Avoid Molycorp: Inventory Overstated By $134MM [View article]
Thank you for finding the $36/kg figure.
Now
Note that Michael Doolan says in reference to slide 9 "our chemicals and oxides segment sold 4,631,000 metric tons"
No matter how you measure products this is a physical impossibility. Note that just to get 20,000 metric tons of throughput at Mountain Pass they would have to move and process 250,000-350,000 tons of ore. This is a major undertaking by itself. I cannot imagine what they would have to process to get nearly 5,000,000 metric tons of PRODUCTS! This is a mis-statement clearly that no one bothered to challenge. I am now quite skeptical about this call. what is it that I am overlooking, please?
Avoid Molycorp: Inventory Overstated By $134MM [View article]
OK. I don't see any statement of current cost per kg. I see only the current target has been moved from Mark Smith's often stated $2.75/kg to Mr Karyannoupoulos' $6/kg, which, in fact, if achieved, would still make Molycorp probably the lowest cost producer of its light rare earth product line.
I am now confused by the statement that the company sold more than 4 million tons of products of all kinds last year. What was the breakdown of that??
Global production of all rare earths last year was officially between 90,000 and 125,000 metric tons. I don't know how much niobium, tantalum, rhenium, and gallium came out of Molycorp globally, but the total global production of all of those metals combined was less than 70,000 metric tons from all producers. Even though Molycorp's acquisition of Recapture Metals, Ltd two years ago gave it, Molycorp, as much as half of the global gallium refining capacity this capacity is around 125 metric tons per year. Where did Molycorp's CFO get his number? Am I missing something?
Avoid Molycorp: Inventory Overstated By $134MM [View article]
I didn't listen to the MCP earnings call last week, and I don't have a transcript at hand. Can you or a reader tell me what cost of processing Mountain Pass material was quoted by Mr Karyannoupoulos? I was told it was a number conistent with the current basket price, but I do not believe that, so if it was mentioned please tell me what that figure was.
I also noted in the 10k that Silimae produced or sold some 75+ million dollars of "rare metals." Are the details of Silimae's production broken out anywhere? Particularly I'd like to know what percentage of that production/sales was what: Niobium, tantalum, and rare earths (and which rare earths and in what forms and purities).
Thanks, by the way, for this analysis of the Molycorp inventory position.
Molycorp's (MCP) deal to distribute its cerium-based water treatment product to municipal and industrial wastewater treatment plants may have eased some investor concerns about MCP's cerium capacity, Goldman Sachs says (also). Jefferies starts coverage at Neutral but could turn more positive if customer trials on the product end well and upon a better understanding of the deal's margin profile. [View news story]
I wonder if anyone at Goldman-Sachs has ever marketed wastewater treatment. I was once the technical sales manager of a small company that produced, among other products, wastewater treatment Chemicals. Municipal and industrial wastewater treatment chemicals are only sourced from approved and qualified vendors. Such approvals can take a very long time especially for large systems. The idea that every customer will just roll over and accept a new vendor with a new technology is literally a pipe-dream. If SorbX is cheaper and better then it will find a market, but NOT IF IT'S ONLY SOURCED FROM ONE VENDOR! It will take time and a licensing program for any new technology to gain a foothold against the existing vendors. I'm not criticizing Molycorp for promoting a technology that may be an improvement. I am criticizing the absolutely uniformed people at Goldman-Sachs who have decided that he world glut of cerium won't affect Molycorp, because they have a purported new use for cerium. This is beyond silly. New products and new technologies no matter how good they are mostly fail in the marketplace, because the vendor or inventor cannot wait and cannot endure the trials necessary for product acceptance in the marketplace.
