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Jack Lifton  

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  • Book Review: Critical Metals Handbook Edited By Gus Gunn [View article]

    This is a good review, because it zeros in on what this book is not. It is not a guide for investors. The review is well written.

    I do take exception to the denigration of generalists as when this reviewer says:

    "On the plus side, you have an expert writing on the subject and not some generalist dabbling into way too many categories"

    Specialists tend to be myopic. They very often miss the synergies of, for example, the adaptability for a wide variety of separations of a refining process, such as the separation of the rare earths, or of uranium and vanadium, or zirconium and hafnium, or cobalt and nickel by solvent extraction. I have been in many conversations in the last decade with solvent extraction process engineers who are mystified by the fact that so many rare earth juniors were not only unaware of the process but thought it arcane.

    I find that generalists (such as myself) tend to examine the trees holistically as the components of the forest rather than the other way around as this reviewer might be suggesting.
    Academics, such as the authors of the sections of this book, are almost always specialists or even when not are frequently beholden to governmental grants and industrial special interests.

    Critical materials can only be defined in a specified frame of reference of time and space. This definition must include both a political and a moral space. Many "critical " materials are, in fact, strategic for lifestyle enhancement and not necessary for health, safety, or welfare.

    Investors need to be aware of 'fashions" in critical materials' studies.

    I will have much more to say about this in the coming months on the web sites of Investor Intel and of Technology Metals Research. I think investors can learn much more from general discussions of the concept of critical materials than from "expert" analyses of subjectively chosen materials.

    Jack Lifton
    Sep 27, 2014. 12:06 PM | 1 Like Like |Link to Comment
  • Forbes Thinks Molycorp Is Oversold, Here Is Why They're Wrong [View article]

    If a Chinese "geopolitical event" occurred then the market would lose not only 95% of the world's light rare earth production but also 80% of its DEMAND.

    After that it would take years for significant downstream capacity in high purity separation (not currently offered by MCP, California), metal and alloy making, and magnet making to replace the Chinese production. I suspect that in the case of a Chinese "event" the world rare earth industry would melt down and the wreckage would wash away MCP>
    Sep 11, 2014. 09:35 AM | 4 Likes Like |Link to Comment
  • Rare Earth Prices Hitting Bottom: Molycorp On The Road To Being Cash Flow Positive [View article]
    Can any of you imagine how long it could take to bring Chinese mining environmental issues under control? Do any of you understand that the purpose of the governmental moves to regulate Chinese rare earth mining and refining is to minimize pollution, maximize efficiency, ensure the continuation of the downstream value adding rare earth enabled components manufacturing industry IN CHINA, and maximize tax collections! In the short term as the vast imbalances in the Chinese rare earths industry among which are vast overcapacity and huge above ground inventories of the least valuable rare earths are eliminated and worked through how, pray tell, will this LONG term program help a Molycorp running through other people's money very rapidly?
    Sep 10, 2014. 09:17 AM | Likes Like |Link to Comment
  • Uncertainty Still Surrounds Molycorp [View article]
    I note my colleague's, Dr Gareth Hatch's, optimism above, and I want to state my pessimism and some of my reasons for it clearly:

    The author of this article says that:

    "Bloomberg, citing Kevin Starke, an analyst at CRT Capital Group Inc., reported that if Mountain Pass mining facility becomes fully operational then Molycorp's severe cash crunch problem will be solved."

    But if Molycorp becomes "fully operational" then it will only be "profitable" if it can go beyond break-even by SELLING most of its Mountain Pass production in direct competition with Chinese pricing. If Molycorp achieves its target costs then this could happen for its neodymium and praseodymium production, but I doubt very much if it will ever achieve competitive costing on cerium or lanthanum, both of which are today in surplus and therefore sell for very low prices with an ominous inventory overhang looming in China. Molycorp's best bet would be to try to convert 100% of its Nd/Pr into magnets or magnet alloys outside of China, but I note that these products would only sell outside of China if they were cheaper than their Chinese competition and just as good as Japanese magnets.

