As we noted a week back Pensana (LON: PRE) is essentially out of cash unless there's some wafting in of money from somewhere or other. If we were of a cynical turn of mind we'd think that their little press relations campaign is designed to get the government to provide that funding. If we were truly cynical then we'd possibly conclude that asking elsewhere isn't working as well.
Now, the basic idea at Pensana if just fine. The world wants more rare earths, they've got access to a possible mine in Angola. They've also realised that simply mining to produce a rare earth concentrate isn't all that profitable. Nor does it actually solve the western world problem. For the major costs and bottlenecks in rare earths are not in mining a concentrate. They're in turning that concentrate into the individual rare earths. Thus the major part of the Pensana plan, the building of a rare earths separation plant at Saltend on Teesside. That's also where you would put such a plant if you were going to do it in the UK.
That's all fine, entirely sensible piece of strategic planning. The problem seems to be that Pensana isn't all that good at actually doing this. That's why their announcement that - effectively - PRE has run out of money.
Pensana share price from London Stock Exchange
Which brings us to this in the Daily Telegraph today:
China ‘weaponising' grip on vital rare earth metals
Beijing plots crackdown on technology crucial for modern tech
Oh, right, is it? They did try this in 2010 and failed dismally as we predicted they would. But the important part here is this:
Paul Atherley, chairman of UK rare earths refinery developer Pensana, said: “This represents a seismic shift from China's previous position and brings an outright export ban one step closer.
“China said they would never introduce export restrictions on rare earths after 2011. The announcement appears to be a clear warning of its willingness to weaponize its dominant position in rare earths.”
Well, we could read that as just a journalist asking for commentary on a passing story. We ten to be more cynical than that. Much, much, more cynical than that. We read that as please, government, give us some money for strategic and geopolitical reasons. In fact, we're so cynical that we read that as Pensana is having significant difficulties in finding any cash elsewhere.
Only time will tell whether we've got the correct question here, the only correct question we need ever ask about the intersection of politics and investing - are we being cynical enough?
