Seeking Alpha

Jack Lifton

View as an RSS Feed
View Jack Lifton's Comments BY TICKER:
Latest  |  Highest rated
  • 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.
    Dec 11, 2012. 07:14 PM | 4 Likes Like |Link to Comment
  • 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.
    Nov 24, 2012. 11:30 AM | 2 Likes Like |Link to Comment
  • 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.
    Nov 24, 2012. 09:07 AM | 1 Like Like |Link to Comment
  • 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.
    Nov 21, 2012. 06:17 PM | 7 Likes Like |Link to Comment
  • 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.
    Nov 14, 2012. 01:05 PM | 3 Likes Like |Link to Comment
  • Molycorp Mired In The Mud: Perhaps A Domestic "American"Total Rare Earth Supply Chain Should Be A Collaborative Project. [View instapost]

    Translation: Until a metallurgy is run at full "scale," it is also just on-going laboratory scale work. In chemical engineering scale-up a pilot plant will be built after the successful laboratory work and it will then be the pilot plant that is scaled (or "ramped up" [if large enough])up to full production.

    Note please the problems Molycorp seems to be having are in scale-up. The information is opaque but it seems to be safety design that is flawed; it may be even a process flaw, which is an economic setback (to say the least) when a chemical engineering project must be redesigned as to process flow.

    Now, finally, as to using a "synthetic process leach solution," this is what one must almost always do first prior to the mine being permitted for full-scale "mining." In Ucore's case it was the desire to synchronize the separation work with the hydrometallurgical work that drove the use of "synthesized" PLS.

    In Ucore's case its metallurgy, or most efficient low cost extraction of the desired elements from the ore, was done, as is standard procedure, by a specialized independent and qualified third-party contractor. This contractor determined what reagents and conditions to use to minimize costs and maximize efficiency.

    In order to reduce costs and time required to complete the project Ucore retained Intellimet and kept it abreast of the metallurgical work.

    Once the metallurgy was settled (not necessarily finished) Ucore had Intellimet "synthesize" a solution of the process leach solution that would result from the proposed metallurgy and begin its, Intellimet's, work on separation and purification.

    Intellimet's first success was in designing a process to pre-treat the PLS at the metallurgical "hydromet" plant (nearby or on site at Bokan Mtn) to remove the nuisance elements, iron, uranium, and thorium from the PLS. This was a substantial move. Uranium and thorium MUST be removed from the PLS to a level below that allowed for radioactive content for commercial transport, but JUST AS IMPORTANTLY the presence of large quantities of IRON, which is common in rare earth deposits, directly impacts the cost of separation and purifying the PLS, because iron must be chemically removed before the PLS is run for rare earth separation and purification. Feeding solutions containing iron into solvent extraction or solid-phase extraction plants designed to separate the rare earths from each other can be a costly mistake.

    In general laboratory scale-up in Chemical engineering is as much an art as a skill. Experience really counts. In my 30s I worked with a company that did contract scale up and pilot production of pharmaceuticals for major Pharma concerns in Europe, and I can tell you reproducing laboratory work in pharmaceuticals for scale up purposes makes rare earth separation seem quite basic BY COMPARISON. I note that Dr. Hammen of Intellimet first met solid phase extraction in his work as a young PhD in the American pharmaceutical industry. I note also that China's leading academic expert in solvent extraction separation for rare earths also learned his craft in the pharmaceutical industry and even today consults to the American pharmaceutical industry on the separations of (molecularly) almost identical sugars and proteins from each other.

    Separation aside the best example of ignored scale-up roadblocks that I know is the glossing over by the lithium-ion battery industry of the near impossibility of scaling up ECONOMICALLY the various laboratory successes in energy density or recharge times that are daily reported as "breakthroughs."

    One of the biggest problems in the American mining industry is the lack of general research and development in the separation and refining of the technology metals that are co-produced or produced as byproducts.

    (Political incorrectness alert): Until Americans start promoting engineering and science AGAIN with the same vigor now used to promote gender and diversity studies we are riding a wagon with a broken axle, and the horse is getting tired. Our American values and the amount of capital we devote to them are seriously out of proportion to our most urgent needs. I am not preaching autarky (look it up), I am preaching autonomy.

    Thanks for the opportunity to rant.