    It is the same for Lynas with the addition of the fact that 5% of its production consists of an SEG/HREE concentrate that can add significant profit to its bottom line.

    I honestly believe that the best solution for both companies would be to add to their business models toll chemical processing to remove Ce and La from consigned concentrates followed by toll refining to produce didymium and/or Nd and Pr products for the magnet and alloy industries.

    In any case this is the last hurrah for Molycorp. It will not be able to borrow again, so this latest plan has to work. I don't know what the status of Lynas is in this regard, but it cannot be too different.

    All of the strategies to raise money by these two companies must be viewed in the harsh light of the global demand for ALL of their products now and in the near future. Unless both companies can be profitable by 2016 there will be no future for either of them.
    Aug 29, 2014. 11:10 AM | 2 Likes Like |Link to Comment
  • Molycorp: Conversation With Kamakura - What Did Bondholders Tell Us Prior To Q2 Earnings? [View article]

    Your detailed analysis of the financial operations of Molycorp and the responses of the more thoughtful of the commentators leads me to ask a question: What happened to Neo Materials?

    Prior to its "takeover" by Molycorp it, Neo. was the most profitable and well run rare earths based company outside of China (NOTE that I am not saying that there were better run Chinese companies, because we have no way of knowing that since the murky, at best, balance sheets of the Chinese companies were not comparable to those of western entities in the same or similar businesses). As recently as 2011 I asked Neo's then CEO, Mr Karyannoupoulos, why he didn't vertically integrate by buying or taking control of a mine or mining project(s). His answer was the same one he gave me in 2007 when I first had asked him that same question: "Why would I want to get into such a volatile business. Let others take the risks of raw material pricing." I am paraphrasing a bit, but, in essence this is what I recall from my conversations with him.

    I can understand why NEO allowed itself to be acquired by MOlycorp; it was a fabulously overpriced deal for Neo's shareholders, and I can understand why, after looking at Molycorp from the inside, Mr Karyannoupoulos, took or was given control by the board. But I cannot understand why the former Neo management has not moved to unwind the original acquisition and reverse it. I think that the best hope for Molycorp is that the mining and light rare earth separation facilities in the USA and Estonia become a stand-alone profit center of a new Neo. I think I understand how and even why the small investors might feel betrayed by such a move, but Neo was, and perhaps, stiil is, a state-of-the-art operation in separation, metal making, and magnet manufacturing. The global rare earth industry can get along with less or even no more production from Mountain Pass, but the loss of Neo's skills and products would be a severe set-back for the global supply chain.

    Perhaps it is time to bite the bullet on the mining operation.
    Aug 26, 2014. 11:25 AM | Likes Like |Link to Comment
  • Update: Great Western Minerals Reports Strong Q2 Earnings [View article]
    Since when does LCM, or Great Western, make rare earth permanent magnets? The relevant output of LCM is the neodymium-iron-boron ALLOY, and the samarium-cobalt ALLOY used to make rare earth permanent magnets by those with the skills, technology, and in many cases, licenses from Hitachi to do so.
    LCM with an output of less than 300 tons of magnet alloy per year is so far a VERY SMALL player in a market that produces 75,000 to 80,000 tons per year of this type of rare earth permanent magnet. Japan's Santoku, for example, has TWENTY TIMES the revenue of LCM, and it is profitable.
    If LCM is to be self-sufficient based on SKK production then its production of alloy from domestic resources will be approximately 3 1/3 times the tonnage of neodymium produced at SKK. If it can be profitable at this level then it should go forward. I am not including samarium-cobalt in this caluclation, but if SKK produces samarium and cobalt can be bought at market price then LCM could also be competitive in that market using in-house (NYSEARCA:SKK) feed stock.
    The best business model for GWMG would be to partner with both a separation provider and with other juniors outside of China with significant dysprosium, neodymium, and samarium. In the event that one of these juniors creates an in-house separation facility then it would be the ideal partner for GWMG. Such a partnership would then be very enticing for a magnet maker as a further "partner." Thus a vertically integrated, though transnational, but non-Chinese rare earth permanent magnet group could be created.
    Aug 17, 2014. 12:10 PM | 1 Like Like |Link to Comment
  • Molycorp - Everything Is Moving In The Right Direction For Long Investors [View article]
    Where is everyone getting MCP's "production costs?" And where does the $12/kg for cerium come from???