Molycorp: Is CEO Constantine Karayannopoulos In It For The Long Haul? [View article]
Raymedo1,
There is no first to market advantage for Molycorp. The L(ynas)A(dvanced)M(ate... in Malaysia is now running and will begin to deliver commercial (to SPECIFICATION) materials to AAA customers early in the next quarter. It looks like it will then ramp up to full production (11000 to 22000 MTA) by the end of the year. The mechanically beneficiated ore for more than a year's production is already prepared at Mt Weld and is being shipped to the LAMP as needed. Note that the LAMP process chemistry was designed by Rhodia and is being brought up to speed with EXPERIENCED Chinese supervisors training Malay workers to take their places. Also the marketing has been done in the form of long term supply contracts (10 years).
Molycorp's problem is credibility: Will it be able to supply, on time, to specification? Note that both Molycorp and LYnas have to prove their ability to deliver TO SPECIFICATION, ON-TIME, THE QUANTITIES AGREED, and AT THE NEGOTIATED PRICE. Both are NEW suppliers and as such get a SMALL percentage (10-20) of the demand until the end-user is satisfied that they are RELIABLE. The market today does not need both of them, and the market will decide which one survives.
My guess, and it is, in the end, just that, is that Lynas will win the race due to its much lower operating costs and the experience of its operating team.Lynas' also seesm to have done an excellent marketing job IN ITS OPERATING REGION, Southest Asia.
I think that America's domestic self-sufficiency in all of the critical rare earths is in the hands of Rare Element Resources and Ucore. Both may well be successful, because they are the right size and have the right mix of products. Follow the details coming out of those companies carefully and pay strict attention to the fact that the critical rare earths are much, much, more important than the light rare earths in a balance sheet. The less a supplier has to depend on lanthanum and cerium for revenue the more likely that supplier will be a strong contender and/or the ultimate survivor and a regular supplier.
Tesla's Obscenely Expensive Cure For Range Anxiety [View article]
John,
My father told me that in 1923 in Detroit he kept the boiler (kerosine fueled like the lamps on the Manitoba farm where he was raised) flame on low during the night and went out when he woke to turn it up to operating level on his Stanley Steamer. Then after breakfast he would drive to his job at a Ford dealer where he among other jobs poured new babbit metal into bearing races.
He told me that he loved to race IC powered cars from stop signs because his Steamer beat them all to hell on start-up torque. He told me that he always thought that the Steamer would survive, but that Henry Ford was too aggressive for them. He also said that a Steamer could beat any electric vehicle he ever saw both in range and performance and PRICE.
Mr Musk and most of your readers still don't understand cost economics. The Tesla is a performance focused rich man's toy. Batteries that give such performance are too expensive and still too cranky (excuse the pun) and temperature sensitive.
You're the one that says "I can explain things to you, but I can't understand them for you." Amen.
Are Molycorp's $1 Billion Intangible Assets Impaired? [View article]
May I point out that Neo Materials was never a "mine to market" organization. Neo, to the best of my knowledge and memory has never been in the mining business as a producer. Neo tried for several years to develop a process technology to recover dysprosium from the cassiterite (tin ore) residues at the Pitinga site in Brazil, but that was not "mining." That was metallurgical research, and as far as I know, Neo was unsuccessful.
It was Molycorp, the mining venture, that bought Neo, the processing and downstream-product company. To the best of my knowledge Neo never offered to buy Molycorp or any other mining venture.
The first time I ever met Constantine Karryannoupolous in late 2007 I asked him why he didn't build a separation plant in North America. he said that it was because there was no feed stock in North America for such a plant. Further, he said, the Chinese might react negatively to such a venture, since it would mean a purposeful lessening of Neo's dependence on the Chinese rare earth supply chain.
Be very cautious when you talk about intangibles and good will when the Chinese domestic market may the source of a big piece of that valuation.
Molycorp (MCP +0.8%) is initiated with a Neutral rating at Goldman Sachs, which says its positive view on growing leverage to higher-value, downstream products and potential share gains in China is balanced by management uncertainty and execution risk ahead of a big capacity ramp in 2013. [View news story]
The Goldman analysts have a nice view of the world from their climate controlled offices at the foot of Wall Street. They watch data displays created by algorithms on devices the construction of which they do not understand nor have they ever been involved with manufacturing or chemical engineering or end-user marketing. Yet as their voices change over the seasons and hair begins to grow in formerly barren places they pontificate on data generated by talking to each other. One cannot smell roses in a filtered climate controlled atmosphere. However the odor of mendacity does pervade those halls. Goldman's Molycorp is not the same as the Molycorp that actual end-users of products enabled by the rare earths see.
