Specialist
Former C-level executive at MP Materials
Agenda
- MP Materials' (NYSE: MP) supply-chain investments
- China export quotas
- Move to downstream concentrates
- 2021 outlook
Questions
1.
How is MP Materials significant in solving the various challenges posed today by China’s supply chain monopoly for rare earths?
2.
How does MP Materials’ approach to rare-earth mining differ to its predecessor Molycorp’s? Are the problems and solutions the same?
3.
How does the DoD’s [Department of Defense’s] support move the needle in project viability and the economics of rare earth mine production?
4.
What percentage of the heavy rare earths potentially in Mountain Pass are or could be used in defence applications?
5.
What continued support for MP can we expect from the DoD considering the US-China relationship? Former defence official Ellen Lord said acquiring stockpiles of rare earths for the US is a matter of urgency.
6.
How can MP compete with China’s producers and international players when faced with disadvantages such as China’s 0% import tariff on rare-earth concentrates, 30% tariff on the import of rare-earth oxides and an additional 27.5% tariff on oxides from the US? MP will have to export to China given that most of the world’s capacity to turn oxide into metal and into NdPr [neodymium and praseodymium] magnets is there.
7.
How does MP achieve its USD 1.50 per kilo production costs? The cost is far below Australia’s Lynas, China’s counterparts and even when Molycorp was selling concentrate. Do you think it is sustainable? How was MP realising 17% gross margin in its Shenghe agreement?
8.
Our expert in a recent Interview [see Rare Earth Sector – 2021 Outlook – 23 February 2021] stated that Mountain Pass has about 82% cerium and lanthanum, which has a negative economic value because it has no end market. How is MP able to reduce its processing costs over time if NdPr are the only magnet materials?
9.
Can you expand on the energy cost and MP’s exposure from the variability? Could a bit more of a predictable cost curve be secured?
10.
MP partly attributed its significant gains in Q4 2020 EBITDA to a strong pricing environment, and the Financial Times reported in February 2021 that the Chinese government proposed draft controls on the production and export of 17 rare-earth minerals. How likely is the former a consequence of the latter? What would you attribute to MP’s pricing gains?
11.
Do you think import duties will continue to be used as a political tool against the sector and MP Materials, especially given China’s growing demand for rare earths? China has lifted some import duties on rare earths and although MP reported higher realised pricing, the company acknowledges that it doesn’t have much quarter-to-quarter visibility.
12.
How might MP try to increase visibility around costs and price? What happens after the take-or-pay contracts expire?
13.
Has Lynas found a better metric for creating visibility or is it similarly as opaque as MP Materials?
14.
Do you think MP can achieve its targeted timeline on stage two? Has stage two always been scheduled for a 2022 ramp-up?
15.
Could you elaborate on MP’s latest update on stage two, the respective design improvements and decision not to restart the chlor-alkali facility?
16.
What are the risks with stage two and the reusage of reagents? How does this affect the yield and margin?
17.
What might be the risks with MP’s stage three plan?
18.
Why would Shenghe allow MP to build its own separation facility? Presumably less support would ensure a steady stream of concentrates.
19.
How can MP compete on cost when the majority of global REE [rare earth elements] are created as by products from other types of mining? How can MP keep the cost down over the life of the mine?
20.
How does recycling factor into MP’s strategy? Are there plans to create capabilities in recycling rare-earth magnets for the long term? Apple has alluded to a recycling programme which will create a circular supply chain of rare earths for the production of its iPhones and iPads.
21.
What is your outlook on the treatment of tailings issue? Legislation categorises rare earths with radioactive material. Does this impact cost? How would the economics change if rare earths were grouped differently?
22.
Do you expect MP to follow in China’s footsteps and try to secure undeveloped REE stockpiles in Africa? What’s the likelihood of a partnership and MP becoming an operator of choice over the long term?
23.
What would you highlight about MP’s management reorganisation in 2019?
24.
Do you think MP will have a sustained advantage as the market grows and as it potentially explores other assets, especially when mining rare earths seems somewhat limited outside of China?
25.
What might happen if China-US relations deteriorate? What price in China could jeopardise MP Materials and its endeavours? Do you think China could theoretically flood the market and crush prices?
26.
Is there anything you’d like to highlight about MP or rare earths mining?
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