Siemen’s next problem is to “broaden” (diversify) its heavy rare earth supply base for terbium and dysprosium produced outside of China.
I am watching to see which of the juniors it will give a conditional off-take for those materials.
Jack Lifton on April 15, 2015 at 9:21 AM said:
Raj,
I have some questions both for Siemens and for Molycorp that have to be answered before I congratulate either of them on this “deal.”
1. Late last year at a meeting of an EU organization in Milan Siemens was asked if it would pay a “premium” for non Chinese produced rare earths for magnet production. The Siemens representative said that the company would consider paying the China “export” price but no more.
2. The Nd-Fe-B magnets used in the type of wind turbine generator to be produced by Siemens are very large SINTERED NOT BONDED constructions certainly beyond the installed capabilities of Molycorp (neo) to manufacture. So is it the case that the ore concentrates produced at Mountain Pass will be separated to produce the didymium, or neodymium and praseodymium, oxide in California at Mountain Pass, at Zibo (Molycorp-Neo China), at Silimae (Molycorp, Estonia), or at Shin-Etsu’s separation plant in Viet Nam, or by a Shin-Etsu operation direct or toll in China?
Will the large amount of Nd-Fe-B or Didymium-iron-Boron powder be produced by one of Molycorp (Neo)’s facilities in China or nearby Asia, or by Shin-Etsu, and, if Shin-Etsu, where, In Japan or at Shin-Etsu’s metal/alloy making facility in China?
Finally where will the large sintered magnets be machined and magnetized? In China or in Japan?
I am going through this litany to point out that Molycorp will most likely be just a supplier of didymium oxide or of Nd and Pr oxide to a Siemens supplier that will most likely make the metals and then the alloy blocks itself and machine them itself .
I want to know how far along in the supply chain Molycorp (neo) will participate? Because if Molycorp is only a supplier of separated didymium, Nd pr Pr oxide then before it delivers any material to Siemens Tier One Supplier, Shin-Etsu, it will need to be competitive with the delivered price inside China, which as of its last quarterly review, it is not.
IS SIEMENS TELLING US THAT IT WILL HAVE SHIN-ETSU MAKE MAGNET ALLOY OUTSIDE OF CHINA AND DELIVER IT TO A NON CHINESE WIND TURBINE MANUFACTURING LOCATION FOR MACHINING AND MAGNETIZING?? THAT WOULD BE BIG NEWS!
UNTIL THEN KEEP IN MIND THAT IT IS VERY UNLIKELY THAT ANYONE OF SIEMEN’S SIZE WOULD TAKE TAKE DELIVERY ANYWHERE ON A PRODUCT THAT CAN BE BOUGHT FOR LESS. THE MOLYCORP SIEMENS AGREEMENT IS MOST LIKLEY A CONDITIONAL OFF-TAKE; THE CONDITION BEING AN AGREED PRICE INDEXED TO THE “MARKET” AT A DISCOUNT FOR VOLUME, ON TIME DELIVERY, AND ADHERENCE TO SPECIFICATION.
I think that for Molycorp the above deal would be a vote of confidence by Siemens, but it is not money in the bank, and it does not “prove” the existence of any useful vertical integration by Molycorp in the wind turbine space.
Siemen’s next problem is to “broaden” (diversify) its heavy rare earth supply base for terbium and dysprosium produced outside of China.
I am watching to see which of the juniors it will give a conditional off-take for those materials.
Jack Lifton
- See more at: investorintel.com/technology-metals-news/...rs/#comment-444020