    The last time I priced cerium in China it was 3 Euros/kg, which is at best $4/kg. If you add an export tax of 50% (it is today 25%, I believe) you get a Chinese export price of $6/kg. Thus the Chinese SELLING PRICE delivered outside of China is LESS THAN MOLYCORP's PROJECTED TARGET COST!!!

    China's cerium demand is 80% of the world's total. I heard the General manager of Baotou say last summer in Ganzhou that he is producing a surplus of 30,000 tons a year of cerium!

    I think that Molycorp as currently structured can only be successful in this cerium/lanthanum price and supply environment if it shuts down the mine, the Silimae operation, and Boulder Wind, and proceeds with the revenues from the operations of the old Neo Materials.
    Aug 15, 2014. 09:29 PM | Likes Like |Link to Comment
  • Molycorp - Everything Is Moving In The Right Direction For Long Investors [View article]
    I came across this comment today from a rare earth markets analyst in Hong Kong replying to a post of his on the Investor Intel web site:

    Hongpo on August 15, 2014 at 1:01 PM said:
    Thank you Andrew

    "The surplus of La & Ce are mainly caused by the serious imbalance of China’s rare earth consumption structure and the rampant illegal rare earth production.
    For example,in China’s 2014 rare earth annual quota of 105,000 tons,lanthanum and cerium account for approximately 70.57%,
    Praseodymium neodymium oxide account for approximately 20.08%.( China increased its light rare earth production quota in order to meet the rapid growing demand for neodymium and praseodymium in the application of rare earth magnets sector,
    In fact,according to people familiar with the situation, the la & ce inventory of the Inner Mongolia Baotou Steel Rare-Earth Group has exceeded 150,000 tons by far."

    - See more at:

    Note that if this is correct then the "real" current price of both Ce and La in China is zero or less. This would explain why both are being sold internally today for $/kg; that could be the cost of carrying the inventory.

    So if in fact MCP can get its COGS to $6-7/kg this, it would seem, will be the figure to be charged against the production tonnage as a loss.

    Of course. if MCP's operations outside of China cannot get Chinese raw materials then transferring some of this material to them will cut the overall losses, but if Chinese material is available at a lower price outside of China then it might be considered malfeasance to buy at a higher price.

    I do not understand how it is that the Neo management could not know about the Chinese oversupply of Ce and La. Perhaps it isn't true. I hope that Molycorp will make a statement about the comment by Hongpo.
    Aug 15, 2014. 05:44 PM | 2 Likes Like |Link to Comment
  • Molycorp: Worst Fears Materializing As China Plans Challenge To Expiry Of Neo Patents [View article]

    1. Hitachi's patent is a "process patent" for a technology of manufacturing neodymium-iron-boron powder from which NdFeB magnets are made by bonding with organic resins (magnequench) and sintering (90% of the NdFeB). The patent is and was an absurd grant in any country, since it patented an obvious process used during the manufacturing of the ALLOY powder. There is no way it could have been renewed by the US Patent Court (for example).
    As I mentioned before when I was in Ningbo, China, this last March, I found that many Chinese producers were already offering ALLOY powder against Neo, and that Neo had begun dropping its prices LAST YEAR in anticipation of the strong increase in competition!
    Bonded rare earth permanent magnets are made from purified neodymium powder; THIS IS NOT WHAT MOLYCORP PRODUCES IN CALIFORNIA. Sintered REPMs are made very often from neodymium/praseodymium natural mixes (THE "DIDYMIUM" of the TRADE). Neo China most likely does not use Mountain Pass produced didymium oxide to manufacture FURTHER PROCESSED neodymium for conversion into NdFEB alloy powder, because China makes it almost impossible to import light rare earths (But see a recent article by HongPo on

    2. Lynas is leaner and more smartly run than Molycorp, but it still faces a grim future. Lynas though seems to have broader support in Australia than Molycorp now has in the USA.