Lithium-Ion Batteries Were A Bust, But Advanced Lead-Acid Batteries Are Booming [View article]
John,
Once more your succinctness has silenced the braying of the jackass knee-jerk market technicians.
I note three of your bullet points, which I think have universal applicability in our age of over-the-top hype for share price boosting:
-Expected improvements in energy density and battery performance proved elusive as unicorns; -Expected economies of scale couldn't be achieved in a mature industry with highly refined manufacturing methods, equipment and supply chains; and -Profit margins were savaged as manufacturers tried to meet unreasonable price expectations of automakers and match unreasonably optimistic price quotes from competitors.
Please replace "expected' with "projected," and eliminate the words "energy density and battery" in the first bullet point above and you have a universal descriptive sequence for solar and wind power developments also.
Flurry Of Trading In Molycorp Ahead Of CEO Change May Finally Cement A Bottom [View article]
Dr Duru is certainly correct in his above conclusion, with regard to MCP, in particular, that "...2013 should be a make or break year." No better successor could have been appointed CEO at MCP, interim or otherwise, than Constantine Karyannoupolous. But it must be noted that when I asked him directly in October, 2011, if he had been assisting Molycorp his answer was no and that he had not been asked as of that time for technical or business management advice by Molycorp. Therefore he starts with a clean slate. The Molycorp business model wasn't designed or executed by him, and even after joining the Molycorp board in March of this year he did so in a non executive position.
As I have said before Mr Karyannoupoulos is the best of the best managers in the rare earth space downstream from mining. The very first time I met him in 2007 I asked him why Neo Materials technology didn't build a separation facility in North America. His answer then was that "there is no feed stock" and Neo does not want to be in the mining sector of the supply chain (He didn't specify whether he was then speaking of just North America or any or all of the rest of the world).
Now, Mr Karyannopoulos, has been given a real challenge. He is to take over and guide a business, the model for which would not have been his idea. In fact the operationally challenged board of Molycorp should have from the very first tried to buy Neo and then have used Neo to acquire Molycorp and develop it as a resource for Neo allowing it, Neo, to break free of dependency on China. At the time this was not an option, as I understand it, because Neo would have been reluctant to challenge the Chinese rare earth mining industry, which had a reputation for making supply difficult to those who even attempted to look outside of China.
So, I believe, that now Mr K has taken on a challenge that he apparently would not have done as Neo, which is to manage a haphazardly put together disparate group of companies to magically create a "mine to market' group with a non integrated management and no apparent market advantage of experience, credibility of regular supply, delivery, quality, and lowest cost..
There is no one on earth who would be more qualified to lead such a recovery ( or discovery ) of value in this hodge podge than Constantine Karyannopoulos. I don't think Molycorp has any more borrowing power based on its "assets," so it is up to Mr K to get the job done with what he has in place.
The survival of Molycorp is now up to the company's being RESTRUCTURED and guided in the right direction by Mr Karyannopoulos or under his direction,and to the growth of the global rare earth market, and, of course, always, to the goddess Fortuna. I note that in the ancient Greek pantheon the goddess that became Fortuna to the Romans was Tyche (Fortune) who was always accompanied by her sister,Nemesis (indignation).
My sincerest best wishes to Constantine Karyannopoulos on an opportunity that should have been his from the beginning. I particularly look forward to his taking a hard experienced look at the non Chinese heavy rare earth junior sector where Molycorp is so dreadfully lacking exposure.
