Seeking Alpha

Gareth Hatch

 
View as an RSS Feed
View Gareth Hatch's Comments BY TICKER:
Latest  |  Highest rated
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    I see the logic in your last paragraph, as it applies to producers, especially if it is the producers doing the warehousing, not the traders.
    Oct 29 09:11 AM | 4 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    Not quite sure I understand your first question - what do you mean by "no Chinese Customs figure"?.

    As for your second: my experience is that Japanese (and Chinese) traders are _very_ reluctant to spill the beans on anything. I also doubt that they're losing money, since, among other reasons, these guys (traders now, not producers) generally don't buy and warehouse material, but essentially broker it, for a fee / commission.
    Oct 27 09:12 AM | 5 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    So the logic here is that because the "ROW just switched", demand decreased, and prices went down, right?

    So why is it that this year, with ROW demand increasing, prices have continued to fall?
    Oct 26 05:57 PM | 4 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    THe main issue is that the author cites a bunch of references, authored by folks who themselves, in various cases, are simply not accurate in their assessment.

    Some specific points:

    - The assertion on page 1 that "China's advantages in the rare earths market" were slipping away in 2010 as a result of "increases in non-Chinese production and processing capacity" doesn't stand up to scrutiny - the author erroneously equates potential capacity with actual output, and does so repeatedly throughout the rest of the paper.

    - the assertion that the market response was "largely successful" despite there still being no appreciable heavy REE production outside of China, and the lack of a dip in demand for heavies for certain applications;

    - It was the export-quota announcement in the middle of 2010 that was the real catalyst for the panic that ensued (not the alleged embargo of Japan by China);

    - Little acknowledgement of the tremendous time-scale differences between demand-side and supply-side responsiveness;

    - The assertion that the problem was basically solved by altering products to require less REEs (true in a handful of cases but not the case for Nd and Pr for magnets, or various other REEs for phosphors and ceramics);

    - The author claims that the magnet makers responded by reducing REE content in their magnets - not true. they reduced the content of certain REEs like Dy and Tb, but that actually increased the amount of Nd and Pr present;

    and on and on.
    Oct 25 11:00 AM | 7 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    @motionstream: there are a number of basic inaccuracies in that report that raise questions about the rest of it.
    Oct 24 12:10 PM | 4 Likes Like |Link to Comment
  • Uncertainty Still Surrounds Molycorp [View article]
    @End Game: I focused on the Resource segment because that segment is still under development, and is the primary beneficiary of the proceeds of recent financing.
    Aug 29 01:27 PM | Likes Like |Link to Comment
  • Uncertainty Still Surrounds Molycorp [View article]
    Molycorp and Lynas were both well underway with their projects, before the major price spikes that started in the middle of 2010 and which peaked in the middle of 2011. Their original business models never relied on those peak prices because they were created long before they occurred. Current prices for rare earths are still significantly higher than they were prior to 2010, and have plateaued considerably since the price spikes. Therefore this tendency to compare current prices to the peak prices of 2011 can be misleading.

    Per the company's Q2 2014 financial results, Molycorp's Mountain Pass mine and processing facility sold materials with an average selling price [ASP] of $10.30 / kg. The stated cash cost of production was $16.54 / kg; obviously still higher than the ASP, but considerably lower than the $27 / kg from Q1 2014. If Molycorp is able to drive those costs down further, as they have so stated, to some level below the current ASP that produces a reasonable margin, then that business segment will be making money for the company.

    Same goes for Lynas - the company has recently indicated production levels that are in proximity to their break-even point. So long as they can produce with an ASP that is equivalent to the cost of production plus a reasonable margin, they will make money. In both cases, scaling production to what are reasonable targets, will get them there.

    The timeline and the capital structure required to get to these points are another matter; from the technical / operational point of view, however, I am optimistic that both of these companies can make it happen.
    Aug 29 10:42 AM | 4 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    @optionsgirl: the VAT mentioned in my article refers only to products produced in China. It is charged to the purchaser of the raw materials, whether they are used internally or are directly exported. If the materials are used internally to make, for example, magnets or polishing powders, and those finished goods are then exported, the VAT paid by the end user on the raw materials is refunded back to them.