    Jul 30, 2014. 07:23 AM | 3 Likes Like |Link to Comment
  • What Now For Molycorp? [View article]
    Sheer hype. Molycorp's mantra is in fact that it's ore contains very little thorium!
    Jul 27, 2014. 01:52 PM | 1 Like Like |Link to Comment
  • What Now For Molycorp? [View article]
    Lynas, LAMP, was set up for poducing and selling cerium carbonate, lanthanum-cerium carbonate (for FCC), and praseodymium-neodymium carbonate (didymium) for magnet making. It sends its SEG/HREE residues to Solvay, la Rochelle, for toll refining.

    It's model is indeed based on 2009 pricing.

    Its grasp is within its reach!
    Jul 27, 2014. 01:50 PM | 1 Like Like |Link to Comment
  • What Now For Molycorp? [View article]
    Absolutely in agreement with you.
    Jul 26, 2014. 10:35 PM | 1 Like Like |Link to Comment
  • What Now For Molycorp? [View article]
    I certainly do not mean to imply that Molycorp could be a producer, much less a "meaningful one, of yttrium or any other mid range or heavy rare earth. In the past its 0.1% (of the TREOs) of europium was the driver for the construction of its separation technology. Today I doubt that it is selling or even producing European competitively.
    Jul 26, 2014. 10:33 PM | 1 Like Like |Link to Comment
  • What Now For Molycorp? [View article]
    I'm sure that this author has good intentions, and he reaches an obvious conclusion, but this article's author is not an expert on the rare earths' markets or on the rare earths. I think that he swallows hook, line, and sinker, the "party" line and the company's promotional hype.
    The demand for a new supply of the size that Molycorp was talking about in 2011, which was an additional supply of 50,000 tons mostly (more than 80%)of the least valuable rare earths that are available in large tonnages, cerium and lanthanum, simply was a fantasy of hope. The speculative boom created in 2011 by Chinese rare earth traders was a blip on an otherwise steady but low growth in REE demand that had been occurring for most of the previous 10 years and has now hopefully resumed from where it left off before the bubble.
    Molycorp hype in 2011 was surreal; the company basically said that increased production would aid in increasing prices even further. Adam Smith's grave was seen to tremble as the sage turned over repeatedly in it.
    Those of you Molycorp investors interested in technology metals should note that new supply is needed only when actual demand overtakes current supply. This is happening in the rare earths markets of neodymium, praseodymium, terbium, dysprosium, ytterbium, and yttrium in varying proportions due to mostly unrelated end-uses in mass produced civilian goods, and to a lesser extent, in SOME NEW military uses.
    Molycorp's mine is not as good a neodymium/praseodymium deposit as Lynas' Mt Weld (Australia) mine, but neither comes close to the cost structure of the Chinese who have plenty of neodymium/praseodymium but not enough of the heavy rare earths the prices of which in China are creeping up.
    The LAWS of supply and demand tell us that we should be looking for those who can produce first of all the heavy rare earths and second of all the light rare earths competitively with the Chinese. Neither of these categories seems to include Molycorp.
    Jul 25, 2014. 01:53 AM | 2 Likes Like |Link to Comment
  • Apollo's Leon Black Seeks Backdoor Takeover Of Molycorp [View article]

    You are absolutely correct. Neo is not now nor was it ever worth what Molycorp paid. Neither was Boulder Wind for that matter.
    Jul 9, 2014. 01:19 PM | Likes Like |Link to Comment