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TT - I can only agree with you on HMG's utterly disastrous priorities management.
But, see here for an emerging view that NdPr price looks like it has bottomed and is now on upward trend, reflecting the real underlying economics of global supply and demand:
https://www.youtube.com/watch?v=0iaqPeD1GUM
I don't see any significant shift in technology to alleviate climate change - it's still overwhelmingly wind turbines, solar panels and EVs on a massive scale, especially within China itself.
It wouldn't take much of a Chinese screw-tighten on REs to make the West see just how much it will have to pay if it keeps waffling along on supply chains security.
Greek - it looks impressive, but I doubt this lot are currently on anyone's payroll. More likely they are just placeholding for future freelance/consultancy/part-time/fixed-term contracts with Ozango Minerals until the money comes in.
Nice to see Dumbo has crossed the floor and joined the ranks - wondered why we haven't had any posts from him recently!
Anyone here care to pass on any feedback/commentary from the PRE Telegram board concerning the finance standstill? Yes, I know I could join the group and find out for myself. In fact, I did briefly, but within a day I was getting text messages from a new friend in Russia, so I closed out and uninstalled the app.
Tony - agree with you 100% it will ultimately come down to an international political solution/stand-off with China. Problem is, we're in no-man's land now pending the ever-looming UK and US elections, to expect any HMG intervention and support in RE supply chains.
However, PA isn't relying on HMG backing any more. If he can get Longonjo off the ground, it will be just too embarrassing for any future UK government to cold-shoulder Angola's approval, and that gives PA an opportunity to get his foot in the door on Saltend development.
My feeling is that the PRE directors have probably been pressed by the Longonjo lender consortium, to 'put more skin' in the game to demonstrate some late-stage proof of commitment. We'll soon see.
One thing is clear in this board's cross-debate between PRE versus RBW and the rest - PRE is the furthest ahead on the Lassonde curve and is on the verge of breaking through into the extraction stage, but now it's reached do-or-die time.
Failure to get Longonjo over the line will destroy PRE's already battered credibility utterly.
Anyone make any sense of this:
https://jornalf8-net.translate.goog/2024/terras-raras-governo-vulgar-povo-lixado/?_x_tr_sl=auto&_x_tr_tl=en&_x_tr_hl=en-GB
Mish-mash of years-out-of-date stuff with a couple of startling claims. What to make of it?
Worth a 10 min read - can't disagree much with Cornford's views:
https://masterinvestor.co.uk/commodities/green-seedling-part-2/
ALK - speculative punt, PRE not just yet.
Lengthy coverage of Pernsana's unaudited 6 monthly results to 31 Dec 2023 on FT site today:
https://markets.ft.com/data/announce/detail?dockey=600-202403280928PR_NEWS_PRUKDSCL_0099-1
Combing for nuggets now....
TheGreekLizard - Goldman Sachs may be optimistic, but tightening markets and lower interest rates won't be the key drivers for rare earth magnet metals and materials future pricing.
This is well worth a read (Feb 21 2024):
https://theoregongroup.com/investment-insights/the-wests-pursuit-of-rare-earths-hits-resistance-from-china/
China only needs to paralyze Western investment in building independent rare eath supply chains for about another 3 or 4 years, and then it will have achieved complete domination and control of the market. This will be the main determinant of where Nd Pr materials prices are going in 2024 to 2030, not global demand or borrowing costs.
Some key points from the above link:
"Rare earth prices surged in 2022, but then fell to some of their lowest levels for years after China ramped up production to 210,000 tonnes in 2022. Then in 2023, China issued — for the first time since it introduced a quota system in the 1990s — three quotas in one year, with the total a record high of 255,000 tons, a 21.4% year-on-year increase.
This oversupply has flooded the market and put significant downward pressure on prices, especially as demand contracts with high interest rates hitting the energy transition".
Net profit at China Northern Rare Earth Group (one of the largest Rare Earth companies in China) is estimated to have fallen 60% from 2022-2023.
“If you’ve got 90% market share of magnet processing capacity, there’s a goldilocks price where you earn a return but you don’t encourage anyone in the rest of the world to build capacity”
Chinese companies are also moving to dominate the international industry, for example, Shenghe Resources, the largest importer of rare earths in China, has moved aggressively in just the last few years to influence the international market:
- acquired stakes in two Australian companies that own rare earth mines in Greenland and Tanzania, with exclusive rights to the minerals
- acquired a 7.7% stake in MP Materials, the largest mine and processing plant in the US
- acquired a 9.9% stake in Australia’s Vital Metals
- acquired Canada’s rare earths stockpile
The Oregon Group Report ends by asking the question:
Is the West prepared to finance long-term, higher-priced investments to bypass cheap and efficient Chinese supply chains that are working to suppress prices and technological advancement, buy up stock and potentially introduce export restrictions to tighten supply?
