Lifton on the collapse of rare earth prices in China and Neo Materials' survival
Channel: InvestorCoffee
Date: 2015-09-03

September 3, 2015 — In a special InvestorIntel interview, Publisher Tracy Weslosky speaks with Jack Lifton, Sr. Editor for InvestorIntel about the collapse of rare earth prices in China and the impact on the rare earth markets. He also explains what really happened with Molycorp and why Neo Material Technologies still has a pulse. He then explains how at the Global Technology Metals Market summit on October 14th he will be presenting his thoughts on “The impact of China’s economic turmoil upon the technology metals supply chains and how to lessen the impact in the future.” He clarifies that he will be addressing the problems, identifying the hurdles and concluding with real solutions for the entire supply chain of technology metals.


Tracy Weslosky: What's happening with Molycorp and what is your conclusion as Robin Bromby's latest piece suggest that this is an absolute catastrophe for our market sector. Do you agree?

Jack Lifton: It's not good news for the market sector because so many people have focused on only Molycorp. I haven't made a secret of the fact that I thought their business model was flawed from the first day in that they were focusing on producing the least desirable sector of the rare earths, for the most part, of any light rare earth deposit. 75% or 80% is cerium and lanthanum, which currently are the least valued rare earths in volume production. The fact is the Molycorp mine has only 11% or 12% of neodymium and praseodymium, the magnet metals. Compare it with Lynas at 23% or I think that Peak Resources might even have a higher percentage than that. There are many deposits that have a better percentage. The Molycorp situation was that it was high-grade and high hype, but it was really just a part of the solution. The solution is the total supply chain and always has been. It was not a good idea. It failed. It's not a surprise that when it’s not a good idea – it fails. I think that last year's contribution of Molycorp to the global rare earths market was basically unimportant. I accept the fact that it is a sad day for shareholders of Molycorp who were long-term shareholders. They've lost all the value, but in general this has been like a rock thrown in the ocean. The ripples have long ago settled. Molycorp's disappearance is of no particular impact on the genuine rare earth market.

Tracy Weslosky: Before we leave the Molycorp topic, let's talk about Neo Material Technologies.

Jack Lifton: Well, I don't know what's happening with the ownership, but Neo Material hasn’t missed a beat in 10 years. Neo Material never depended on the Mountain Pass Mine for raw materials. It's always been able to buy raw material in China at much lower prices. In my opinion, if they took anything from Molycorp, California, it was for political purposes in their own company's bureaucracy. If Neo survives it'll be just fine. It's a well-managed, well-run company and it's doing the right thing.

Tracy Weslosky: Our headline from Hongpo this morning was the collapse of the rare earth prices in China. I keep reading about the collapse of rare earth prices but I think these are all overstatements. You're the senior expert here between the two of us. Jack, do we have a collapse of the Chinese rare earth prices? …click here, to access the rest of this interview