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Jack Lifton

 
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  • Tesla's Painful Journey Into The Valley Of Death [View article]
    John,

    I think you're absolutely right on this. Chevron poured a relative fortune into COBASYS (Chevron Ovonic Battery Systems). The money went mostly to Energy Conversion Devices, Chevron's partner, for battery manufacturing R&D. General Motors was comforted by Chevron's strong support of the technology so it built some 8000 HEVs with the COBASYS batteries. All 8000 cars were recalled for a defect caused by a bad choice of battery "case" plastic, which cracked and lost the electrolyte. Daimler, also a "customer" because of Chevron's involvement canceled its contract and sued for civil fraud as well as non performance.

    The cells were made at the end by Sanyo in Japan. Assembly was done at COBASYS and R&D by Ovonic Battery Systems and Ovonic Materials, to where Chevron's capital flowed to disappear in research programs unconnected to manufacturing technology problems that were being encountered.
    There were endless "breakthroughs" in the lab.
    Chevron pulled the plug on the sugar after it was out more than 300 million dollars. It told Energy Conversion that it would not put any more into the "partnership" until ECD came up even in the financing. It invited ECD to find financing or a buyout partner.
    No one came forward because Stan Ovshinsky made emotional not financial decisions and his model of announcements and press releases had run its course in the stock market. There was no more money to be made by trading shares, which is the only way anyone dealing with a dream factory can ever make money.
    Tesla's demise, like Solyndra's and that of COBASYS, is foreseeable as soon as you see that the real world doesn't allow technologies to succeed that are not in lock step with the actual and near term supplies of their enabling raw materials and cannot be mass produced at the levels required for contemporary manufacturing engineering to make competitive products.
    The Tesla WORKS, the NiMH battery WORKS, and the Solyndra CdTe cells WORK. None of them are economic. Each product cannot be mass produced, because it would then be unsustainable economically.
    The amazing thing about innovation finance is that it allows so many dreams a chance. The market, however, always chooses the winners.
    Nov 8, 2013. 10:15 AM | 2 Likes Like |Link to Comment
  • Molycorp Won't Close Gap In Low China Rare Earth Metal Export Quota [View article]
    Lynas and Molycorp are both struggling with engineering "learning curves." They are both trying to master the problems of what I think, and what I have said from the first day for both, are the wrong output volume targets for either to be considered as "the right size."

    This is what happens when spreadsheet warriors take command waving computer printouts against the other guys' shovels, engineers with experience, and marketing guys who "know " the market.

    There is room in the nonChinese market for both Lynas and Molycorp only if they can deliver the quantities and qualities required by the non Chinese customers on time and at agreed prices. So far that has not seemed to happen at least for Lynas.

    The spreadsheet warriors do not want investors to realize that the Chinese domestic rare earths markets, the largest in the world, do not want and will never want or need to import light rare earths. The Chinese markets want heavy rare earths, and because China today is the only producer of them, outsiders will have to be very good at marketing and have clearly first class deposits to get into the game at all.

    Please Read my series running this week on Investorintel.com for a very detailed discussion of the global rare earths markets in this decade.
    Oct 2, 2013. 08:56 AM | 2 Likes Like |Link to Comment
  • Why Tesla Had To Repay Its DOE Loan [View article]
    John,

    Your critics have it in common that they only care about the share price and that only in the short term. Your analyses are meant for those with a different outlook, the long term. Companies that produce items that people want to buy for more than the cost of the goods sold are here as long as, and only as long as, their products are in demand at those prices and with those costs that allow them to make a profit. In the share casino in the short term it's always the greater fool theory that prevails. Screw your critics from the casino. You're a first class analyst with a razor sharp eye for details. Mr Musk's brother is probably an avid reader of your analyses.
    Sep 2, 2013. 11:42 AM | 6 Likes Like |Link to Comment
  • U.S. Rare Earths Inc: A Rare Combination Of Assets And Management [View article]
    The concept of "critical rare earths' was devised by the editor/publishers of Technology Metals Research, LLC (http://bit.ly/uy2hnD). I chose neodymium (and reluctantly praseodymium), terbium, dysprosium, and yttrium as the five CREOs. My co-founding publisher, Dr Gareth Hatch, indeed added europium to his list.

    The miniscule amounts of erbium, holmium, thulium, and ytterbium that can be produced in a full spectrum separation plant such as Solvay's (the successor in interest to Rhone -Poulenc's Rhodia) or the many such Chinese plants have few uses and no business can be based on just those elements individually or even in concert.