Molycorp (MCP) says CEO Mark Smith has resigned; no explanation is offered. Board vice chairman Constantine Karayannopoulos is named interim president and chief executive. Shares -6.3% AH. [View news story]
Constantine Karyannoupoulos is arguably the best manager of a rare earth based business in the non Chinese world. he has been a non executive vice chairman of the Molycorp board since he sold his former already very successful rare earth/rare metals enterprise, Neo Materials Technologies to Molycorp early this year. Yet one wonders if anyone on that board has been listening to his always sage advice. I suspect not. I admire therefore his courage in accepting even an interim position as CEO of Molycorp under the same board that applauded and allowed the previous CEO to spend money relentlessly on an ever changing business model that I suspect has long lost any focus. The true test for Molycorp will be to see if they can retain Mr Karyannoupoulos in a decision making position either as CEO or even better as chairman of the board. Without the strong and experienced leadership of a rare earth/rare metals technological and market specialist of the caliber of Mr.Constantine Karyannoupoulos Molycorp will be no better off without Mr Smith than it was with him.
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
The DoD program is to map out America's resources of the CRITICAL HEAVY RARE EARTHS and to determine WHAT IS THE LEAST EXPENSIVE AND FASTEST WAY TO PRODUCE THEM. Ucore has strong points in both categories; it has heavy rare earth rich deposits, and it is committed to a rapid flow through combination of economical process technologies that will isolate and remove the radioactive nuisance elements and separate and purify the desired HREEs, primarily dysprosium. Ucore's choice by the DoD also emphasizes Alaska's place in the critical metals supply base.
Molycorp does produce mixed neodymium-praseodymium (so-called "didymium) chemical salts, and I believe it makes from that some limited quantities of didymium alloy in Phoenix, AZ, at the former Santoku pilot plant. Molycorp does not now IN THE USA produce HREEs. The DoD wants to investigate a total domestic American supply chain for rare earth permanent magnet alloys. Ucore is the logical choice to anchor that study, because it is committed to exactly what the DoD REQUIRES, an American domestic total supply chain for rare earth permanent magnets.
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
Ausheds,
I am having the same thoughts. China is now embarking on the institution of a regulatory regime for the rare earth "production" industry and God knows what other industries are already being regulated or are about to be. This is experimental capitalism. First you have cowboys, then cattle barons, and finally faceless corporations. Governments are always one step behind in trying to get their taxes and pretending to be trying to make industries safer and workers lives better.
Those who think that Chinese multi-billion dollar experienced natural resource producers will simply allow a locally controlled global advantage to just slip away are ridiculous. China is bringing its rare earth production industry under control to make it globally competitive. It may well roar back if and when excess production (excess over China's domestic demand) can bring the benefits of higher profits and productivity through new technologies to Chinese producers.
What's happening now is called "creative destruction." Did any of you graph reading, tea-leaf reading "investors" ever hear of that?
Actually Neo was quite a good and well run company. It was the star of the REAL non-Chinese rare earth sector; it made a consistent profit and was the right size for its market segment. However i think it has been made ineffective by Molycorp's poor judgment and lack of business acumen in the global arena. You can't buy good judgment. You can only hope you have it, and the test is "results" not opportunistic market announcements.
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
Kevin, It seems to me that if Mr Smith had sold shares at $6.20 for any reason other than to pay for a life saving surgical intervention for a close relative the market for MCP would have simply gone down the drain. He had therefore just the two choices, do nothing or buy some shares. In fact since he netted more than $10 million on the insider sell out in which Ross Bhappu (On behalf of Resource Capital(?)) netted several hundred million dollars wouldn't a purchase of a million shares by Mr Smith have been a more appropriate and commendable vote of confidence? Mr Bhappu, as I recall bought 2,500,000 shares at $10, recently, so he, Bhappu has already lost $7,500,000.00 since then. If MCP goes to $27 as Byron Capital is projecting then Mr Bhappu stands to make another $40,000,000.00 while Mr Smith would net some $400,000.00. If you are looking for an internal vote of confidence Mr Bhappu has Mr Smith beat by 100 to 1.
