China stainless steel mogul fights to avoid a second collapse
A debt crisis is threatening the future of one of the world’s top stainless steel producers, Jiangsu Delong Nickel Industry.
In a wide-ranging interview with Swiss publication Finanz und Wirtschaft published on Tuesday outgoing Molycorp CEO Constantine Karayannopoulos had some soothing words for investors in the US rare earth miner.
Karayannopoulos said he expects Molycorp (NYSE:MCP) to turn cash flow positive on an operating basis by the end of 2014 or the beginning of 2015.
The Colorado-based company’s finances have been a worry for investors after it was forced to tap capital markets for more than $650 million this year to fund expansion of its Mountain Pass mine in California.
Karayannopoulos said Mountain Pass would cost $1.5 billion to bring up to full capacity, adding that the facility is able to produce the highest quality concentrate – with 55%–60% rare earth oxide (REO) content – outside China.
Once the largest supplier of rare earths anywhere in the world, the facility, then owned by oil major Chevron, was mothballed in 2002, ceding the market to China which today produces some 85% of the world’s REEs
A large proportion of the Mountain Pass deposit is made up of cerium, a light rare earth.
Cerium, used to polish TV screens and lenses, is one of the least valuable of the 17 elements. Cerium oxide is trading at around $8.50 per kilogram ($5.40 inside China), down from an all-time high of $118 in September 2011.
The price is now almost back to 2008 levels; before worries about China’s monopoly of production sent prices for all rare earths into the stratosphere.
Those sky high prices were entirely unrealistic to begin with said Karayannopoulos adding that crucial to the success of the project was figuring out metallurgical and chemical processing and that the company is now competitive in terms of cost.
Karayannopoulos and incoming CEO Geoff Bedford are former executives of Neo Material Technologies, the Canadian rare-earth processor acquired by Molycorp for 1.2 billion in June last year.
When asked how many REE producers does the world need, Karayannopoulos said for light rare earths Molycorp and Australia’s Lynas and perhaps one other smaller player outside China would be enough.
As for heavy rare earths, “one or two projects” outside of China would be sufficient to meet demand according to Karayannopoulos.
Molycorp, a speculators’ favourite and closely watched stock, jumped 2.8% to $5.12 a share on Tuesday, a rare gainer in New York amid sell-off on the broader market.
MCP, which regularly tops 10 million shares traded per day, peaked at a whopping $75 a share in April 2011 and despite a 10% gain over the last week remains down 45% this year.
Molycorp announced a deal in October which would allow Chilean company Molibdenos & Metales SA to increase its current shareholding of around 17% in the company to as much as 27.5%.
Birds-Eye Tour of Molycorp’s New Rare Earth Processing Facility at Mountain Pass, California from Molycorp, Inc. on Vimeo.
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Louis W Schurmann
SRE Minerals Limited announces the results of exploration and studies
in collaboration with the Korea Natural Resources Trading Corporation of Democratic People’s Republic of Korea
Pacific Century Rare Earth Mineral Limited (the joint venture company) has the rights to explore, mine, beneficiate and market REM in the Jongju area for the next 25 years with a further renewal period of 25 years.
Australian geological consultancy, HDR Salva has been SRE’s technical representative and has reported that the Jongju REE Exploration Target has a mineralised potential of 6.0 Bt (216.2 Mt TREO) of which 2.66% could consist of HREE.
Dr Louis Schurmann said: “The Jongju Target would appear to be the World’s largest known REE occurrence.”
Further exploration will commence in March 2014 (which will include 226,000 m of core drilling). Exploration results will be generated and reported according to JORC Code (2004 / 2012) Standards.
Dr Louis W. Schurmann is a Fellow of the Australasian Institute of Mining and Metallurgy and a Professional Natural Scientist with over 15 years of experience relevant to the styles and types of rare earth mineral deposits.