Seeking Alpha

Jack Lifton

View as an RSS Feed
View Jack Lifton's Comments BY TICKER:
Latest  |  Highest rated
  • Molycorp Announces Start-Up of Heavy Rare Earth Concentrate Operations at Mountain Pass, Calif. [View article]
    I would like to formally ask Molycorp from exactly where is this "heavy" rare earth concentrate coming? Also I would like the company, Molycorp, to define exactly which rare earth elements it considers to be "heavy rare earths."

    The analysis of the bastnaesite deposit at Mountain Pass, which is gathered from Molycorp supplied data and is published for example at, shows only traces of what are generally known as the heavy rare earths. Molycorp itself said recently that it would only produce 7 tons of dysprosium if it could recover 100% of the dysprosium co-produced with 50,000 metric tons of the light rare earths from Mountain Pass. Has Molycorp filed a 43-101 compliant verification of an additional ore body on the Mountain Pass site that could produce any "significant" amount of heavy rare earths? I know there is samarium and a little (0.1% of the TREEs) europium in the bastnaesite, but where and which exactly are the others and in what quantity.

    I would also like to see a detailed analysis of the cost of upgrading the new Project Phoenix SX system at Mountain Pass to process the heavy rare earth fraction remaining after the first separation of the light rare earths, lanthanum, cerium, praseodymium, and neodymium, and the further separation of the samarium, gadolinium, and europium, medium rare earths fraction. Are any rare earths present beyond europium in "commercially recoverable" quantities, and if so, how are they, the heavy rare earths, to be separated from each other? Since Molycorp openly said less than a year ago that it had no plans to separate the "heavy rare earths" at Mountain Pass I ask Molycorp to please tell us what process they have now installed to do that? I assume its ion exchange, because I do not think there is any other way for them to have a limited use specialized system up and running in less than a year. Actually now that I think about it there is such a system and Molycorp is aware of it, SPE, solid phase extraction, but they rejected it several years ago.

    I have a theory. I suspect that Molycorp is intending to send the heavy or even the medium, and heavy, fractions from their SX plant to China for the recovery of the contained rare earths by and at Molycorp China? That would make sense both as a cost saving and efficiency move, but it would require import and export permits from the Chinese government, which are probably harder to get than hen's teeth. But if there are concentrates to be processed from Mountain Pass and they are processed in China then returned to the USA then I would call them domestic materials.

    Here's an idea: Perhaps the tiny amount of dysprosium concerned could be obtained in a heavy rare earth concentrate at Mountain Pass then separated and purified in China then made into metals and alloys either in Japan or the USA and then delivered to Hitachi in China Grove, North Carolina. Publicists and government bureaucrats could I think legally call this
    domestic" American material, but it would be hard to justify if someone else did all of the steps in the total supply chain within the United States and offered it at a lower price. I am betting that will happen.

    By the way I just thought of another question for Molycorp: How long will it take to accumulate enough "heavy rare earth" concentrate to make a cost effective separation run? The SX and IEX processes don't lend themselves to any size runs. They have minimum thresholds. So, I ask, politely, what are those limits for Molycorp and when will there be enough concentrate to make a minimum run.
    Aug 27 06:18 PM | 2 Likes Like |Link to Comment
  • Future Quite Bleak For Rare Earths Miner Molycorp [View article]

    I note that some analysts are projecting cerium at a selling price of $8/kg by 2015 for 99.99% oxide. If MCP's FUTURE cost is $7/kg then you, jbde, are predicting a disaster, since half of the predicted 40,000 mt/a will be cerium, and since NO ONE pays a posted price for volume this would mean that MCP would have to sell cerium oxide at a loss.
    Please do not tell me about the market for Xorbex. That is a fantasy at any price but at a cerium price of $8/kg there is a fatal problem in that it has already been stated by MCP that Xorbex will fail in the marketplace if cerium is below $11/kg.

    I note that at $21/kg cerium Xorbex is already a flop.

    Molycorp's problem is that it is basing its supply model on a demand market that does not exist except, perhaps, for neodymium. The question is: Can Molycorp survive when it has to produce 40,000 MT/a of the light rare earths in order to produce 5,000 mta of neodymium or 7,500 mta in total of didymium, if you count the praseodymium as a desirable product?

    Molycorp's problem is one of break even. It is already too high.

    The biggest worry for Molycorp has got to be Lynas, which will produce nearly 4,000 mta of neodymium and a total of 8,000 mta of dudymium from just 22,000 mta production. I doubt very much that Lynas' cost structure is twice as high as that of Molycorp, so they will be able to sell their Nd and NdPr at a lower price than Molycorp.

