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Lynas Corporation Limited Message Board

  • fastmoney_2011 fastmoney_2011 Dec 29, 2010 3:14 PM Flag

    "It is unusual for a company of Lynas's size to be invited to that forum"

    Miners up as rare earths get even rarer after Chinese cuts
    Sarah-Jane Tasker From: The Australian December 30, 2010

    CHINA has again cut its exports of rare earths, further boosting emerging local producers as companies scramble for alternative supplies.

    Beijing cut quotas on 2011 first-half exports by about 35 per cent.

    China, which supplies more than 90 per cent of rare earths to the world, had cut export quotas for the second half of 2010 by 72 per cent.

    Shares in emerging rare earths producer Lynas Corporation jumped 10.80 per cent to $1.79 yesterday following news of the latest cut.

    "(China's decision) is a re-affirmation of the expressed policy of the Chinese government to continue to husband rare earth resources for use in China and to push the rest of the world to seek alternative development opportunities," Lynas executive chairman Nicholas Curtis said.

    "There were some fairly clear statements around that, and the quota is the most concrete expression of all of that."

    Related Coverage
    China's rare earth cuts boost miners Courier Mail, 6 hours ago
    Big miners feel Chinese burns The Australian, 7 hours ago
    Rare metals exports cut Herald Sun, 17 hours ago
    Miners, banks, drag stocks lower Courier Mail, 18 hours ago
    China cuts rare earth export quotas The Australian, 1 day ago

    Lynas claims its Mount Weld resource in Western Australia is the richest known deposit of rare earths outside China.

    The company is planning to be in production in the third quarter of next year.

    Mr Curtis said it was possible that within five years

    China would become a net importer of rare earths, which are mostly used in electronic products.

    "I've been out there saying for 10 years this is a strategic industry that is significant and China won't sustain itself, and this year it is fair to say that the world has really taken notice," Mr Curtis said.

    The issue gained political attention in September, when Japan said Beijing had blocked shipments of rare earth metals to Japan in possible retaliation for Tokyo's arrest of a Chinese fishing boat captain near disputed islands in the East China Sea.

    The political focus on rare earths is reflected in Mr Curtis's invitation to attend the World Economic Forum meeting in Davos, Switzerland, next month.

    "It is unusual for a company of Lynas's size to be invited to that forum, but that indicates there is some important strategic thinking about rare earths and material supply and China as a consequence of all that," he said.

    China's decision to cut its quota for rare earths exports led to a sharp rise in some other Australian listed miners. Alkane Resources was up 9.37 per cent to 87.5c, Arafura Resources added 11.07 per cent to $1.35 and Greenland Minerals and Energy gained 12.5 per cent to $1.08.

    Mr Curtis said the growth in the Chinese domestic market, coupled with a decrease in production of rare earths in China, were the likely causes of the export restriction.

    Lynas last month signed a major supply deal with Japanese conglomerate Sojitz.

    The agreement gives Sojitz exclusive import rights for 9000 tonnes of Lynas's rare earth metals a year.

    In return, the Japanese company will seek up to $US250 million ($246.7m) in funding from Japan to develop the project.

    "That deal (shows) the Japanese government at its most senior policy levels has now taken very seriously the fact that Japan needs to find alternative sources of rare earths from China," Mr Curtis said.

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