    Nov 13, 2012. 10:57 AM | 3 Likes Like |Link to Comment
  • Molycorp Mired In The Mud: Perhaps A Domestic "American"Total Rare Earth Supply Chain Should Be A Collaborative Project. [View instapost]
    Good point, and I don't actually know the answer to the question of Ucore's extent of ownership and coverage of the deradioactivation aspect of SPE, but I do know that developing the SPE deradioactivation process itself is a very significant achievement.However I must say that I disagree with your point that the process is universally applicable to all "hard rock ree ores." I suspect that a variation of the process used for Bokan will almost always be applicable, but the "variation" may be substantial. Note that any and all of the ores must be beneficiated and chemically cracked to produce a process leach solution, which is the feedstock into the SPE system(s). Ore cracking, which is known in the trade as "metallurgy" is far from an exact "science." In fact several well known large deposits have proved to be intractable to cracking economically.

    I congratulate Ucore on its singular achievement, but I would much rather not have the problem of deradioactivation than have to devise a chemical processing/mining engineering solution to removing it for further processing to get at the desired elements. Ucore has done what everyone in mining thought would be impossibly expensive and for which no good technology has existed, or at least put into use for this purpose, up until now anyway.

    Canadian securities' law requires that announcements of grade, tonnage, process, and process efficiency and cost be verified by independent qualified third parties, so Toronto's Bay Street talks about everything but the important stuff when its denizens are selling exploration company shares. I am in America , so I can tell you there is a very good probability that the REE separation/purification game is about to change dramatically. Get a large popcorn and wait for the main feature (for those of you old enough to understand that metaphor)
    Nov 11, 2012. 10:18 AM | 2 Likes Like |Link to Comment
  • Molycorp Mired In The Mud: Perhaps A Domestic "American"Total Rare Earth Supply Chain Should Be A Collaborative Project. [View instapost]

    Parr, of course, should be "par," the golf term. SA's editing software leaves much to be desired for iPads.

    Nov 11, 2012. 09:57 AM | 1 Like Like |Link to Comment
  • Molycorp Mired In The Mud: Perhaps A Domestic "American"Total Rare Earth Supply Chain Should Be A Collaborative Project. [View instapost]

    You have asked a good and a multi-part question, but I don't think all of the parts are necessarily inter-related.

    1. In my opinion the GWTI "operation" is indeed today superfluous to GW's vertical integration model. Note, however, that the Chinese separation technology supplier is only a minority capital partner and that, as I read the published documents the Chinese company is entitled to a percentage of the operation's "profits" not of any "metals."

    2. It is my understanding that Ucore indeed has an exclusive license for using SPE technology from Intellimet, specifically developed for the purpose, to process its Bokan ore. I do not believe that Ucore has at this point any additional claims on the process as used to separate the REEs or to de-radioactivate the ore concentrates (other than from its company owned deposits in Alaska)

    3. Intellimet is the property of a 68 year old PhD chemist and his immediate family and lifelong collaborators, which group includes two more PhDs in chemistry from Stanford. The 68 year-old, Dr Richard Hammen, introduced himself to me at a Hard Assets Conference in 2009 in San Francisco. I listened to his story and failed to really understand it fully, but I asked him to call Mark Smith at Molycorp and offer his services and/or technology. I had visited Mountain Pass in June of that year, and I saw then that they were working on bringing the original SX plant back on line after its half-decade shutdown. Molycorp was then private, and I had not heard of any plan to replace the original SX plant. In fact I then thought that Dr Hammen was talking about a form of Ion Exchange separation, which was used then, and is still used, to ultra-purify the heavy rare earths in particular. I didn't think that Molycorp knew much about IEx and I thought they might be interested.

    I had forgotten the meeting when I got a call from an irate Mark Smith late in 2009 or early in 2010 berating me for "disparaging" Molycorp by telling Dr Hammen that i thought they could use his help in process engineering. It seemed to me that it was Mr Smith who was being foolish by ignoring Dr Hammen. I was not intimidated by a threat to sue me made by Smith on that call, and I told him that I would send him my jurisdictional information to help his lawyers. I never heard from him again-to this day.

    However a year ago Dr Hammen called me and asked me to come to his lab-I have never been to his home or garage (if he has one)-in Missoula, Montana. I did, and I was delighted to see a table top demonstration of the separation of neodymium from praseodymium. I was delighted because it was a demonstration of a technology, Solid-Phase extraction, that I had never known to be applicable to REE separation or purification, and the process was hundreds of times faster than SX or IEx , very very inexpensive, and could be used with any amount of feed NO MATTER HOW SMALL.