Lynas said, I believe, that after a six week first batch time that their system would be brought up to 400 tons a week of product in the second quarter of its going into full operation. I think that is ambitious. As I understand it Molycorp is not going to run its original SX plant after it starts the new plant. The question is; How long will it take to bring the new plant up to 400 tons a week of product output. I would think that as of today Lynas has a slightly shorter lead time. If both projects succeed then by the end of 2013 they will be together producing an annualized 40,000 ADDITIONAL TO THE EXISTING MARKET tons of light rare earth products. Isn't just this fact alone a market damper for lanthanum, cerium, and even, perhaps for neodymium-praseodymium prices?
Do we know the break-even points for Molycorp or Lynas? How little do they need to produce to keep operating in the black? Stay tuned as reality and I think lower-cost competition sorts out the true market size.
SEC Investigation Overshadows Better-Than-Expected 3Q Results For Molycorp [View article]
When I worked at Energy Conversion Devices in the mid-1960s and early 1970s the employees used to laugh at the regular "positive" news that the company had lost less than expected and overall had lost less than it had the year before However, to be fair, the company was really an R&D house, and it regularly for nearly 50 years raised money by licensing ideas to those who would then try to put them into mass production. The company did not have the internal staff to mass produce and market products. Thus it was Toyota that profited most from the company's nickel-metal-hydride battery, the Japanese consumer electronics industry that profited most from the record-able dvd, and Samsung that profited most from the solid state flash memory just to name a few. The one project that the company tried to do in-house, the amorphous solar photovoltaic panel was a success for a while and then became obsolete.
I have come to the conclusion that Molycorp needed much more R&D before it undertook a massive increase in capacity and a mind-numbing attempt to become expert in a group of (related) but individually complex technologies to process rare earths into individual metals, alloys, and sophisticated products such as magnets.
The driver for all of this was greed for the quick big buck and hubris was its undoing.
I would love to have a disinterested judgement from Constantine Karyonnapoulos, the former CEO of Neo Materials, on what he thought of Molycorp's technology and R&D once he had access to it. I doubt that it was coincidence that Molycorp's falling out with M&K came just 6 months after Molycorp had acquired Neo, which was (is?) a first class rare earth separation and refining company and a technological leader in strip cast rare earth permanent magnet alloys for the bonded alloy market. I might add that Neo was also first-class at evaluating and acquiring high tech metal recyclers and purifiers also. If Neo had bought Molycorp that would have given the venture a high probability of ultimate success.
I'm sure we'll have to wait for the final judgement on Molycorp, but I suspect the wait won't be that long.
Avoid Molycorp: Inventory Overstated By $134MM [View article]
Now
Note that Michael Doolan says in reference to slide 9 "our chemicals and oxides segment sold 4,631,000 metric tons"
No matter how you measure products this is a physical impossibility. Note that just to get 20,000 metric tons of throughput at Mountain Pass they would have to move and process 250,000-350,000 tons of ore. This is a major undertaking by itself. I cannot imagine what they would have to process to get nearly 5,000,000 metric tons of PRODUCTS! This is a mis-statement clearly that no one bothered to challenge. I am now quite skeptical about this call. what is it that I am overlooking, please?
Avoid Molycorp: Inventory Overstated By $134MM [View article]
I am now confused by the statement that the company sold more than 4 million tons of products of all kinds last year. What was the breakdown of that??
Global production of all rare earths last year was officially between 90,000 and 125,000 metric tons. I don't know how much niobium, tantalum, rhenium, and gallium came out of Molycorp globally, but the total global production of all of those metals combined was less than 70,000 metric tons from all producers. Even though Molycorp's acquisition of Recapture Metals, Ltd two years ago gave it, Molycorp, as much as half of the global gallium refining capacity this capacity is around 125 metric tons per year. Where did Molycorp's CFO get his number? Am I missing something?
Thanks again.
Avoid Molycorp: Inventory Overstated By $134MM [View article]
I also noted in the 10k that Silimae produced or sold some 75+ million dollars of "rare metals." Are the details of Silimae's production broken out anywhere? Particularly I'd like to know what percentage of that production/sales was what: Niobium, tantalum, and rare earths (and which rare earths and in what forms and purities).
