The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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Because I'm interested, and may well take a punt on this stock. Regarding manufacturing, the logistics costs are paramount; every dollar saved is a dollar on the bottom line. SP's suggestion of $8 / MT is unrealistic; however, the location of the RBW plant adjacent to the Phalabora Mining Company sulfuric acid plant and the potential for piping presents huge savings compared to trucking. If RBW were to include the capex for a short pipeline, probably 6" stainless steel, to transfer 1500 mts a week to a couple of 1500 m3 storage tanks (probably only a 12-hour transfer once a week), they would almost definitely get the H2SO4 for Ex-works price rather than deliver by truck, a significant saving which would justify the extra capex in a very short time. The US Producer price index indicates a price of $188/MT (Compared to $215 MTs 10 months ago), and REEtecs R1570/MT was $84/MT is considerably less; the Rand is in the same region as the dollar as REETechs backup date of May 2023, so that doesn't factor into any price disparity. My own view is that the plant is located next to a source of reagent that is priced at below world market rates with potential substantial savings in logistics costs compared to truck delivery. It's a big plus for the OPEX, but not $8 a ton, I'm afraid.
George mention the $8 price in an interview. It will come out in the DFS.
Even better,
The acid is not the biggest cost, that would be Lime. The PEA puts Lime at $10.23 and acid at $3.98 per kg NdPr.
Reagents make up 55.8% of the cost and RBW mentioned better recycling rates. Cannot see how Lime could be recycled as its consumed.
Power makes up 15.3% of the cost and that is halved, apparently by them temp reduction from 40c to 30c.
Further income from Gypsum sales eat into the effective opex cost.
Sprotts cost heat map didn't even go any higher that $30/kg so I was shocked at the $34/kg PFS opex. So I'm expecting a pleasant surprise reduction and increase in NPV.
"Cannot see how Lime could be recycled as its consumed.")))
read about the conversion of phosphogypsum to calcium carbonate
You will be surprised to know that at the Uberaba Sulfuric Acid Plant, sulfuric acid costs $120-130/ton. This is much more expensive than declared in the Phalaborwa project - $8/ton (not a realistic price). The optimistic price is $40-50/ton.
Delivery is everything. It's $20 in China. $300 in the outback of Africa.
As a waste stream piped from next door George negotiated a very low price.
Which as he mentioned also saves them the cost of disposal so win/win.
What "waste stream" are you talking about?
About sulfuric acid waste, with a concentration of 240-300 g/liter, after copper electrolysis?
Yes the adjacent copper processing plant produces sulphuric acid as a waste by product.
The primary reason sulphuric acid was chosen over Hydrochloric (slightly more efficent) was the dirt cheap acid supply next door.
Since its incorporation in 1956, Palabora Copper (PC) has been South Africa’s sole producer of refined copper although it mines other by-products such as magnetite, vermiculite, sulphuric acid, anode slimes and nickel sulphate.
The Chinese Consortium acquired PC in 2013 .
The Chinese Consortium approved R10.4-billion to extend the life of mine to beyond 2033, R878-million to refurbish the smelter to ensure that PC continues to produce copper rod and R261-million to construct the floatation plant to improve copper recoveries, operational efficiencies and lower operational costs.
Most likely, for $8, the Chinese are selling “dirty” waste electrolyte from copper electrolysis. And they make very good money by saving on its neutralization and disposal.
Good news all round then👍
1M H2SO4 contains 98 grams of acid /litre-----240 to 300 grams is therefore around 2.5 to 3M concentration. Kids in school routinely use 1M in their experiments. Dilute H2SO4 which this is behaves as a normal mineral acid. Concentrated H2SO4 is a different matter entirely.
SP, Assuming both you and Reetech are proven correct, I'm assuming that the CAPEX involves a sulphuric acid regeneration plant to ensure that the acid used for production meets the purity requirements for MREC production. At $8/MT, it's still dirt cheap and ends up as a win/win for both supplier and consumer. Does the FEED include an H2SO4 plant.?
Is it worth guessing?
It would probably be better to ask George this question.
Its in on of his interviews.
The concertation of sulphuric acid used is specified in the PEA. its not very high.
What reagents are used to precipitate mixtures of rare earth carbonates and ammonium carbonate? what is the consumption of these reagents, provided that the precipitation of REE carbonates occurs at pH 3.5-4.5. It is necessary to neutralize the acidity, and as you say, "The concentration of sulfuric acid used is specified in the PEA. its not very high."
There are no answers to these questions in the PEA.
Page 132. Type, cost and quantity of reagents.
pH specified elsewhere.
Do not confuse sulfate and carbonate
Wtf are you on about?
"Conclusion: Rainbow is going to have to work hard to justify the capex required for the Phalaborwa process plant with NdPr prices more than halving alongside significant falls in Dysprosium and Praseodymium and a likely increase in operating costs due to increasing power and labour costs in South Africa. While the K-Tech work is impressive we suspect the critical CIC and CIX processes will need to be trialled in a significantly larger pilot plant before banks are willing to finance a full scale plant in South Africa.
Moreover, given, South Africa’s recent accusation of war crimes by Israel, the financing of larger-scale and critical minerals projects in the region is likely to become significantly more difficult."
Conclusion : Reet, you are a moron and there are so many basic errors in that post you should be embarrassed, but I guess you will carry on to earn your crust!
Wonder what will be wrote when rainbows share price takes off?
Only a matter of time now 👍
Fulmar29
read the original - https://www.share-talk.com/sp-angel-morning-view-todays-market-view-wednesday-31st-january-2023/