That is indeed the question....
VanEck Vectors Rare Earth/Strategic Metals ETF Index (REMX) is up 21%, steadily from 43.5 to 52.61 since start Feb. If this rate is maintained, the index will be back at its all-time high sometime Sep/Oct 24.
Statista now forecasting Nd and Pr oxide prices to hit US$77.5K and US$94.5K/mt by 2025. (Currently US$50.4K/mt and US$50.4K/mt). That's a 55% increase in Nd oxide, and a 88% increase in Pr oxide in a year or so.
Which considerably sweetens the investment cases for Longonjo, Coola and Saltend.
Not surprised PA is dropping gentle hints that if UK govt isn't interested in critical metals refining here, other countries most definitely are: Mr Atherley said: “The Government is keenly aware that they’re in competitive situations for locating these plants. The competition is coming from Europe, North America, Saudi Arabia – people are offering incentives – but the UK is doing a good job in trying to keep and attract businesses like ours".
I suspect PA is thinking what we all know - that HMG is abjectly failing on all fronts to "keep and attract businesses"in the UK. Subsidising selected manufacturers' energy costs directly from the taxpapyer's pocket is a cunning wheeze for some, but an utter ondemnation of (the total absence of) government energy policy and investment for the last 30 years.
More evidence that China is waging price wars to prevent the West from investing in critical metals supply chains:
https://finance.yahoo.com/news/china-crushed-west-race-power-050000870.html
Dominic Raab was right - we shouldn't dig deeper into the hole where China is trying to bury us.
HMG needs to recognise that the critical minerals marketplace no longer reflects reality, and we need to develop a 'rational' pricing basis for them. The simple fact they are critical implies we should incorporate a price premium for Western supply chains which is not payable for Chinese-dominated supply. The clue is in the name.
Followed by a slap with a wet fish from our China correspondent:
https://www.globaltimes.cn/page/202403/1308615.shtml
Basically says our supply chains are too long, we don't have any industrial base anyway, and we monopolists in China are no threat at all, honestly...
Here's an alternative link to the Telegraph article which allows you to read the thing without demanding money:
https://www.reddit.com/r/ukpolitics/comments/1bbvpyo/british_battery_plants_given_cheap_power_deals_in/?rdt=45672
See:
https://www.telegraph.co.uk/business/2024/03/10/british-battery-plants-cheap-power-china-dependence/
Lead article in Business Telegraph today - interesting comments by PA on intention of more HMG encouragement for critical minerals UK investments through lower energy costs.
Theo: the offtake information you seek is here:
https://pensana.co.uk/wp-content/uploads/2024/02/Corporate-Presentation-February-2024.pdf
It says "Executed letter of intent for the offtake for up to 100% of stage 1 production. Customer has approved MREC product specifications." Hmm.... ambiguous, even by Pensana standards.
Moving on: LewisW - I don't agree that China will continue to be price controllers and market entry blockers - those days are numbered now. China ha already embarked on a current 5-year plan to hugely ramp up domestic EV production, at the same time as cutting their oil energy dependency through a vast internal wind energy build-out. They recently warned the rest of the world that China has no obligation to be the supplier of first or last resort for rare-earth materials in future, and in 2023 placed an embargo on Chinese companies exporting RE magnet technology, manufacturing equipment and IP.
It seems clear to me that China are simply not interested in selling magnet fabrication materials , from refined oxides to sinter powder, or even finished magnets - what they are really committed to is selling the world the finished goods - EVs, wind turbines, consumer goods, and electronic items. Witness the BYD EV invasion happening in Europe.
Forecasters are saying the the magnet materials market supply-demand balance went negative at the end of 2023, will be 500 to 800 tonnes by end 2024, rising steadily to an unimaginable 1/4 million tonnes by 2040. That's several times China's total production capacity today.
Some info for you: in Apr 2022, Adamas Intelligence produced a report "Rare Earth Magnet Market Outlook to 2035", subsequently updated in May 2023 as a 220 page report "Rare Earth Magnet Market Outlook to 2040" - each paid-for subscription so unavailable for personal reading/research.
