Underlying much of the discussion about Lynas Corporation Ltd in Australia and Malaysia is the assumption that Lynas has a captive market in China for its product.
However in Lynas' own words:
The market, despite the trade tensions and the attention in the media, is quite soft. This is particularly after the economic situation in China. So demand in China is soft. There's been -- the automotive market there is not growing, which is sort of a really big driver. There's a real concern there about the effect of the trade war, and sort of the level of optimism in the market is not where it has been previously.
The owner of the only U.S. rare earths mine is going on a hiring spree as it looks to significantly boost production, part of a strategy to build out American refining capability after China raised tariffs on the minerals amid an escalating trade war.
By next year, MP Materials aims to be the first U.S. company to refine rare earths since 2015 when Molycorp Inc, the former owner of California's Mountain Pass mine, went bankrupt, executives said.
"If the (U.S.) Department of Defense came to us and said, 'We need product,' we'll sell there first," he said. "We'll sell wherever we want to sell."
(See full story below)
Further, Lynas is not exactly cash rich. It has had to reschedule debt:
And then of course, the other significantly positive thing during the quarter was the rescheduling of our JARE loan facility. The significant rescheduling means that we are able to accumulate cash from operations over the next couple of years, which will pay for the capital requirements in our Lynas 2025 plan.
Given the risks that the Malaysian taxpayer is exposed to a mere 600 jobs or so cannot be a sufficient return. To properly hedge this risk, Lynas needs to become a Malaysian owned and controlled company. It can do so by issuing new shares to Malaysian GLCs (which will also provide it much needed capital) and come under Malaysian control.
That Lynas needs fresh capital should not be in doubt.In addition to its Malaysian capital commitments it is going to need many more dollars for facilities in Australia:
FILE PHOTO: Heavy mining equipment hauls overburden material across Molycorp's Mountain Pass Rare Earth facility in Mountain Pass, California
By Ernest Scheyder
(Reuters) - The owner of the only U.S. rare earths mine is going on a hiring spree as it looks to significantly boost production, part of a strategy to build out American refining capability after China raised tariffs on the minerals amid an escalating trade war.
By next year, MP Materials aims to be the first U.S. company to refine rare earths since 2015 when Molycorp Inc, the former owner of California's Mountain Pass mine, went bankrupt, executives said.
The mine has relied on China for rare earth processing, fueling national security concerns. China is the world's largest processor and producer of the 17 specialized minerals used to build weapons, consumer electronics and a range of other goods. There are no known substitutes.
GRAPHIC: Rare Earth Production - https://fingfx.thomsonreuters.com/gfx/editorcharts/USA-TRADE-CHINA-RAREEARTH/0H001PGB36HY/index.html
In June, China more than doubled tariffs on U.S. rare earths imports for refining to 25 percent. On Friday, Beijing said it would add an additional 10 percent on top of that tariff rate starting next month, the latest tit-for-tat exchange in a protracted dispute between the world's top two economies.
The Trump administration has labeled rare earths critical for national defense and ordered the Pentagon to support domestic production.
"What China has recognized is that this is a strategic industry," said James Litinsky, co-chairman of MP Materials.
The company plans to boost its headcount by next year to about 400, up from about 200, and is already producing 68 percent more rare earth concentrate than under Molycorp.
But that concentrate - more than 50,000 tonnes per year - is today shipped to China for processing.
To resume refining in California, privately-held MP Materials is spending $200 million to restart mothballed equipment at the mine and build a large roasting oven.
"The tariffs are very painful, but we remain profitable," Litinsky said.
After processing, rare earths need to be turned into rare earth magnets, found in precision-guided missiles, smart bombs and military jets. But China controls the rare earths magnet industry, too.
Litinsky and peers are betting that by bringing rare earths refining back to the United States, it will encourage other investors to build magnets and other related parts in the country as well.
The mine originally opened in 1948 and has gone through a series of owners, including Chevron Corp <CVX.N>, before Molycorp went bankrupt.