Thanks, by the way, for this analysis of the Molycorp inventory position.
Molycorp's (MCP) deal to distribute its cerium-based water treatment product to municipal and industrial wastewater treatment plants may have eased some investor concerns about MCP's cerium capacity, Goldman Sachs says (also). Jefferies starts coverage at Neutral but could turn more positive if customer trials on the product end well and upon a better understanding of the deal's margin profile. [View news story]
Molycorp: Is CEO Constantine Karayannopoulos In It For The Long Haul? [View article]
There is no first to market advantage for Molycorp. The L(ynas)A(dvanced)M(ate... in Malaysia is now running and will begin to deliver commercial (to SPECIFICATION) materials to AAA customers early in the next quarter. It looks like it will then ramp up to full production (11000 to 22000 MTA) by the end of the year. The mechanically beneficiated ore for more than a year's production is already prepared at Mt Weld and is being shipped to the LAMP as needed. Note that the LAMP process chemistry was designed by Rhodia and is being brought up to speed with EXPERIENCED Chinese supervisors training Malay workers to take their places. Also the marketing has been done in the form of long term supply contracts (10 years).
Molycorp's problem is credibility: Will it be able to supply, on time, to specification? Note that both Molycorp and LYnas have to prove their ability to deliver TO SPECIFICATION, ON-TIME, THE QUANTITIES AGREED, and AT THE NEGOTIATED PRICE. Both are NEW suppliers and as such get a SMALL percentage (10-20) of the demand until the end-user is satisfied that they are RELIABLE. The market today does not need both of them, and the market will decide which one survives.
My guess, and it is, in the end, just that, is that Lynas will win the race due to its much lower operating costs and the experience of its operating team.Lynas' also seesm to have done an excellent marketing job IN ITS OPERATING REGION, Southest Asia.
I think that America's domestic self-sufficiency in all of the critical rare earths is in the hands of Rare Element Resources and Ucore. Both may well be successful, because they are the right size and have the right mix of products. Follow the details coming out of those companies carefully and pay strict attention to the fact that the critical rare earths are much, much, more important than the light rare earths in a balance sheet. The less a supplier has to depend on lanthanum and cerium for revenue the more likely that supplier will be a strong contender and/or the ultimate survivor and a regular supplier.
Tesla's Obscenely Expensive Cure For Range Anxiety [View article]
My father told me that in 1923 in Detroit he kept the boiler (kerosine fueled like the lamps on the Manitoba farm where he was raised) flame on low during the night and went out when he woke to turn it up to operating level on his Stanley Steamer. Then after breakfast he would drive to his job at a Ford dealer where he among other jobs poured new babbit metal into bearing races.
He told me that he loved to race IC powered cars from stop signs because his Steamer beat them all to hell on start-up torque. He told me that he always thought that the Steamer would survive, but that Henry Ford was too aggressive for them. He also said that a Steamer could beat any electric vehicle he ever saw both in range and performance and PRICE.
Mr Musk and most of your readers still don't understand cost economics. The Tesla is a performance focused rich man's toy. Batteries that give such performance are too expensive and still too cranky (excuse the pun) and temperature sensitive.
You're the one that says "I can explain things to you, but I can't understand them for you." Amen.
Are Molycorp's $1 Billion Intangible Assets Impaired? [View article]
It was Molycorp, the mining venture, that bought Neo, the processing and downstream-product company. To the best of my knowledge Neo never offered to buy Molycorp or any other mining venture.
The first time I ever met Constantine Karryannoupolous in late 2007 I asked him why he didn't build a separation plant in North America. he said that it was because there was no feed stock in North America for such a plant. Further, he said, the Chinese might react negatively to such a venture, since it would mean a purposeful lessening of Neo's dependence on the Chinese rare earth supply chain.
Be very cautious when you talk about intangibles and good will when the Chinese domestic market may the source of a big piece of that valuation.