    It is no secret that Intellimet is working with Ucore, but I have a non-disclosure agreement with both parties, so I cannot comment on the work other than I have above.

    I think that the Ucore PEA, which should be out shortly, will be of very great interest to the REE mining and refining community.

    4. I think that anyone who hasn't already contracted to utilize or build an SX plant for separation of the REEs should wait for a few more months before doing so. I also think that those who have built or are building SX plants for light REEs separation, in particular, should wait before commissioning any further SX/IEx plants for heavy REE separation.

    Thank you sincerely for asking your questions

    Nov 10, 2012. 09:12 PM | 3 Likes Like |Link to Comment
  • Energy, Imagination And Politics: A Toxic Cocktail For Your Portfolio [View article]

    Your table of sales by power train shows just the US market. Can you give us the percentage breakdown, by power train, for the global OEM market in those same years? I think that only the richest countries have any significant market for short range high priced status markers. I think that in the global market place IC power trains account for 98% of sales.

    Also, why is it with battery manufacturers going bankrupt that we don't see anyone worrying about shortages of batteries for future scrap like the Tesla? Where are the batteries going to come from for the million rolling toasters to be sold in 2015?

    Did you see the story out of Michigan of a local reporter finding the workforce in the LG battery factory just sitting around doing nothing while the proceeds of the $300 million federal "grant" keep them in snacks. Is there excess capacity for the Volt battery? How can that be?
    Oct 19, 2012. 05:39 PM | 3 Likes Like |Link to Comment
  • Electric Vehicles, Front-Loading The CO2 Emissions [View article]
    Oops, It's Salmon, IDAHO, mea culpa.
    Oct 10, 2012. 11:09 AM | 5 Likes Like |Link to Comment
  • Electric Vehicles, Front-Loading The CO2 Emissions [View article]
    Right on John.

    The US company, Formation Metals, Inc., has been trying to start up a cobalt mine in mining friendly Salmon, Utah, for the last 12 years. It would be America's only primary cobalt mine. The environmentalists, NOT THE LOCAL MINING FRIENDLY PEOPLE have blocked it. It seems hypocritical, but in fact it's just STUPID. The Eco-freaks simply do not know what they're doing.

    Conflict metals, toxic heavy metals, and so forth are a big deal in Al Gore's world, but creating jobs and growing the safest mining industry on earth-not so much.

    Oct 10, 2012. 11:08 AM | 7 Likes Like |Link to Comment
  • Electric Vehicles: Front Loading The Filth [View article]
    I have now arrived in Germany where I will be speaking about the rare earths critical to hybrids, EVs, and most of all, IC, powered cars and trucks to the SAE on Thrusday in Stuttgart. You are of course entirely right when you do an overall toxicity audit of the residues produced from the manufacturing and operation of motor cars.

    I admit that the front end audit is horrifying overall and the back end though not as bad is also an eye opener. What is the impact of the average useful life of the vehicle on the back end numbers? Note that batteries are not only not reconditioned they are also disposed of (wasted again)and replaced, so that there is another load of front end contamination required to "extend" the life of the vehicle.

    In the Soviet Union and its dependencies the automobiles and trucks available were of uniform design from year to year and were so costly in terms of average income that they were run into the ground, literally. Sheet metal repairs were not considered important and there was no infrastructure to support any cosmetic repair industry. The joke is that although these vehicles were spewing raw gasoline, oil, carbon monoxide, and carbon dioxide they lasted for decades. I remember well that a Romanian Dacia pickup truck was called a Chinese limousine, because it could carry 3 Chinese in the cab and six in the pickup box. The pollution per capita was thus less in use than the most fuel efficient western glamorous looking machine. Dacia exported 80 such limos a day to China.

    If we keep up this mindless enthusiasm for the environmental problem of the moment with subsequent legislation making whatever it is into a permanent resource drain while ignoring all of the consequences such as the ones you enumerate here then you're right we will simply run out of technology metal and mineral resources because we will use up our ability to generate enough capital to keep this avalanche of waste creation going.

    How many of the commenters are multi-car owners that utilize their cars to carry one person at a time on multiple shopping trips to decide which redundant luxury item to buy.