MP Materials also plans to re-open the Mountain Pass chlor-alkali facility, which was built by Molycorp, Litinsky said.
The facility will recycle wastewater and produce hydrochloric acid and caustic soda to use in the rare earths separation process, saving the facility the added cost of buying the chemicals on the open market.
The company's new roaster will bake rare earth ore at high temperatures to effectively leach out the high-value minerals.
'SMART PLAY, CHINA'
It's not clear if the group will be able to re-start the processing equipment by next year or instead will face delays common in construction projects.
"Call me cynical, but history just shows if you look back on metals projects, most don't start when they were slated to come online," said Mark Seddon, an Argus metals analyst.
Once the refining equipment does switch online, the goal is to use that material on site to make more than 5,000 tonnes per year of neodymium and praseodymium (NdPr), two of the 17 types of rare earths that are used to make magnets.
Friday's tariff news means that MP Materials will need to find more customers outside of China once it restarts its California processor, pitting it against Australia's Lynas Corp <LYC.AX>, the largest rare earths miner and processor outside of China.
Lynas CEO Amanda Lacaze has vowed not to cede her company's market share outside of China.
"This will put MP Materials in direct competition with Lynas. Smart play, China," said Ryan Castilloux, managing director with Adamas Intelligence.
MP Materials is majority controlled by Chicago hedge fund JHL Capital Group and New York's QVT Financial LP, with China's Shenghe Resources Holding Co <600392.SS> holding a 9.9 percent stake.
The group bought the mine out of bankruptcy in 2017 for $20.5 million, a far cry from billions that Molycorp had invested in the facility over the years.
Litinsky says that despite the Shenghe stake, China has no control over Mountain Pass or where its products will go.
"If the (U.S.) Department of Defense came to us and said, 'We need product,' we'll sell there first," he said. "We'll sell wherever we want to sell."
While it is true that advances in machine learning and artificial intelligence are not yet able to fully replicate human reasoning, this does not mean that there are not means and methods which provide frameworks to rigorously analyse evidence and hence the reasonableness of any human decision.
The dissenting judgement by Mark Weinberg, the junior judge in the panel, continues to command attention and dominate discussion, and commentators (lay and expert) seem drawn by the fact that it is rigorous.
Weinberg has, in an informal sense, applied what has become known as the Dempster–Shafer theory or method to evaluating and combining data that is subject to disbelief. It has been around for more than 50 years and has found application in a number of areas including oil and gas exploration (where this writer, among others has used to it to assess the presence of oil,gas and uranium) and importantly in legal reasoning, particularly evidence.
The Dempster Shafer method is one of many formal methods for evaluating evidence and lends itself readily to the analysis of the reasonableness of a decision. Consequently while no one is suggesting that Ferguson CJ subject her decisions to some computer program or iPhone app, she is wrong in her refusal to accept an appeal based on the reasonableness (or lack thereof ) of a jury decision on the basis that, as she asserts," it can be said with confidence that no advance in technology can ever replicate the unique features of jury deliberation and decision-making”.
The days when judges could determine matters by reliance on the "in light of all of the facts and circumstances of this case" heuristic are long gone.
While the decision in the matter of Cardinal George Pell concerns criminal issues it does raise questions about the application of the rules of evidence by Australia's courts in all including commercial matters. While commercial disputes are generally civil matters between the parties in commercial matters litigants face the burden of presenting financial information to judges who often seem dismissive of financial detail (see article below for the reasons why Australian courts seem to find dealing with financial data a burden).
In handing down the decision in Cardinal George Pell's appeal against his conviction for crimes relating to child sex abuse Chief Justice Ann Ferguson said that “it is not enough that the jury might have had a doubt, but they must have had a doubt” .
Her Honour said so in explaining why she and the other judge in the three judge panel disagreed with dissenting judge Mark Weinberg's decision where he concluded that the "jury might have had a doubt".