    Europium is not in short supply. Molycorp was perhaps the first company to put europium into mass production, but it was by no means ever the industrial world's major resource of europium. Europium for the USA in early color tv picture tube display screens came from Steenkampskraal, then an Anglo-American property. It was refined by a unit of St Louis Chemical, which I recall as being in West Chicago, Illinois. Rhone-Poulenc in France was the first company to build a solvent extraction plant that separated ALL of the rare earths from each other. Molycorp had decided to focus on getting the 0.1% europium separated from its TREEs in its bastnaesite, and even at that, the concentrates were sent to West Chicago where they were purified for use using ion exchange.

    Molycorp made a wrong bet in 1964. It bet that europium demand would skyrocket. By 1967 when Molycorp was ready to deliver europium bearing concentrates to refiners the color tv industry had advanced its technology to use just a fraction (1/8) of the europium it had projected in 1964 that it would need in 1967
    Molycorp then found that it could not compete in finished REE products with Rhone-Poulenc, so it began sending concentrates to China for low cost refining in the 1970s..

    By the time the next rare earths boom came along in the early 1980s when the rare earth permanent magnet went into mass production Molycorp was in a death spiral. Its Chinese subcontractors had learned the separation game and how to market the material. They now opened up their immense bastnaesite resource in Inner Mongolia and soon discovered how to recover heavy rare earths from their large very low grade ionic adsorption clays produced almost uniquely in the former rain forests of Sichuan and Jiangxi provinces of China.

    Molycorp with its relatively high cost and no heavy rare earths was doomed as the use of the heavy rare earths became "critical" to the performance of rare earth permanent magnets.

    China has the world's largest total supply chain for all of the rare earths. It is getting leaner and meaner by the day. The million dollar salary paid to the CEO and some officers of Molycorp is not based on performance. It is based on hope. In the light rare earth sector the Chinese are once again breathing on the Molycorp and Lynas necks. The now occurring and ongoing shake out of the total rare earth supply chain within China will determine the future of both Molycorp and Lynas.

    The remaining non Chinese rare earth junior contenders need to focus on the production of the heavy rare earths terbium, dysprosium, and yttrium and the light rare earths neodymium
    and lanthanum. Production in this case means downstream all the way to high purity chemical salts that can be turned into high purity metals and alloys for end-use product fabrication. The USA, Canada, and Australia have immense deposits of heavy rare earth rich hard rock minerals. These deposits are the hope of the REE industry globally.
    Aug 31, 2013. 10:09 AM | 3 Likes Like |Link to Comment
  • Tesla's Crushing Battery Supply Constraints [View article]
    John,

    Once again you've identified the real and specific problem here: The limitations of available capital for building speculative manufacturing capacity. Only investors with no knowledge of the world beyond their remote control could believe that once "burned" for billions of dollars a company like Panasonic, for example, would simply put its corporate existence back into the flames. The key word is speculative. Neither the technology nor the market was anywhere near ready for the tsunami of capacity that the politicians and the stock hustlers poured from their publicly funded piggy banks. Since that capital cannot be recovered it is LOST. The world is at a low point in the formation of capital, and making batteries for rich boys toys is unlikely to open the public tap again for a very long time.

    The US president doesn't seem to want to involve the Congress as he decides to play at making war, but he will soon find out that the cost of war making makes even Washington graft look cheap. When he goes to Congress finally for the money that the constitution gives it the power to control I'll bet the first casualty is green technology and then after that health care. Chinese rare earths for control electronics and tungsten for armor are expensive. But the good news is that Chinese scandium alloy putters may be cheaper than Russian scandium alloy putters.

    But i digress. Good article, as usual. Even deaf ears may vibrate a bit. Let's hope so.
    Aug 27, 2013. 09:54 AM | 5 Likes Like |Link to Comment
  • Yields Of 6-11%: Overlooked Stocks And ETFs That Still Offer Opportunity [View article]
    Tack,

    I believe that the "mandatory" convertibles are quite common among Canadian junior miners who are forever raising money just to keep afloat. These companies are created primarily in the hope that they can sell the company to an actual miner before they have to raise the huge amount of money it takes to bring a mine into production, and, in the case of the so-called rare earth "juniors," to find and implement the technology to add enough value to mixed rare earth concentrates so as to make them profitable to produce-This invariably requires separating them from each other and purifying and MARKETING the critical rare earths , and that is often the only "value" they can have. MCP works the stock market very much like a Canadian junior even though it is in fact a producing company. I note that sites like Yahoo always put Molycorp in the same class as the major miners. This I think is why there is so much interest in MCP in the market; it's the company it keeps.
    Apr 28, 2013. 09:33 PM | 2 Likes Like |Link to Comment
  • Tesla's Q1 Earnings, An Epic April Fools Prank [View article]
    John,