However, if you go to:
https://www.listcorp.com/asx/bre/brazilian-rare-earths-limited/news/prospectus-part-1-2973997.html
This Dec 2023 prospectus includes a 21-page client report produced by Adamas Intelligence "Rare Earth Market Outlook - An Independent Analysis for Brazilian Rare Earths (ASX:BRE)", which you can read in full (though it is "Client Confidential").
It makes very interesting reading, from which my conclusion is that the NdPr market is going into a very heated decade ahead, and also that the West has frittered away, through 5 years of inaction, any opportunity it ever had to mitigate the consequences.
Another re-hash of all the stuff we already know and love here:
https://pensana.co.uk/wp-content/uploads/2024/02/Corporate-Presentation-February-2024.pdf
- but they've just missed the 28 Feb US$950 million Polestar financing annoucement here :
https://finance.yahoo.com/news/polestar-secures-usd-1-billion-141800930.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFnzA_rSixZi53wJOhPgtrs6QzF1UV45qqOw0bxMDle-6ZbdC3NiGzJrFxOgy2tbq5JtTtbvkr8SFOQghPSvW4yBVrnGRn3uNQmnluKn95DrRh5rZJ1jsC46sYUbVxQFyrlAFGN8I3ZbonsSHpiT1jUi98KpSwKCslwkIipI-K
Word is that Polestar will be manufacturing in China and only maybe in USA. No real surprise there because Polestar = Geely since Volvo pulled out.
So much for the PA-touted "Net-Zero by 2030. Responsible sourcing: Ethical and transparent supply chain/Engaged with major OEM’s for partnership to support their magnet supply chains including Polestar"
I'm guessing we can now cross off Polestar as one of the potential offtake customers, which suggests that quite a few other candidates on PA's offtake list also need to be reconsidered in the light of Geely's ever-growing ownership and acquisitions.
Mumbles - thanks for the encouraging update - just need to sit tight now.
Worth a read:
https://oilprice.com/Energy/Energy-General/This-Year-Could-See-a-Significant-Rebound-in-Rare-Earths-Metals-Prices.html
Salients:
Since mid-2023 rare earth companies have been hit hard by plunging prices: MP shares have tanked 50.0% over the past 12 months, Lynas shares have tumbled 42.7% while Arafura Rare Earths Ltd (OTCPK:ARAFF)(ASX: ARU) has crashed 78.5% over the timeframe.
Shanghai Metals Market say rare earth prices have likely bottomed out and could be poised for a rebound in the second half of 2024 on the back of strong demand by the electric vehicle and wind power sectors, claiming further downside for rare earths, particularly for neodymium-praseodymium (NdPr) oxide, used in permanent magnets, which fell 38% last year, is limited with prices near the production cost level. Guolian Securities has predicted that NdPr oxide is likely to record a 800-metric-ton deficit globally in the current year, flipping from last year's 6,600-ton surplus.
"We expect extra supply to be more or less cleared by end-2024, as demand catches up with supply through continually increasing electric vehicle sales and wind turbine production," said analyst Willis Thomas at CRU Group.
Las Vegas, Nevada-based rare earths miner MP Materials (NYSE:MP) and its Australian peer Lynas Rare Earths (OTCPK:LYSCF) (OTCPK:LYSDY) may be working on a deal that would merge the world's two biggest producers of rare earths materials outside China,
Lynas’ managing director Amanda Lacaze revealed that the company was constantly being pitched M&A opportunities.
The VanEyck index for rare earths is also on an uptick since the start of Feb supporting these trends, see:
https://www.forbes.com/investment-funds/remx/?sh=314bc0132f75
Maybe the market makers ate too much pancake today - SP on the up despite some heavy sells.
20 day MA has already up-crossed the 50 day MA and should break the 100 day MA tomorrow, if sustained.
Might even crack the 200 day MA in a few days, so we get back to the average SP levels back in April 2023.
Progress of a sort?
China - thanks for a detailed (unlike you, I'll not say verbose) response and analysis.
I don't cross-promote and posting this information elsewhere would deny the silent majority of LSE PRE visitors a first look at a significant "Pensana parallel" development. I'll take your point though and cut the length in future.
Not that I'm cross-promoting, but I see ARR is up 18% today, so there seems to be support coming out of their recent news....