    The hypocrisy is no longer even noticed.
    Oct 9, 2012. 12:29 PM | 20 Likes Like |Link to Comment
  • Ford (F) says it’s cutting consumption of rare earths used in its hybrid and electric cars by 500K lbs./year and will save hundreds of dollars per car in the process. But shares of rare-earth leader Molycorp (MCP +5.6%) shoot higher anyway, adding to gains a day after China announced a 40% cut in the number of permits to mine rare earths. REE +5.7%, AVL +4.5%[View news story]
    The Ford press release is full of spin. But the brief SA summary here is also rotating at high speed.

    First of all the nickel-metal hydride battery that Ford has been successfully using for nearly 10 years WITHOUT A PROBLEM in its well made, well engineered HYBRIDS uses on the average 2.3 kg of LANTHANUM per battery and very little of any other rare earth metal. Therefore the press release is telling you that IF FORD WERE TO MAKE AND SELL 100,000 HYBRID EVs per year without using the proven reliable NiMH battery it would then not use 243,000 kg or, approximately 500,000 lbs of LANTHANUM. LANTHANUM price today is less than $20/kg and DROPPING. But let's use the $20 figure. This means that each NiMH battery contains $46 of lanthanum. Watch out at this point for the spinning propeller! The same battery uses FIVE TIMES AS MUCH NICKEL, AND NICKEL SELLS FOR THE SAME PRICE AS LANTHANUM TODAY! So, in fact, it's not the 500,000 lbs of lanthanum that has Ford's bean counters worried it's the 2,500,000 lbs of NICKEL that accounts for more than 80% of the cost of the metals in a proven, reliable, long lasting in many cycles NiHM battery.
    Please also note that Lithium-ion batteries are very very expensive to build and that this has NOTHING to do with the price of lithium.I hope the Ford bean counters know that the most efficient Li-ion chemistry is Li-COBALT, and that COBALT is MUCH MORE EXPENSIVE THAN NICKEL.

    I have always believed that in an era of CAFE rules and arbitrary government mandates WEIGHT is the controlling factor. But I wonder if these Li-ion batteries being discussed here are actually lighter in weight, since they require more manufacturing engineering and it results in multiple safety systems being required for fire suppression and cell breakdown management.

    Magnets: My partner in TMR informed me this morning that the magnets that Ford is to be utilizing to thrift the use of dysprosium are only made in Japan, so that Ford will remain dependent on Japanese access to Chinese dysprosium in any case.

    This brings me to Molycorp, which is, of course, hurt by Ford;s reduction of its use of lanthanum, because lanthanum is a principal product of Molycorp. It accounts for some 25-28% of the output of Mountain Pass.

    In addition to that you must note that the Chinese restriction in the number of licenses is not to restrict the total amount of rare earths produced but to CONSOLIDATE its more than 129 legal mines into just a dozen or so COMPANIES! Just one of those companies Baotou Heavy will now have under its control a group of REE mining companies that not only has the capability of producing 50,000 mt of light rare earths per year but has the capacity to produce MANY TIMES that amount from combined reserves and resources much larger in net rare earths contained than either Mountain Pass or Mt Weld.

    The Chinese are consolidating their REE industry to make it SAFER, ENVIRONMENTALLY FRIENDLY, and MORE PRODUCTIVE and therefore COMPETITIVE. Share traders who do not take this into account are very foolish or do not themselves own the shares and are simply churning for commissions or short term profits at the margins.

    Ironically it is the Chinese demand for nickel and cobalt that is driving Ford's moves while the misunderstanding of resource economics drives a company's share prices up as its strongest competitors act to reduce costs and improve efficiency.
    Sep 14, 2012. 12:32 PM | 7 Likes Like |Link to Comment
  • Hedge For Inflation And Deflation With Precious Metals Convertible Securities - Part 1 - U.S. Securities [View article]
    I am totally at a loss to understand why you would even include Molycorp in your list. The revenues of some of your list members actually exceed that of the entire rare earth sector not only at the mine-that revenue is trivially small by global standards-but even at the point in the supply chain where a mining company can integrate itself into a magnet alloy provider. Your metric seems to be the type of security a company issues rather than the substance of the company issuing the security.

    I note that Lynas got its operating permit this morning, and as of this minute, is operating the largest solvent extraction plant in the world for the separation of light rare earths into the ACTUAL products their customers want. Does this factor into your analysis?

    Please explain exactly why you match Molycorp with, for example, Newmont?
    Sep 5, 2012. 08:49 AM | 1 Like Like |Link to Comment