Pinned straw:
So I have been working on a model to see what the new US EV Tariffs and proposed Euro Tarriffs might do for NdPr demand.
And wow.
I'll put these slides here....and tmrw will put up my modelling approach. But I have got my exPwC friends to review. And they were amazed by the effects...and couldn't find any issues in my model.
I'll put below what I wrote on HC:
So i have been doing lots of thinking about this. And I have updated my model as follows:
1 - Ex China NdPr Oxide Supply (the blue line below) - I have updated for Iluka. The rest of the ex-China suppliers....they seem a long way off. But what I have done, is added another 20% supply from 2025 onwards. That is a massive conservative assumption. In fact, for 2025 i don't think it is possible. But even if I increase that to 40%, it shows a clear supply gap.
2 - Ex China RoW EVs - Additional ExChina NdPr Oxide required - Any manufacturer that wants to see into the USA, will have to change their EV motors....and they will change ALL their motors - Not just the EV units going into USA and Euro. I have excluded ALL Chinese EVs, which accounts for about 50% of all EV Sales. I assume they will just have to accept the tariffs and won't change to Ex-China NdPr oxide supply. Or they will just sell internally or countries with no tariffs.
So the scale of the Ex-China NdPr Oxide Supply Gap is much bigger than what I thought.
What might the effects be?
- I think China may put Tariffs on imports into their country? That means a reduction in exports for all the other makers...and would drop the NdPr demand a little bit. But I don't think by that much. Maybe 10-20% of their total EV sales.
- I think China will fill that gap by supplying more cars for itself internally.
- The likley NdPr price increase should make lots of other REO mines come online. But I just can't see that happening until at least 2030. REO mining and processing is complicated and specailised. So take the timelines of Meteoric etc with a grain of salt.
- I think established players like Lynas, Arafura, MP etc....will snap up some of these other juniors.....
So I did this exercise to get a feel for what it all means. I will not do much more exploration of the effect of these tariffs because the answer is pretty obvious. Even with the large factors of conservatism in the modelling: IMHO - Ex-China NdPr Oxide will be in high/extreme demand for the next 5-10 years at least. ARU is well positioned not only to deliver on Phase 1 and Phase 2, but to process other's aggregate and to do some acquistions along the way.