    I'm so old that I actually heard Bertrand Russell say that philosophers and other soothsayers only get famous 50 years after their deaths. Combine that with "a fool and his money are soon parted" and "too soon, old, too late smart" and you have all you need to know to understand why Tesla, Fisker, and Next will not even be footnotes in the very near future. They are all a type of vehicle (in both senses) to funnel taxpayer money to connected elites of the ruling party of the moment. They are not game changers, they are game players.
    Apr 26, 2013. 12:39 PM | 7 Likes Like |Link to Comment
  • Rare Earth Weekly [View article]
    I assume that you made a Freudian slip when you identified Rare earth Miners as "Minors" consistently in your article. Outside of mainland China there are very few rare earth miners. Lynas, Molycorp (I think), a Brazilian or two, an Indian or two, and perhaps some small operations in southeast Asia that are not rare earth mines but are places where heavy rare earths are recovered as byproducts of base metal mining. There is absolutely no point whatsoever in mining rare earth if you cannot process them through at least the separation stage to CUSTOMER SPECIFICATIONS. Also there is no economic driver (demand) to justify the ENORMOUS expense of mining the DEEP sea bottom for ANYTHING yet.

    The market is CORRECTING as dictated by the law of supply and demand.

    Stop writing glibly as if you understand the technologies here or the demand market. You do not.

    The junior minors (excuse the redundancy) are mostly sunk as junior miners.
    Apr 23, 2013. 02:57 PM | Likes Like |Link to Comment
  • Molycorp: Recent Capital Raise Poses Reputational Risk [View article]
    Not true.

    There is also the effect of unsalable inventory that has to be re-worked due to not meeting the customer's spec or being contaminated. This happened when Molycorp restarted the original plant, and IF it is happening again it is VERY serious.

    Neither Molycorp or anyone else outside of China plans on selling high purity separated rare earths INDIVIDUALLY. The market for them is customer designed specialized composites such as La-Ce for fluid cracking catalysts and Neodymium-praseodymium (didymium) for magnets. The only commodity material they might make is cerium oxide for glass polishing, but that is a low value very competitive product. SorbX is their only hope to get some added value from cerium.
    Apr 22, 2013. 10:52 PM | 4 Likes Like |Link to Comment
  • Molycorp: Recent Capital Raise Poses Reputational Risk [View article]
    Gentlemen,

    I enjoy reading your tales of market gamesmanship, in which you try to make money off of each other and off of those who consider Molycorp just another game in the casino.

    In fact none of you understand the problems of building or operating a very large solvent extraction plant to separate the rare earths not only from each other but in mixtures and ratios that are CUSTOMER specified. Sovent extraction planst are not meant to be turned on and off with a light switch. They must be run with a DEFINITE output spectrum in mind. If Molycorp is building inventory it is either because their customers cannot or will not take material or they are making a generic material on speculation. If the designated customer does not take the specified material it will only be sold at deep discount, if at all.

    Please keep playing your market games, but do not purport to understand the operations of an industry that is a specialist business which you do not understand.
    Apr 22, 2013. 10:38 PM | 5 Likes Like |Link to Comment
  • 3 Highly Shorted Stocks Being Bought By Insiders [View article]
    I am confused by your description of Molycorp. You say that it " Focuses on the production and sale of rare earth oxides from stockpiled feedstocks in the western hemisphere."

    In 2009 When I visited Mountain Pass I was told that it had 22,000 tons of 70% ore concentrates on hand produced before 2002, and that it was processing enough of this to produce nearly 4,000 tpa of lathanum, cerium, and didymium "oxides." Surely this material has been exhausted. So, from where are the stockpiles coming. Are they mining again? If so then is mining output greater than separation capacity? If so what is the size of the stockpile? If not , what is going on there?

