October 22, 2012
Heavy Rare Earth Rhetoric Translated To Today's Reality
A lot of attention has been paid in the popular media in recent months to the issue of "heavy" rare earths. Much of the public commentary has focused on speculation related to potential deposits of rare earths that are reportedly skewed to the heavy rare earths (HREs), which are those elements on the right side of the periodic table's "lanthanide row."
However, little attention is paid to the issue that most directly connects the dots from a resource to the consumer: the ability to economically separate these elements into high-purity, custom engineered forms that today's manufacturers increasingly demand.
Until recently, no U.S. company had access to the technology and know-how necessary to produce high-purity forms of separated HREs. Molycorp's acquisition of the former Neo Material Technologies has given us access to these unique technologies, the experienced workforce necessary to manage them, and the intellectual property behind them.
It also has made us a significant current producer of custom engineered, heavy rare earth products. In all, we can now make products from 13 different rare earths, plus yttrium, from HRE concentrate produced at Mountain Pass and/or Molycorp Silmet, or purchased from China. These include high-purity materials made from samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, ytterbium, and lutetium.
The separations technologies we now own and operate can achieve purity levels of up to "six nines" (99.9999% or 6Ns) for some of these materials. The ability to produce higher-purity rare earths is increasingly important in today's economy. Many products and technologies increasingly require high purity, custom engineered rare earth materials in their manufacturing processes.
Molycorp's production of HREs for global supply chains now occurs at our facilities in China. However, the Company intends to deploy high-purity HRE separations capabilities outside of China in 2013 / 2014. After all, technology is mobile, and we will integrate these capabilities into our supply chain wherever it makes the most sense for our business. The location(s) for this processing will naturally follow growth in manufacturing demand, but my hope is that it can be located in the U.S.
Increasing the diversity of HRE production strengthens the security of the supply chain for our customers and for nations concerned about the availability of these critical materials. It should provide a catalytic boost to rare earth-dependent manufacturing and job creation in markets outside of China. And, it ensures that more of the world's HRE supplies are produced with the attention to environmental performance that Molycorp demands.
This last point is an important one. Increasingly, manufacturers that use HREs expect that these products are made in an environmentally responsible manner, so they can assure their customers that a product's larger supply chain pays requisite attention to environmental values. Molycorp is already a global leader in this area.
Our world-class resource at Mountain Pass contains all of the rare earth elements, including HREs. As those who study their history know, Molycorp has produced HREs, such as europium, from Mountain Pass since the 1960s. As Mountain Pass ramps up production to a rate of nearly 20,000 tonnes per year — and beyond, as demand requires — we will produce significant amounts of HREs from our resource there. Our five-part HRE strategy will help to ensure that our supply chain produces HREs necessary to meet customer needs well into the future.
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a very interesting post DenverDude ......thanks ....but it is very "interesting" that Mark Smith ( aka Mr Smoke and Mirrors ), makes no mention of the SIGNIFICANT drop in pricing and VERY weak demand for most if not all of their products.
Lookout -- Nov 5th is only 10 trading days away and as we all know the market is always "making adjustments" ahead of the real news.... and the news on Nov 5th is going to be horrible, of course mgmt will do everything they can to twist the numbers and the outlook ...but the analysts will see thru it all and Timmmmmberrrrrrrrrrrrrrrrrrrrrrrrrrrrrr.
Sentiment: Strong Sell
Mark Smith has repeatedly addressed RE pricing and demand. This blog post is about the scope of RE's and RE purity that MCP has technology and facilities for. Interesting stuff. Of course he could mention the prices and demand with every other word and you might not be satisfied ...
Hi (Rare earth prices have fallen) I'm (demand has dropped with the economic slowdown) Mark (RE prices are not what they were in 2010) Smith (market demand will be whatever it is). etc.
And of course earnings will be terrible.
Sentiment: Strong Buy
Jeff, you've been spot on for quite some time, kudos for that. What do you make of the insider purchases? I know they've already cashed over $1 Billion last year, but why would they "give away" $70 million if this company is going under as u have stated. Billionaires don't like to lose money. I think $10 is the floor at this point. Well see on nov 5 I suppose. What do you make of the purchase? Head fake?
I don't know when earnings will be. Perhaps as early as Nov. 5, but no announcement has been made. I was also surprised that there was no information about the status of Phoenix I. This blog post seems to be looking beyond operation of Phoenix I as if it is an accomplished fact.