    I think Molycorp's basic problem is, as I have already said, their break even is too high and the target production rate is far too high for the real market. This has been obvious for years. The investing public has just caught on, and the greater fool theory that drove it has finally run out of greater fools. S**t happens.

    There are much better managed REE companies out there than Molycorp. Look, for example, at GWMG, UCORE, TASMAN, and REE. Their managers all understand the market far better than Molycorp's managers do. More importantly all of those managements understand that profitability not overall size is the target of a well managed business. Economy of scale is a useful manufacturing approach. It works for natural resource production only when, as an example, in the case of the heavy rare earths you cannot achieve production of the desired metal values without concomitant production of the other rare earths.

    Polymetallic projects can also exhibit an economy of scale through diversification into marginal products. For example, Orbite Aluminae Inc. will produce low cost heavy rare earths and gallium, scandium, yttrium, and zirconium as byproducts of large scale production of alumina into a market that has capacity to absorb more than Orbite can produce even at its current costs. This will allow Orbite to produce and sell 1,200 tons per year of critical technology metals at a large margin while the costs are borne by the 250,000 mta of alumina that is their principal product. There are other good companies doing the same thing with polymetallic deposits. For example, Australia's Alkane is a zirconium producer that will produce substantial rare earths and hafnium as cost contained byproducts.Turkey's AMR will do the same with a broad range of technology metals which will be byproducts of its magnetite (iron ore) production.

    I think that Molycorp just overshot the mark and never considered cost control as an important target. Now I think its too late.

    One more company, Tantalus, in Madagascar will have a very low cost of producing rare earth concentrates from an ionic clay field larger than those known to us in China. Tantalus has an LOI with Rhodia in FRANCE to process the concentrates. If that goes to a final deal then Tantalus will be the first producer of rare earths from ionic clays outside of China within a year and a half.

    There's a lot happening also with regard to rare earths in Australia, southern Africa, Greenland and eastern Canada. Stop worrying about Molycorp.
    Aug 26 06:58 PM | 8 Likes Like |Link to Comment
  • Future Quite Bleak For Rare Earths Miner Molycorp [View article]

    The Soviet Union centralized industries without much regard to economics or geography. They set up a niobium tantalum ore processing/scrap processing operation in Silimae, Estonia, after World War II, and it functioned as a central place to ship both Soviet sourced domestic ores and those from "friendly" socialist countries. The Soviet Union was never a competitive source of niobium and/or tantalum in the global market, but its refusal to publish production or use statistics allowed it to confound western analysts trying to determine the extent of the Soviet military's production capacity in certain alloys and for electronics.

    Much later as rare earths became important to electronics the Soviet central planners in Moscow added to the then Silmet's responsibilities the processing of Russian sourced loparite ore from the Kola Peninsula. Silmet had already added plutonium processing to its skill sets-at least for recovering plutonium from over aged weapons and breeder reactor fuel.

    The company was part of the cleanup of excess Soviet era nuclear weapons after 1989 as a plutonium recovery processor. It also produced average quality neodymium and low quality neodymium-iron-boron magnet alloy. It was and most likely is very far from the state of the art in either as practiced in China and Japan.

    Silmet was a obsolescent Soviet era processing plant when the greater fools showed up and bought it from the Russian businessmen, living in Zurich, who had "privatized" it and were looking for a buyer.

    Silmet has never produced much rare earth metals or alloys; it has not even met its own production goals for them-EVER.

    Its sole value to Molycorp has been for hyping the supposed global reach of Molycorp and to add a list of technology metals, such as niobium, tantalum, and scandium to the fantasy. We are supposed to believe that a very minor player in the global market somehow makes a major player out of a company that knows only as much about those metals as the Silmet people tell them.

    By the way: What happened to the Wind Turbine "investment" that Molycorp made in order to demonstrate that Molycorp didn't need to worry about its lack of access to dysprosium production from ores? The comapny upon which Molycorp wasted $35 million of other people's money has done what lately? Has Molycorp put any more money into this R&D, all production involving rare earth magnets is outsourced to China, loser of taxpayer subsidies boondoggle.

    I know the Molycorp answer: "Never mind," its PR flacks would say.

    In answer to that I say as to Molycorp:


    One more thing: Does Silmet process coltan from the DRC, which it is claimed by the UN and USA is mined by children and slaves?? Traxys certainly makes no secret of being a supplier of these materials. I have to assume that Traxys is the supplier to Silmet, so what's the answer??
    Aug 26 01:37 PM | 8 Likes Like |Link to Comment
  • A123 Systems: An Object Lesson In Toxic Financing [View article]

    It seems to me that such deal structures as this "financing" are designed for the benefit of only the most savvy investors who become or are in fact the insiders in all but legal definition. My observations of the junior mining markets in Canada show many similar arrangements. I see the same old promoters selling deposits and then buying them back later or at least regaining control of them through financings like this for just a tiny fraction of what they made when they promoted the stock. They seem to be shearing the sheep and then letting the wool grow back for a future shearing.

