RE: is argex a competitor or not to hannan is argex a competitor or not to hannan that's the big question.....any answer???????
PPG has licensed a Cloride based process that makes TiO2 to Hannan. PPG owns the process, Hannan is simply a licensee, and is presumably paying PPG some form of royalty for the use of the license.
Argex has developed a competing process which is believed to compete favourably with the PPG owned chloride process now licensed to Hannan.
Argex is therefor competing with Hannan on processing, however if all the claims about the Argex's new process are proven accurate, Hannan won't be a competitor for much longer.
Hannan does not own a large body of TiO2 rich ore. Argex does. Argex benefits from being a vertically integrated company which can source its own raw ore with no mark-up by suppliers. Hannan has to source its ore from someone and this means there is a markup/profit margin included.
I believe that being vertically integrated, Argex will have cheaper ore and a more efficient process.
PPG, who previously manufactured its own TiO2 using the chloride process now licensed to Hannan, may now want to be an even more vertically integrated company and own the Argex process, as well as an ore body. It would cut out 30% profit in the supply chain at two steps.
Frequently large companies license less than optimal or older technology to developing markets. It allows them to continue to profit off of the technology while not giving away their best and latest trade secrets to someone who could become a competitor.
PPG has $1.392 BILLION in cash available right now. Provided the process scales and meets PPG's technical requirements I believe they will do a valuation calculation and realize they can invest a nice chunk of change now to buy some or all of Argex (and the subsidiary companies that own the proces as well as the ore body) and generate themselves even more healthy returns. I personally do not expect ARGEX to ever become a "producer" they are now a technology company, have you seen any mining engineers added to the executive team?