Molycorp (MCP +0.8%) is initiated with a Neutral rating at Goldman Sachs, which says its positive view on growing leverage to higher-value, downstream products and potential share gains in China is balanced by management uncertainty and execution risk ahead of a big capacity ramp in 2013. [View news story]
Goldman's Molycorp is not the same as the Molycorp that actual end-users of products enabled by the rare earths see.
Lithium-Ion Batteries Were A Bust, But Advanced Lead-Acid Batteries Are Booming [View article]
Once more your succinctness has silenced the braying of the jackass knee-jerk market technicians.
I note three of your bullet points, which I think have universal applicability in our age of over-the-top hype for share price boosting:
-Expected improvements in energy density and battery performance proved elusive as unicorns;
-Expected economies of scale couldn't be achieved in a mature industry with highly refined manufacturing methods, equipment and supply chains; and
-Profit margins were savaged as manufacturers tried to meet unreasonable price expectations of automakers and match unreasonably optimistic price quotes from competitors.
Please replace "expected' with "projected," and eliminate the words "energy density and battery" in the first bullet point above and you have a universal descriptive sequence for solar and wind power developments also.
Keep up the good work
Jack
Flurry Of Trading In Molycorp Ahead Of CEO Change May Finally Cement A Bottom [View article]
As I have said before Mr Karyannoupoulos is the best of the best managers in the rare earth space downstream from mining. The very first time I met him in 2007 I asked him why Neo Materials technology didn't build a separation facility in North America. His answer then was that "there is no feed stock" and Neo does not want to be in the mining sector of the supply chain (He didn't specify whether he was then speaking of just North America or any or all of the rest of the world).
Now, Mr Karyannopoulos, has been given a real challenge. He is to take over and guide a business, the model for which would not have been his idea. In fact the operationally challenged board of Molycorp should have from the very first tried to buy Neo and then have used Neo to acquire Molycorp and develop it as a resource for Neo allowing it, Neo, to break free of dependency on China. At the time this was not an option, as I understand it, because Neo would have been reluctant to challenge the Chinese rare earth mining industry, which had a reputation for making supply difficult to those who even attempted to look outside of China.
So, I believe, that now Mr K has taken on a challenge that he apparently would not have done as Neo, which is to manage a haphazardly put together disparate group of companies to magically create a "mine to market' group with a non integrated management and no apparent market advantage of experience, credibility of regular supply, delivery, quality, and lowest cost..
There is no one on earth who would be more qualified to lead such a recovery ( or discovery ) of value in this hodge podge than Constantine Karyannopoulos. I don't think Molycorp has any more borrowing power based on its "assets," so it is up to Mr K to get the job done with what he has in place.
The survival of Molycorp is now up to the company's being RESTRUCTURED and guided in the right direction by Mr Karyannopoulos or under his direction,and to the growth of the global rare earth market, and, of course, always, to the goddess Fortuna. I note that in the ancient Greek pantheon the goddess that became Fortuna to the Romans was Tyche (Fortune) who was always accompanied by her sister,Nemesis (indignation).
My sincerest best wishes to Constantine Karyannopoulos on an opportunity that should have been his from the beginning. I particularly look forward to his taking a hard experienced look at the non Chinese heavy rare earth junior sector where Molycorp is so dreadfully lacking exposure.
Molycorp (MCP) says CEO Mark Smith has resigned; no explanation is offered. Board vice chairman Constantine Karayannopoulos is named interim president and chief executive. Shares -6.3% AH. [View news story]
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
Molycorp does produce mixed neodymium-praseodymium (so-called "didymium) chemical salts, and I believe it makes from that some limited quantities of didymium alloy in Phoenix, AZ, at the former Santoku pilot plant. Molycorp does not now IN THE USA produce HREEs. The DoD wants to investigate a total domestic American supply chain for rare earth permanent magnet alloys. Ucore is the logical choice to anchor that study, because it is committed to exactly what the DoD REQUIRES, an American domestic total supply chain for rare earth permanent magnets.
