Recently, Michael Gambardella and analysts at JP Morgan cut estimates on Molycorp due to the large supply of Cerium (Ce) and Lanthanum (La) expected to enter the market in 2012 from Lynas and Molycorp. The expectation is this could create oversupply and drop the prices of these two products. I disagree with this position. Firstly, I do not believe Molycorp's Project Phoenix will produce a single ton of rare earth in 2012. And second the Lynas Corporation (Lynas) is far in front of any other rest of world rare earth project and will enjoy attractive prices into the future. Lynas will be the most advance rare earth project in the world by Q2 2012. The Lynas Advanced Materials Project (LAMP) has moved to the public disclosure stage in it's Malaysian approval process. This public disclosure is more of a governmental notice procedure and indicates the debate over LAMP is winding down. The advancement suggests Lynas is in a clear frontier position outside of China in this market and is far ahead of others.
To understand this conclusion an understanding of these Rare Earth Processing Plants is required. The Lynas Concentration Plant is fully buil and producing with above expectation recovery rates. The Lynas Advanced Materials Plant is nearly fully built (over 85% complete in November 2011) and is expected to have first feed in Q1 2012.
Molycorp's Project Phoenix is "On time and on budget" according to Molycorp's CEO Mark Smith. Based on the information on their web site I disagree. The photos below are currently or were on the http://www.molycorp.com site unless linked from elsewhere.
The old drawings are in this analyst day presentation at:
36 Acre Separations, CHP, Salt Recovery, Ancillary Facilities
Above Google Earth Image shows 36 Acre Separations, CHP, Salt Recovery, Ancillary Facilities in 2009 (Pre-Project Phoenix)
Above 36 Acre Separations, CHP, Salt Recovery, Ancillary Facilities (in background April, 2011, old plant in foreground)
Above September 2011 Separations, CHP, Salt Recovery, Ancillary Facilities
Below-Slide 19 appears to show a close up of what Moly now labels as the Site of the New State-of-the-Art Separations Facility in Slide 26 of this presentation:
Above note the forrest green building with four "smoke stakes" and the current CHP has only two. Also note the large number of color buildings in the drawings not even started in the construction.
Below is a more recent drawing of the Separations, CHP, Salt Recovery, Ancillary Facilities. Here the pink building shows four black "smoke stakes" and the current CHP has only two. Also note the large number of color buildings in the drawings not even started in the construction.
Below September 2011 photo of CHP
Above and below September 2011
So either there has been massive redesigns from the analyts day drawings or there are a large number of foundations yet to begin. Either scenario seems very bad to me. And if Moly is going piece meal I see multiple bottlenecks and confusion in the future. Overall, this project seems very different than the promises Molycorp is making.
Below is the December photos of the Separations, CHP, and Salt Recovery.
December 2011 Above is the full 36 acre Separations Pad Site. The CHP is built with no gas line available, while other fondations are just beginning. And based on the drawing of the Serparation Site several buildings have only grading work one year into the project.
December 2011 Below to the right is the CHP but the rest of the color drawn buildings in the slide above are just starting.
December 2011 Below one full year into the Phoenix Project and this foundation has not received concrete.
December 2011 (Below) On the other side of the CHP the iron in the foundations is not yet placed.
Above Google Earth Image shows Mill Area Construction in 2009 (Pre-Project Phoenix)
Above and Below September 2011 Mill Area
(Note the worker in the photo for scale. This foundation is about the size of a suburban house. I assume the structure is an internal piece of a bigger structure.)
Below December 2011 Mill Area the prior concrete structure is encased in framing (left)and the Shell of the Ball Mill building is built (behind). The Ball mill is in the shelled building.
Below is the reverse of the construction site.
December 2011 Below Here again the work is mostly at a foundation stage:
And even the more advanced large building is only at a framing stage:
Google Earth Image shows Crushing Facility in 2009 (Pre-Project Phoenix)
Above September 2011 Crushing Facility
Below December 2011 Crushing Facility
Paste Tailings Plant
Google Earth Image shows Paste Tailings Plant in 2009 (Pre-Project Phoenix)
September 2011 Above and Below Paste Tailings Plant
Below December 2011 is the first structure on the large Paste Tailings Plant Site:
But this structure is only a small part of the Paste Tailings Plant Site.
Below December 2011 The full Paste Tailigs Site:
And the road ahead looks even longer when the enitire Paste Tailings Site and Crusher Site are viewed together.
Above and Below December 2011 Paste Tailings Plant Site With Crusher Site:
I know the compare is challenging. But there is something here for certain. I appreciate if others can see my point.
Perhaps the LAMP build offers a compare. The LAMP is almost fully built but below is a slide from February 2011: