anyone worked out costs?, page-45

Ausheds,

Chill mate!!!

I do see the relevance of your point.

Let me use an analogy to confirm the point I feel you are making.

The price of a house is the measure of the attractiveness of a house to a buyer. It takes into account such things as the standard and size of improvements, size and orientation of the land, and location of the land with respect to social amenity facilities and economic hubs.

Other impacts that may have an impact on price may be that a potential buyer may pay more than any other person because they are adjoining the property for sale. A reason, for example, is they may be able to develop 5 units with two blocks while only two units may be developed for each seperate block.

Each potential purchaser will balance his or her requirements for a number of features and that will be reflected in a single figure, the sale price of the property.

To confirm the point you are making are you saying like home buyers different rare earth purchasers will reflect in the price they are willing to pay their specific requirements for rare earths they require. The specific requirements including such features such as the grade and compostion of a concentrate? If you are I agree!!!

But may I suggest, and what you do not appear to accept, is that decisions will be made on price.

Take the hypothetical example:

A rare earth user wants "X" rare earth.

Supplier 'A' can supply a pure mix of "X" and "Y" rare earths and the user can easily seperate "X" from "Y" (XA and YA)

Supplier 'B' can provide a pure supply of "X" (XB)

Who will the rare earths producer buy from 'A' or 'B'?

I don't think there is enough information to answer the above question.

A number of issues will be taken into account such as security of supply etc... but if all those issues are the same it will come down to price.

If 'a' tonnes of XB costs more than 'a' tonnes XA and 'a' tonnes of XB plus the cost of seperating XA and XB then an economically rational purchaser will buy the mix from supplier "A".

In other words the rare earths producer can get the supply of "X" cheaper by getting the mix from supplier "A" seperating "X" from "Y" and could throw all of they "Y" away. Iy they got anything for "Y" from another purchaser it would reduce the cost of their requirement for "X" even further.

I'll go further if it was cheaper for a buyer to breach a long term supply contract and pay the penalties to buy from another supplier it would be an economically rational decision and management of companies are charged with making economically ration decisions to maximise their profits for shareholders.

In the end, it all comes down to price. The rare earths market is not unique but as you point out it is complex, but in the end it is simply economics that drives any market. It's not just a case of 'guns and butter' its a case of 'guns, butter, vegemite, jam, ....', but it is an economic challenge. Purchasers are not charities and will make the most economically rational decision for their circumstances and suppliers will attempt to maximise their profits for the mix they have.

A challenge for rare earth suppliers and producers alike is the sellers of some rare earths are nearly 'price makers' while for other rare earths they are definitley 'price takers'. An interesting problem for producers but the solution will be found with price. The cheaper the price of exploitation of a resource and the preferable the mix of the resource, the more creative the solutions for the economic challenges found by the producer.

Cheers

Stoops