    Do the documents show who is financing the Aone deal, and do we know who they are or for whom they are acting.
    Jul 29 12:53 PM | 5 Likes Like |Link to Comment
  • Even After More Insider Buying, Molycorp Struggles To Generate Upward Momentum [View article]

    That's an idea worth pursuing. However, I understand that to save costs, the GW separation plant is being built with a limited capacity to just provide enough material for LCM's operations in the UK and the USA and only the surplus will go into the raw materials market. If Frontier wanted to get involved it would be best served by getting the GW separation plant enlarged and getting the plant's HREE separation capability and capacity served by a separate cracking plant for the Frontier ores so that Frontier would produce just PLS (process leach solutions) at its sites to be sent "out" for separation. This is not a new idea, although I haven't lately heard much about it.
    Jul 9 11:05 AM | 2 Likes Like |Link to Comment
  • Even After More Insider Buying, Molycorp Struggles To Generate Upward Momentum [View article]

    I am closely following the companies I named and have visited all of their sites and talked to all of their managers and technical people. My understanding from publicly available information is that QRM has a deposit of ore that if it can be efficiently and economically extracted and if QRM has access to a HREE capable separation plant then it will be able to produce significant quantities of the HREEs. America's most experienced and distinguished rare earth geologist, Dr Anthony Mariano, told a group meeting at which I was in attendance that the Matamec property is America's (North America's) best HREE bearing deposit.

    My concern is with the gritty, and expensive, and not always of certain outcome details of bringing HREEs to market. A great deposit is necessary but not sufficient. Toyota's interest, for example, is certainly a plus factor, but Toyota is interested ONLY in the future of Toyota not even of the survival of its Japanese rivals. If Toyota should develop Matamec I predict it will take it off the market..
    Jul 9 10:37 AM | 7 Likes Like |Link to Comment
  • Even After More Insider Buying, Molycorp Struggles To Generate Upward Momentum [View article]
    The Chinese centrally planned economy has now turned its laserlight on the rare earth mining and refining industry, which has been an opaque circus riddled with illegal mining and refining almost from day one.The purpose of the stockpile is twofold: One, to stabilize prices, and Two, to allow the central government's chosen surrogates, State-owned metallurgical giants such as Jiangxi Copper, Chinalco, and BaoSteel Heavy to review and select those rare earth miners and refiners in their geographically determined oversight districts that are to be shut down; those that are to be modernized; and those that are to continue production with safety and health standards overseen by their big company supervisors. This will cause shutdowns and increased costs for remediation and modernixation. Therefore the very rational Chinese government is building a stockpile to ensure the security of supply during this restructuring.

    Companies in the outside world that care only about financial reporting do not have the luxury of restructuring when they have made a mess or done the wrong things.

    STOP viewing China from a small investor's mindset and try to think of it as a centrally planned economy.

    The rare earth issue is way overblown. It is the mix of products of a mine or refinery that matters not the quantity. The entire world, including China, is short of the heavy rare earths. The light rare earth demands can be met in several ways including a straightforward ramting up of Chinese production utilizing existing capacity. This now will not and cannot happen until the Chinese mining industry is cleaned up.

    There is a window therefore for companies like Molycorp and Lynas and Rare Element Resources and Frontier to produce light rare earths for a market deprived by thie contemporary Chinese withdrawal. But in the future the only non Chinese suppliers of rare earths will be those who produce significant quantities of the heavy rare earths. I would choose Lynas, Rare Element Resources, Tasman, Ucore, and Frontier as those who can survive the resumption of large scale Chinese production at the end of this decade. It is their product mix that counts.
    Jul 9 09:57 AM | 12 Likes Like |Link to Comment
  • Tesla Motors: Automaker Or Graphic Novel? [View article]
    Perhaps it would be kinder to simply launch them into limitless and resource empty outer space? Oh, wait, St Elon has already done that. Economically brain dead concepts such as mining from the deep ocean pale before the idea of going to where we know NOTHING of the geology but do know that the environment (vacuum, hard radiation, and limitless nothingness ) is hostile to get stuff we DONT need such as platinum (for God's sake) and rare earths.
    Jun 17 11:09 AM | 2 Likes Like |Link to Comment
  • Tesla Motors: Automaker Or Graphic Novel? [View article]
    Sometime in the 17th century scientific analysis began to make inroads into religious zealotry in reductionist arguments (i.e, those of a type that reduces unmanageable complexity to simpler terms that can themselves be studied ). The practitioners of the dismal "science," economics have yet to convince the public that economics is not about magic. The simplest economic terms and rules, such as the LAW of supply and demand, are daily trumped by the cult of greed and the fast buck, so that many people believe that there is a "free lunch" or that you can get something for "free." In this case you take a tiny corner of the energy universe and pretend it is unconnected with the rest of the universe. In this tiny corner of the universe energy is free because it comes from a wire in the wall. It's, literally, "magic" to the uneducated.
    John, You're a prophet in the widerness, but St Elon is of the established Church of Greed and Righteous Environmentalism. Economics is heresy in that church.
    Jun 17 10:36 AM | 5 Likes Like |Link to Comment
  • Tesla's Troubling Risk-Reward Profile [View article]
    This comment string has made me think of Apples and oranges. Have any of the readers thought about the logical fallacy of "false analogy?"

