Which is the better stock to own at this juncture, Lynas or Molycorp. Both have predominantly Lrees. They are both closer to processing their Lrees than all other non Chinese ree space companies. With the acquisition of Neo Material, Molycorp has a more integrated business model which should make them the winner in the long term IMO. Yet Lynas has a great deposit of Hrees in the Duncan deposit, But they have no way to process them and the Duncan mine has not even been started!
MCP is better. Both are good but both have identical market caps of $1.22 billion right now. I like the diversification of MCP into downstream magnets, metals and alloys. And I like the larger scale production MCP is heading for. I like the Lynas ore better. I like the MCP level of expertise better ... the combination of the knowledge bases of MCP, Silmet, Neo, Molymet, Tolleson ... people don't notice technical competence, just incompetence. Both companies have displayed incompetence in their path to developing their resources.
There is a lot to be said for the better ore at Lynas. I like that the financial focus at Lynas is exclusively on a single mine development. But I like the MCP integration of more RE better. I think that MCP has been VERY aggressive in acquisitions. Now is obviously not the time for another but eventually they will begin acquiring more RE juniors, and more downstream elements.
First to market of these two is not any advantage ... MCP won't ever cut a ribbon for an "opening" while Lynas WILL have a more defined start up. But they should both succeed in operational production. I do think that Lynas is dodgy on the waste issue and that Malaysia will have to extract some promises and money, and it may be an ongoing issue. They may face a continuous annual review forever. And start up is a regulatory hurdle that they have failed to clear so far (but they will eventually). MCP has a plan to store waste at Mt Pass and as long as they take adequate precautions, no waste should ever get off the site.
The bottom line is that both of these are large scale production companies that should be operating in the next few years at capacity. The RE market will see price fluctuations with the entry of new production. And planning changes with the removal of the Chinese export control. I think the demand is going to grow. I think both companies will see future demand that keeps prices fairly strong.
If you share that view then some critical differences are:
the ore (Lynas is better),
the scale (MCP is bigger and more integrated),
the acquisition mindset (MCP is addicted and over-aggressive),
the balance sheets (both are near the end of spending on construction, both are stretched),
the regulatory hurdles (Lynas' are more complicated, MCP already satisfied the turtle friends),
future internal expansions (Lynas can explore to better ore on their property, MCP can expand downstream: Tolleson capacity, Xsorbx market, Neo capacity, etc),
the technical knowledge base (MCP is a bit deeper, Lynas is a complete start up and optimization and de-bugging will be a longer process)
And I'm sure there are other significant differences that matter. I favor MCP, but other investors favor Lynas.
Lynas has no sales and is only set to produce LREE's. MCP had over 200 million in sales for Q3, has a host of high end products they currently sell (NEO, magnets, etc.). Even 55 cents, I just can't bring myself to jump into Lynas. . . . Not to mention they #$%$ off a lot of Malaysians opening this plant after the last LREE plant in the country killed the environment. I believe there are still lawsuits about Lynas moving forward (Not sure though).
Much better infrastructure in the Gebeng Industrial Zone of Malaysia as compared to Mt. Pass, California. Cheaper labor and close proximity to the companies they will be selling to. BASF?Petronas isin the same complex and they will be buying cerium and lanthanam from Lynas to crack petroleum products. Ja pan wants Lrees too and has contracted to buy 8500 metric tonnes of rees annually from Lynas for the next 10 years!!! It is a long haul from Mt. Pass to Japan and the same goes for Estonia!