Ore to Oxide...why it is important

John

Administrator
Staff member
So in our interview with ARU CEO, he really rammed home why Ore to Oxide is so important.

And this report really backs this up:
https://bipartisanpolicy.org/downlo...BPC_The-Missing-Midstream-Report_May-2024.pdf

Here is a quote from the report:
"Processing is the missing middle of the U.S. critical mineral supply chain. Without domestic midstream capacity, even new mining projects risk becoming captive to foreign refiners—largely in China."

Put into conext for Arafura - the value isn’t in just digging ore—it’s in owning the midstream. Whoever controls processing controls the market. Arafura is one of the few ex-China projects positioned to capture that premium, producing NdPr all the way to oxide and bypassing the biggest supply chain choke point.

It is def worth watching the interview again in full, because this Ore to Oxide point is made over and over again. And it is why you cannot compare companies that are only producing an NdPr Concentrate or Cabonate.
Here is a link to the video:

 
Daniel from REEx has written a great article on why Ore to Oxide is so important:

https://rareearthexchanges.com/news...ust-understand-in-rare-earth-mining-projects/

Interested in your thoughts.


Also...the ore-to-oxide strategy of a project is taken into account with our Rankings.
All these projects have hinged on the world decoupling from China, but that decoupling has long been uncertain. For a while, it felt more like political posturing: "Yeah, it should happen." But with MP Materials now signing a deal with the U.S. DoD, it’s become "Yeah, this is happening."

That deal marks a turning point, it’s a real catalyst for an ex-China rare earths market. Without this shift, I think ARU would’ve remained stuck in development limbo. But not anymore.

DC says said the same in the podcast.

I think we are now over the hump, I don't think many realise how pivotal this deal.
 
All these projects have hinged on the world decoupling from China, but that decoupling has long been uncertain. For a while, it felt more like political posturing: "Yeah, it should happen." But with MP Materials now signing a deal with the U.S. DoD, it’s become "Yeah, this is happening."

That deal marks a turning point, it’s a real catalyst for an ex-China rare earths market. Without this shift, I think ARU would’ve remained stuck in development limbo. But not anymore.

DC says said the same in the podcast.

I think we are now over the hump, I don't think many realise how pivotal this deal.
Yep...and I don't think the market understands what Ore-to-Oxide really means. For ARU it means that they can:
- Get premium pricing (ex-china certainity, no radiation, no storage costs for radiation, no radiation processing and no radiation disposal costs, high ESG credentials etc. etc.)
- Become a processing hub for other MREC projects.
- Acquire other projects.

It also explains the length of time taken for ARU to get to this point. To develop a flow sheet that economically processes the radioactive elements. This takes time and money. This is how many of these other rare earth projects have got into construction so fast. They bypass all that design and approval processes. But that then just becomes their customer's problem.

The other point tht DC made...is that even with the larger capex cost to go ore-to-oxide....the phosphate ore body, means a byproduct is the acid, which means two things. First is they don't need to buy this product to process...and the remainder (which is substaintial ) is then sold. From memory this accounts for between 5-10% of ARU's revenue. But also means that ARU has a really low opex cost.

So put it all together...the ore-to-oxide strategy means an amazingly profitable business, with options to grow fast.

And then compare the market cap with all the other projects that do not go all the way to oxide.....does not make sense.
 
Anybody who knows the Rare Earth market, knows it "does not make sense"!

When companies like ARU, Peak, and Pensana, who actually have World class 'Ore reserves' that are shovel ready, but whose market caps are so well below 'fair value', that they have to sit around waiting for finance. While other companies, like MP, USA RE, who, on close inspection actually have very limited real assets, have managed to con their way into the markets and achieve grossly inflated valuations way in excess of their true potential. IMO, the only company operating at anywhere near its 'fair value' at the current time is Lynas.
 
Anybody who knows the Rare Earth market, knows it "does not make sense"!

When companies like ARU, Peak, and Pensana, who actually have World class 'Ore reserves' that are shovel ready, but whose market caps are so well below 'fair value', that they have to sit around waiting for finance. While other companies, like MP, USA RE, who, on close inspection actually have very limited real assets, have managed to con their way into the markets and achieve grossly inflated valuations way in excess of their true potential. IMO, the only company operating at anywhere near its 'fair value' at the current time is Lynas.
Pretty much spot on.

There is lots of 'froth' in this market.
 
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