    My understanding is that because this rebate is available to all end users in China that export finished goods, whether or not they are domestic- or foreign-owned, then there is no issue because the approach is evenhanded. Such finished goods are not subject to export quotas.

    The issue of FOB vs. domestic pricing in the later paragraph that you quoted, concerns the price decks that are used by juniors, in determining the assumed future values of their products. The typical assumption has been that they will sell a mixed REO concentrate, without specifying to whom such material will be sold. Given the lack of excess capacity for separation outside of China, the implicit assumption is that maybe the Chinese will buy it.

    However, such purchases would have to compete with internally sourced materials, which are purchased internally at some discount to domestic, not FOB / export prices. So those juniors who are assuming that their material will be sold into China, should be using a domestic, not an FOB price deck, from which to then discount to establish the value of their concentrate.

    Of course that assumes that folks in China will want to buy such concentrate in the first place; some of the juniors are going to have a rude awakening in this regard, given the lack of interest in such materials.

    As for Lynas and Molycorp, their processing is done outside of China, so they have the advantage of needing to compete with the FOB prices, not the domestic prices, assuming their customers are based outside of China. In the case of Molycorp, which may be transferring a portion of its material to its magnetic-materials operations in China, different mechanisms may apply.
    Apr 5 09:27 AM | 7 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    @motionstream: to what special interest are you referring? In case you didn't know, Jon is no longer with Byron Capital.
    Mar 30 10:01 AM | 2 Likes Like |Link to Comment
  • REE/Strategic Minerals Concentrator, March 18, 2014 [View instapost]
    @tripleback: I agree that this by no means means China has to resume unrestricted mining. They have their production quotas in place which are holding steady at around 94,000 tonnes, and since they affect both domestic and foreign entities, wouldn't be subject to sanction via the WTO.

    If taxes and tariffs are eliminated, all other things being equal then we should see a decrease in prices for exported REEs and REE products, down towards current domestic China levels. For REEs like La and Ce where the price difference is fully accounted for by these taxes and tariffs, we should see price parity; but for others, where there is the mysterious "quota surcharge" on top, things are perhaps not so clear.

    Maybe the authorities will simply apply a uniform tax across all production…. or perhaps implement minimum price floors, across all sales, again to stay compliant with the WTO, but as a means of propping up the prices?
    Mar 27 01:34 PM | 4 Likes Like |Link to Comment
  • Going Natural: The Solution To Tesla's Graphite Problem [View article]
    @aksika: because Graphite One's Graphite Creek project is an earlier-stage project. It has not announced efforts to produce battery-grade graphite (>99.9% purity + spheroidized + micronized), it does not yet have Demonstrated resources (Measured + Indicated) and has yet to complete a Preliminary Economic Assessment.
    Mar 26 10:15 AM | Likes Like |Link to Comment
  • Going Natural: The Solution To Tesla's Graphite Problem [View article]
    To date, I have seen no indication that Zenyatta is working on the spheroidization and micronization necessary for the production of graphite for battery anodes.
    Mar 26 08:23 AM | Likes Like |Link to Comment
  • Going Natural: The Solution To Tesla's Graphite Problem [View article]
    To date, I have seen no indication that Mason intends to produce the high-purity, spheroidal graphite required for Li-ion battery anodes.
    Mar 26 08:21 AM | Likes Like |Link to Comment
  • Going Natural: The Solution To Tesla's Graphite Problem [View article]
    @jaberwock: could you point me to somewhere online that details the Syrah operating costs?

    As for Mason and the other companies out there, I will be keeping an eye out for announcements, concerning new developments of relevance to the battery-grade and other graphite sub-sectors.

    On anode materials - science marches ever on, for sure. There has been recent work on silicon-based anodes and other materials, but for the time being, graphite is the material of choice. Perhaps in the long-term we'll even see graphene-based anodes, if the costs can be brought down….
    Mar 25 07:44 PM | 1 Like Like |Link to Comment
  • Going Natural: The Solution To Tesla's Graphite Problem [View article]
    @BenBminnesota: I don't have data on the energy cost to make Li metal, I'm afraid.
    Mar 25 07:38 PM | Likes Like |Link to Comment
COMMENTS STATS
139 Comments
127 Likes