In reading out the court’s conclusions for rejecting the appeal, Chief Justice Anne Ferguson outlined Justice Weinberg’s reasoning.
“In his dissenting judgment, the judge found that at times, the complainant was inclined to embellish aspects of his account,” she told the court this morning. “He concluded that his evidence contained discrepancies, displayed inadequacies so as to cause him to have a doubt as to the applicant’s guilt. “He could not exclude as a reasonable possibility that some of what the complainant said was concocted, particularly in relation to the second incident.”
“Nevertheless, Justice Weinberg stated that in relation to the first incident, if the complainant’s evidence was the only evidence, he might well have found it difficult to say that the jury, acting reasonably, were bound to have a reasonable doubt about the Cardinal’s guilt,” she said. “He went on to note, however, that there was more than just the complainant’s evidence. “In Justice Weinberg’s view, there was significant and in some places impressive evidence suggesting that the complainant’s account was, in a realistic sense, impossible to accept.” “Justice Weinberg stated that in his view, the convictions could not stand,” she said. “Nevertheless, the appeal on the unreasonableness ground has been dismissed because two of us took a different view of the facts.”. In short, its seems as if the CJ is herself aware that one cannot prove with absolute certainty that the jurors must have had a doubt. It will always have to be an objective test, which is what Weinberg set-out. However, because it can only be an only be an objective test, Weinberg could only make a conclusion based on probabilities (hence "may" and not "must").
Nevertheless, the Chief Justice seemed determined, as has become the norm, to formulate if not state legal principle without reference to a factual matrix. Commercial lawyers (one hopes) but certainly litigants in commercial matters can immediately see the problems that can and will arise in taking such an approach.Conversely, Weinberg's reasoning provides a timely if not long overdue reminder of how the facts in any case ought to be assessed.
Westpac's Fed Crt win can also mean a Westpac downgrade: Asian investors would not consider Westpac a safe investment given Perram J's peculiarly Australian judgement
Whilst I accept that the ( National Consumer Credit Protection Act 2009 (Cth)) requires a credit provider to ask the consumer about their financial situation (s 130(1)(b))and, in turn, to ask itself—and to answer—the s 131(2)(a)Questions, I do not accept that this has the further consequence that the credit provider must use the consumer’s declared living expenses in doing so.
While lawyers and judges may be able to perceive the wisdom and clarity of these words, to investors , especially from Asia, the words make little sense for they imply that a lender need not concern itself with what the borrower says about his or her living expenses ie his or her net cashflows.
Additionally, while ASIC's pleadings may well have been deficient (in Perram J's words “this case fails on the facts") the judgement does raise a question about what it is Australian courts consider to be relevant in matters that concern lending, if not net cashflows.
Consequently while Westpac can celebrate its victory over ASIC,investors, especially in Asia, are likely to re-assess Westpac's risk profile and the quality of its loan book,and in particular its consumer loan book. Of primary concern will be the quality of current loans.However there will also be concerns about future loan quality given the likely perception that Perram J's decision provides Westpac justification to grow its loan book unconstrained by considerations of borrowers' capacity to repay. His reference to spending on wagyu and shiraz, presumably in an attempt to quantify cash outflows, is not likely give investors any comfort. Bankers who do not consider what their borrowers say they earn and spend to be relevant, while not uncommon in Asia, are also not considered a safe investment, either in shares or in deposits.
Perram's wagyu and shiraz explanation adds to the evidence that Australian lawyers and judges are not comfortable dealing with commercial matters, and worse, not capable of dealing with the increasingly technical nature of commercial transactions.
by Ganesh Sahathevan Victoria Police Chief Commissioner Graham Ashton. Picture: Getty Images. While Victoria's Police Commissioner Graham Ashton is being praised for putting away George Pell, one wonders what he might have achieved to keep us safe from terrorism had he devoted that same energy to policing jihadis. Ashton is regarded as an expert in terrorism,having spent time working with Indonesian police, and apparently fluent if not proficient in Bahasa Indonesia. Yet, it was the Singaporeans , not Ashton who detained and are keeping us safe from Melbourne resident Zulfikar Shariff:
The failure to act on the threat of Zulfikar Shariff was not the only instance where Ashton failed to act,if not missed crucial and somewhat obvious evidence.There was, not too long ago,the matter of the Bali bombing and Jemaah Islamiah's Hambali (see story below).
