Huge potential28 Nov 2024 06:04
I have been slowly building up my long term holding in MKA, holding both Canadian and AIM listed shares.
On the recycling business i see huge potential and a business with global scale in 3-5 years time
1. US is a huge and growing market, with continued technological advancement and strong end product consumer demand. Trump for the next years will be a huge tailwind as he is not words but action when it comes to protecting US economic interests vs China.
2. Europe is also a large market for the magnets, second to the US. Unlike the US Europe is also driven by sustainability, net zero emission directives which gives a massive boost to recycled rear earth products compared to mined material.
3. Japan also very interesting. Big technologically advanced economy with historic uneasy relationship with China.
4. There is then also licensing potential to benefit from other regions such as India, Korea, South America
When it comes to mining, i see that best is to do this together with a strong US partner that can underwrite the financing, mine construction cost overruns and then take off of mined materials. The appointment of advisers yesterday is a strong step in this direction and a good start to considering how to unlock value from this potential.
With separation plant, I do not see Poland/Europe as the right location. Things have totally changed in the last years with no cheap Russian gas available. Chemicals needed for the separation cannot competitively be produced in Europe owing to high gas prices, which is some cases are 10x more than the US. For me what makes sense is that the separation plant is established in the US, where also there is a larger end market for the processed products and no need to ship back to Europe or to do so where it makes economic sense