    The correspondents keep talking about Tesla and Apple.

    This reminds me of an old Muppets movie in which a wicked witch told a dumb king that since both of their mothers were women they must be related. The king then looks at the witch and shouts "sister!" She falls into his arms and in an aside says "Geez, what a moron."

    John, you keep mentioning subsidies which are of course for socializing the risk of FAILURE! It dawns on me that if private equity is too stupid or blind to the low risk of Tesla then individuals must be helpless to make such assessments. Thank goodness for our betters who take our money directly and through subsidies. Otherwise we might have to spend the first wisely in our own interest and not fund the other.
    Jun 7 10:59 AM | 5 Likes Like |Link to Comment
  • 2 Ways To Invest In Rare Earth Metals [View article]
    There won't be a 'flood' of supply, because no one has the money to waste on building an inventory of materials already in surplus.. The problem is not the supply of ALL of the rare earths; it is the SUPPLY of just the critical rare earths. The demand for all of the so-called light rare earths except possibly neodymium can be met simply if Molycorp, Lynas, and the Chinese accomplish their projections (Molycorp, Lynas) and/or produce to capacity (China). The most serious problem of SUPPLY SHORTFALL already exists for the heavy rare earths, terbium and dysprosium. Only the members of the "Dysprosium Club" can address this problem. I will be publishing my thoughts on the "Dysprosium Club" tomorrow on my and Gareth Hatch's web site,
    Jun 4 10:01 AM | 4 Likes Like |Link to Comment
  • Storm Warnings At A123 Systems [View article]

    Your financial sagacity is much appreciated. Would you please review the effect of the $650 million dollars of debt that Molycorp will have to take on to complete it's acquisition of Chinese-Canadian Neo Materials' Technology? I, for one, think that Neo's latest year was a one time thing and that it's (Neo's) future earnings will never again be as high as in 2011. I think that Molycorp probably therefore overpaid for Neo and that using borrowed money to overpay is not a good idea. Can you look at that deal and give your opinion as to it's financial impact on those companies? Obviously you'll have to use published data for such an analysis.

    May 17 11:46 AM | 5 Likes Like |Link to Comment
  • EV Dreams And Industrial Metal Nightmares [View article]

    You can't be right, because you're saying that to save the environment for the 99% we would first have to produce all of the world's accessible fossil fuels in order to produce the critical metals to produce and utilize the specific critical metals for alternate energy production and use. Fortunately for the eco-elite probably we'd only be able to produce enough of the metals by using so much fossil fuel that the prices of oil, coal and gas rise for everyone thus having all of us, the 99.9%, pay for the Eco-bling.

    You seem to be saying this, but I must be wrong, because that would mean that our wise elites are economic illiterates with no knowledge of resource production limitations or energy economics.
    May 6 09:32 AM | 11 Likes Like |Link to Comment
  • Is Lithium-Ion A Borgia Battery? [View article]
    I'm pretty sure that lithium hexafluorophosphate is meant by the author of the comment.
    Apr 22 02:29 PM | 3 Likes Like |Link to Comment
  • Is Lithium-Ion A Borgia Battery? [View article]

    Let's all note that the battery being "extreme" tested FAILED. Engineers and scientists at GM who were testing the battery under rigorously controlled conditions suffered a completely unexpected failure-mode. This is the very definition of an "accident." If the GM people made a mistake in not placing the battery in an explosion proof containment it was because of their confidence in the vendor's data. This is a huge problem for A123, it's insurer, and it's legal counsel. The public has a right-to-know whether this battery chemistry or a variant is now in use anywhere. This was an accident, but if these batteries OR ONES WITH SIMILAR CHEMISTRY are in use then the next mishap will be pure negligence and the third could be criminal negligence. This event has to be taken from the hands of the PR flacks and explained in detail immediately. How long before a tort lawyer creates a fear of electric cars made me do it cause of action?

    Apr 22 12:41 PM | 8 Likes Like |Link to Comment