    I do not understand from Molycorp's public announcements from where the inventory is coming in any case. Is newly produced ore concentrate being characterized as an inventory of contained end-products? Is this a common practice?
    Apr 18, 2013. 01:59 PM | 1 Like Like |Link to Comment
  • Molycorp Is Worth $2.21 [View article]
    Raven,

    You're correct about Molymet, and the deep-pockets premise is well taken, but keep in mind that Lynas has brought in a 22,000 tpa SX plant from a green field for much less than Molycorp seems to have spent for the completely new 19,700 tpa at Mountain Pass. I admit that it is hard to know exactly how much MCP has spent on Project Phoenix alone, but even when you back out the cost of acquiring Neo the number is very high. Now if in fact CK can get his operating cost down to USD$6.00/kg then he will have one of, if not the cheapest OPEX of any plant of its type, perhaps in the world. But for now the Chinese are holding that title. Note also that If Lynas is on target with its OPEX it will be neck and neck with MCP

    We are obsessed in the USA with Molycorp, but the rest of the world notes that Mt Weld is, like Mountain Pass, a huge deposit with a grade perhaps 50% higher than that of Mountain Pass (Note: The direct comparison is mis-leading in that they are of different minerologies). This means that for practical purposes that Lynas says it need process much less ore, fpr example than Molycorp, to recover its 22,000 tpa. The world's senior rare earth geologist who is also the world's leading authority on rare earth mineralogy told me a few years ago that he knew of at least 7 deposits outside of China that were world class if a method could be worked out to crack (extract the metal values from) the mineral eudialyte. I personally believe that particular cracking problem has now been solved, and that we will be hearing much more about this in the near to mid-term.

    The market seems to have fallen out of love with metal mining/refining ventures in general, so that those who still must raise a lot of cash are in peril. Experienced financial and technical management allied with a top flight administrator is the buy-in for not only success but survival. Molycorp is playing catch up in all of those categories, but I admit I like what it has done with CK and his new team.

    Good luck to you as an investor in the RE circus.
    Apr 8, 2013. 07:55 PM | Likes Like |Link to Comment
  • Molycorp Is Worth $2.21 [View article]
    Raven,

    Indeed it is possible that some consumers would pay a premium for non-Chinese REEs, but since the world's principal consumer of REEs is the Chinese civilian industrial economy it is not likely. The second biggest users of REEs, the Japanese, were always interested primarily in price. I remember being told there less than two years ago that the Chinese were a problem for everyone but the Japanese and that there was, for them, with their special relationship, no security of supply issue.

    The problem facing Molycorp is that there is not really a shortage of good deposits of the light rare earths outside of China. Molycorp's perceived advantage was that as the one time largest producer of light rare earth raw materials, and some next step downstream separated products, such as didymium, it was assumed that bringing it back to that point would be easy and it would have the advantage of needing only the CAPEX to bring it back on line.

    The mistake at this point, I think, was to decide that somehow the existing Molycorp separation plant needed replacing, not refurbishing, by a giant size "advanced" plant, which it turns out is not only not cheap but hard to bring on line and chock full of new problems.

    I assume that you, in 2007, would not have believed that REE prices would rise, but I did, and I told Mark Smith in 2009 that I thought that just bringing the existing plant up to its design capacity-I do not think that had been done for more than 25 years-could produce enough profit to justify the then expenditure of the 80 million his group had made to acquire "Molycorp," Mountain Pass. He told me that they had big plans and that Molycorp was going to again be the biggest producer of REEs in the world (light REEs).as it had been in 1984. I think that both Smith and I have been consistent in promoting our different visions of the best way for a junior to proceed in the current REE market. There was no mention whatsoever in 2009 of entering the total supply chain as a participant at all levels.

    I remember asking a Star Trek author how much a Galaxy Class starship massed. I noted that just as a guess I would say that the 400 man/woman/being crew were cruising the galaxy surrounded by several thousand tons of ship and that today putting such a mass into space, let alone a fleet, would require a healthy percentage of our gross national product. She told me that even if that were true it was a matter of poetic license.

    The Chinese took a generation to bring the total of their production in dozens of mines and separation plants for LREEs in Inner Mongolia up to 50,000 tpa. Isn't it just poetic license to assume that we can do the same in a short while?

    In my old age I have begun to enjoy the enthusiasm of the young untempered by experience or the limits of economics. If only Congress would repeal the laws of supply and demand and of gravity. But alas they are too worried about being re-elected and of their toupees flying upward if they repeal gravity.

    I'm sure that there is still money to made in trading shares of MCP; I'm just not so sure that MCP will add to the world's supply of LREEs.