News today from the Daily Mail about the USA Wheatland/Wyoming explorations JORC- claiming 2.3 BILLLION tones of RE deposits - Nd Pr easily accessible leach extractable with little radionuclide (U and Th) issues:
https://www.dailymail.co.uk/sciencetech/article-13062273/rare-earth-minerals-wyoming-green-energy-material.html
Wildest dreams doesn't quite cover the scale of this - it's 53 timesbigger than the total RE reserves of China (44 million tons).
Here's the JORC pdf if you want details:
https://app.sharelinktechnologies.com/announcement/asx/99e2b33b2d8382c24ed859bbd35d1dbf
• February 2024 JORC Resource is 2.34 billion tonnes
• 1.42 billion tonnes of measured and indicated resources were estimated at a grade of 3,296 ppm TREO using a
1,000ppm TREO cut-off
• Economic and technical evaluation supports cut-off grade at 1,000ppm TREO based on the net-smelter return
• Successfully preconcentrated TREO at a 12:1 upgrade ratio, representing a ~200% increase from existing flowsheet
design using low cost, conventional Dense Medium Separation
• Deposit remains open at depth and along strike
• In-Situ Resources of 419 million tonnes with a TREO grade of 3,349 ppm exists within ARR controlled Wyoming state
mineral leases.
• Close to infrastructure and a highly skilled workforce.
• Potential for remarkable scalability, with 75% of mineralised zones yet to be drilled and deposit remaining open at
depth.
• Deposit is from surface with consistent grades throughout making it ideal for large scale, low-cost open pit mining.
• Breakthrough metallurgy and mineralogy results reduce capital and operating costs opening the path to early
production.
• Environmentally and socially responsible with low penalty elements.
Wow.
It's been a while since PRE market activity was suffciently interesting to merit some EXCEL analysis of trades.
Today's was a corker.
Buy:sell ratio - 5000:1
96% buy volume came after US open - mainly O trades
AT trades very steady - buying all day - not a single AT sell - bye bye day traders, pump & dumpers.....
O trades number roughly same as AT trades, but account for 79% of volume. AT buy volume only a quarter of O buy vol
Only 5 sells the whole day = 0.2% of volume
For an illiquid stock like PRE (by which I mean that most of us LTI's are stubbornly holding out for better days and will not sell before then), when all trades are buys, it suggests increased interest or demand for the stock, leading to a tightening of the spread as more buyers enter the market.
PRE spread fell 50% today.
So why read anything into a low-volume, 30 trades day?
It seems's unlikely that the Pensana's press briefings released over the past week or two have materially altered the situation with PRE, except to somewhat de-risk the Longonjo/mine/products side.
But if PRE were to get Longonjo financing in the bag (as Pensana say is expected in the coming weeks or months):
a) the news will leak - hey it's Africa isn't it?
b) the news would come out over a weekend for obvious reasons
So, it's going to be an interesting day tomorrow, and worth following the deals as they come in.
Just saying - this is opinion, not advice or recommendation, and you should do your own research and arrive at your own conclusions and actions.
Recognising that the market price for NdPr has long been jury-rigged by China, but especially since the outbreak of COVID in 2020, the US Defence department is moving towards overturning the whole critical metals pricing system. DARPA are going out to tender for an AI-based system of RE pricing to get round the supply chain barriers the US faces due to the current bent market, see:
https://www.mining.com/web/pentagon-plans-ai-based-program-to-estimate-prices-for-critical-minerals/
The DARPA program, known as Open Price Exploration for National Security (OPEN), is contracting the development of an independent AI-based pricing system which goes beyond the conventional economics of price-setting where prices are set by futures markets and pricing agencies reflecting what buyers are willing to pay, and sellers are willing to accept using supply, demand and other factors.
Its aim is nothing less than to “revolutionize the construction and dissemination of price, supply, and demand predictions and forecasts in critical materials markets.” It will do this by avoiding the problems of “opaque and flawed pricing data” that pose “substantial barriers to US commercial competition”, in order to “remove market opacity that can engender supply chain disruptions” by creating an AI-pricing model that would construct a metal’s “structural price” based on where and when it is produced, as well as labour, supply and other costs.
OPEN cited the LME’s 2022 nickel pricing fiasco as one of the “endogenous market dynamics and anti-competitive practices [that] can make futures markets a poor source of price information” as evidence of the need for a new pricing code.
Interestingly, several lithium, rare earths, and graphite miners have already begun charging premium prices for metals produced outside of China, suggesting that the current market price mechanisms for critical minerals are indeed no longer fit for purpose.
This will be introduced in three stages over the next 2 years, and could dramatically improve the investment case for Pensana, particularly regarding the Saltend plant.