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
I am having the same thoughts. China is now embarking on the institution of a regulatory regime for the rare earth "production" industry and God knows what other industries are already being regulated or are about to be. This is experimental capitalism. First you have cowboys, then cattle barons, and finally faceless corporations. Governments are always one step behind in trying to get their taxes and pretending to be trying to make industries safer and workers lives better.
Those who think that Chinese multi-billion dollar experienced natural resource producers will simply allow a locally controlled global advantage to just slip away are ridiculous. China is bringing its rare earth production industry under control to make it globally competitive. It may well roar back if and when excess production (excess over China's domestic demand) can bring the benefits of higher profits and productivity through new technologies to Chinese producers.
What's happening now is called "creative destruction." Did any of you graph reading, tea-leaf reading "investors" ever hear of that?
Actually Neo was quite a good and well run company. It was the star of the REAL non-Chinese rare earth sector; it made a consistent profit and was the right size for its market segment. However i think it has been made ineffective by Molycorp's poor judgment and lack of business acumen in the global arena. You can't buy good judgment. You can only hope you have it, and the test is "results" not opportunistic market announcements.
Molycorp: CEO Confidence In Light Of SEC Action? [View article]
It seems to me that if Mr Smith had sold shares at $6.20 for any reason other than to pay for a life saving surgical intervention for a close relative the market for MCP would have simply gone down the drain. He had therefore just the two choices, do nothing or buy some shares. In fact since he netted more than $10 million on the insider sell out in which Ross Bhappu (On behalf of Resource Capital(?)) netted several hundred million dollars wouldn't a purchase of a million shares by Mr Smith have been a more appropriate and commendable vote of confidence? Mr Bhappu, as I recall bought 2,500,000 shares at $10, recently, so he, Bhappu has already lost $7,500,000.00 since then. If MCP goes to $27 as Byron Capital is projecting then Mr Bhappu stands to make another $40,000,000.00 while Mr Smith would net some $400,000.00. If you are looking for an internal vote of confidence Mr Bhappu has Mr Smith beat by 100 to 1.
Lynas said, I believe, that after a six week first batch time that their system would be brought up to 400 tons a week of product in the second quarter of its going into full operation. I think that is ambitious. As I understand it Molycorp is not going to run its original SX plant after it starts the new plant. The question is; How long will it take to bring the new plant up to 400 tons a week of product output. I would think that as of today Lynas has a slightly shorter lead time. If both projects succeed then by the end of 2013 they will be together producing an annualized 40,000 ADDITIONAL TO THE EXISTING MARKET tons of light rare earth products. Isn't just this fact alone a market damper for lanthanum, cerium, and even, perhaps for neodymium-praseodymium prices?
Do we know the break-even points for Molycorp or Lynas? How little do they need to produce to keep operating in the black? Stay tuned as reality and I think lower-cost competition sorts out the true market size.
SEC Investigation Overshadows Better-Than-Expected 3Q Results For Molycorp [View article]
I have come to the conclusion that Molycorp needed much more R&D before it undertook a massive increase in capacity and a mind-numbing attempt to become expert in a group of (related) but individually complex technologies to process rare earths into individual metals, alloys, and sophisticated products such as magnets.
The driver for all of this was greed for the quick big buck and hubris was its undoing.
I would love to have a disinterested judgement from Constantine Karyonnapoulos, the former CEO of Neo Materials, on what he thought of Molycorp's technology and R&D once he had access to it. I doubt that it was coincidence that Molycorp's falling out with M&K came just 6 months after Molycorp had acquired Neo, which was (is?) a first class rare earth separation and refining company and a technological leader in strip cast rare earth permanent magnet alloys for the bonded alloy market. I might add that Neo was also first-class at evaluating and acquiring high tech metal recyclers and purifiers also. If Neo had bought Molycorp that would have given the venture a high probability of ultimate success.
I'm sure we'll have to wait for the final judgement on Molycorp, but I suspect the wait won't be that long.