. Surely a long term price where only the first quartile projects make >15% IRR would be more realistic? ILU's DFS shows that NdPr US$106/kg is the threshold to bring monazite cons online as RE feedstock, so IMO this is the maximum average long term NdPr price. There are huge quantities of Eneabba style monazite cons globally which could come online (like lepidolite in the lithium game) and correct the NdPr price. @2ic probably understands this better than myself.
How does the model look with a NdPr US$100/kg price assumption? ARU do have a very low breakeven NdPr, so surely still very very strong financials at NdPr prices >2x their breakeven?
ARU Price at posting:
19.5¢ Sentiment: None Disclosure: Not Held
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