    If you don't like all of my opinions that's fine. I appreciate you're reading and commenting on them in any case.
    Apr 8, 2013. 04:02 PM | 4 Likes Like |Link to Comment
  • Molycorp Is Worth $2.21 [View article]
    You gentlemen do realize, right?, that Molycorp or any other business has to produce goods/services for less than the selling price in THEIR market. Notwithstanding your playful banter about how YOU will make or lose money through puts, calls, intangible good will valuations, and professionally written press releases this "making it for less and selling it for more" is exactly what Molycorp has not yet achieved on a consistent basis. You also seem to think that the marketplace is just waiting for Molycorp and no other competitor exists that can challenge Molycorp if and only if it becomes profitable.

    The stock market plays with itself most of the time, and share valuations are less and less intrinsic as the time from the IPO lengthens.

    I wish all of you luck in making money in the casino, but I think in the near term that you will make it from the game not from the intrinsic value of this company or of its products.

    The rare earth end user market is highly specialized. Product specifications are driven by customer's requirements. Building an inventory can mean that the customer has changed his requirement or simply cannot afford to buy as much as you are producing, or, is out of business. How do you mark to market an out-of-spec material? At first the same way you value last year's model car, then the way you value old meat after you cannot afford to refrigerate it.

    All of you are using the de Beer's model for inventory. I would use the American Beef Association's model, personally. First, dog food, then doo-doo (composting material)

    I think that the rare earth juniors (exploration companies) went into the market ass-backwards. First they should have all looked at the market to see what was needed, and then to see HOW THAT NEEDED PRODUCT WAS PRODUCED. Then they needed to survey the market and see what the customers would pay for these products, and if there were a premium to be gained from better quality, reliability, and security of supply. Then they needed to determine EXACTLY where they needed to enter the market to make a profit and to provide enough return to their early investors and creditors.

    As far as I can determine they all used only the field of dreams' model: "If I dig up this stuff they will buy it. (This model is also used by all junior gold miners)".

    Molycorp to me was a classic of the above type. It first hyped a USA "military NEED," which has turned out to be, with almost no fanfare, just 150 tons a year of rare earth permanent magnets. Then when that actual demand itself turned out to require and critically need 7 tons a year of dysprosium Molycorp simply ramped up its projected production to 50,000 tons per year, in which, with 100% recovery (impossible, of course) it would produce (surprise) exactly 7 tons of dysprosium per year. Then when the 50,000 ton level's absurdity filtered down to the puts/calls trade Molycorp changed its business model to one of a total supply chain , and purchased Neo materials for twice the value it would have just 6 months later.

    I note that there is no Chinese competitor YET to the total supply chain model. But there will be one if Chinese rare earth businessmen determine that they can cut costs and make money in this fashion. So far, to the best of my knowledge, THEY HAVE NOT SO DETERMINED as of this writing!

    I wish you sincere good luck. The founders of Molycorp made at least two billion dollars playing the market game. I actually hope the company survives, but I know that in its present state survival is perilous.

    Good luck to Molycorp and to you guys in the stock market. You are NOT playing on the same field.
    I note here, to avoid, bulletin board controversy. That the Great Western model of creating a supplier of magnetic materials within the limits of in-house capability of raw materials' production is a very good one, but the volatility of the end-product pricing is not matched by a resonance in the mining and processing costs. I am concerned for their break-even point. I have never met Marc LaViere, but he looks, on paper, to have the right-stuff at this time for GW. I wish them luck also.
    Running a public company is a bitch; you have to answer questions with sound bites that can take a life-time to understand.
    I would leave Consatntine Karyannoupoulos now of MCP alone. If he can't make the colossus work then no one can. He's the best man, and he knows what to do, if it can be done.
    Enough rambling. Gentlemen man your checkbooks (or EFT stations).
    Shockwave: Please keep analyzing I really think your ideas are good.
    Apr 8, 2013. 01:25 PM | 5 Likes Like |Link to Comment
  • Molycorp: There Will Be Blood [View article]
    I note that Molycorp had no problem promoting Dr Burbs's patents on processing as ones that would improve the efficiencies and costs of their operation. I am mystified by why my simple question is avoided and an ad hominem attack is mounted. Actually I admit that I am not mystified at all.

    So, now that you brought it up I ask again why was Dr Burba separated?? Did he offend the gods, or was the job he did deemed insufficient for his pay grade? (Which was the same as that of the President of the U.S.)
    Apr 5, 2013. 09:54 AM | 1 Like Like |Link to Comment
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