These facts concerning Hambali, the Bali bombers, and Jemaah Islamiah have long been a matter of public record.,Victoria Chief Of Police Graham Ashtonwas chief Australian Federal Police investigator of the Bali bombings and ought to know these facts by heart (we do). The evidence of a strong level of passive support,at the grassroots and above is evident:
JI Training in Malaysia
The JI has been conducting training camps in Malaysia since 1990. Up to 1994, the training was focused mainly on maintaining physical fitness like jogging and trekking. From 1995, however, the training camps held in Gunung Pulai and Kulai began to also teach "military" skills (without firearms training). For instance, JI members were taught to make Molotov cocktails, learn knife-throwing skills, topography, jungle survival skills and trekking. In 1997, additional modules like guerrilla warfare, infiltration and ambush were included. Around 2000, reconnaissance and observation courses were conducted in Kota Tinggi; these classes were dubbed "urban warfare". The JI even conducted "Recall and Operation exercises" to ensure that members were operationally ready. 14 (which includes the 3 who went to Afghanistan) of the 21 arrestees participated in such training camps in Malaysia.
According to Malaysian officials, the so-called school of terror,Luqmanul Hakiem school, was established more than a decade (before 2002, that is before 1992 by Abu Bakar Bashir and Hambali.2
Malaysian authorities say Bashir, Hambali, Samudra and Mukhlas had used the Luqmanul Hakiem school in Ulu Tiram, in the southern state of Johor, since 1993.3
According to report in a Government-owned and controlled newspaper in Singapore, Abdullah Sungkar, was also among the founders of the Luqmanul Hakiem school. Mukhlas, brother of the Bali bomber Amrozi (who helped out at the school), helped set it up. Shahril Hat, an ex-engineer arrested by the Malaysian police, was the principal, while his assistant was Noor Din Mohd Top, a fugitive member of the Kumpulan Militan Malaysia (KMM).Three other Bali bombing suspects , Idris, Imam Samudra and Dulmatin - were said to have met and studied at the same school in the early 1990s.A course instructor there was bomb-maker/trainer, Fathur Rohman Al Ghozi - now in custody in the Philippines4.
Nowhere in official AFP and other Australian Government reports have the above AND the their implications and consequences for the future of Australian national security been discussed. It must be assumed that Ashton and others have either suppressed if not are totally ignorant of the facts and/or the issues they raise. That Ashton has ignored all this must break the hearts of those whose lives have been lost or otherwise affected by both Bali bombings.It also discloses an appalling lack of skill and knowledge, evidence most recently in the matter of Zulfikar Shariif.Of course, it is also likely that Ashton is more interested in preserving his "diversity" credentials.
New Federal MP Gladys Liu, the first Chinese-Australian woman to ever sit in the House of Representatives, is facing questions over her links to a secretive Chinese influence network.
The ABC can reveal ties have been discovered between the Liberal member for Chisholm and an organisation linked to Beijing's United Front, which aims to influence politics in foreign countries.
Chinese-born Australian MP Gladys Liu has asked chief spy Duncan Lewis whether ASIO could vet anyone requesting her for face-to-face meetings.
The Liberal MP was also told by ASIO to consider deleting the popular Chinese social media platform WeChat, which was already downloaded on her mobile.
At a special security briefing for new MPs, Ms Liu asked Mr Lewis if there was a process for ASIO to run background checks on people and organisations before she agreed to meetings
This seems to be a classic attempt at sanitization so as to remove suspicion at official levels of those associated with her.
