Australia's Lynas Corporation to Supply Rare Earth Minerals to Japan as China Restricts Shipments

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australia's Lynas Corporation Limited (ASX:LYC) (Sydney, Australia) has announced the signing of a supply contract with a major Japanese consumer to supply rare earth minerals from its operations in Malaysia.

China, which supplies about 97% of the world's rare earth minerals, previously exported almost half of its production to Japan. However, there now appears to be an unofficial embargo on exports of the minerals to Japan, forcing consumers there to turn elsewhere.

Several Japanese companies have reported that shipments of rare earth from China stopped on September 21 and that Chinese exporters had been instructed not to make new shipments or sign new contracts with Japanese companies after that date.

However, Akihira Ohata, the Japanese Minister of Economy, Trade and Industry (METI) (Tokyo, Japan), told reporters that Beijing has no official embargo in place.

Reports suggest that the unofficial delays in rare earth shipments may be the result of the current tensions between China and Japan over the latter's holding of a Chinese fishing boat captain, whose boat collided with a Japanese patrol boat. China has responded by detaining four Japanese citizens in China on suspicion of a violation of Chinese law.

Rare earth minerals--there are 17 of them--are used widely in new technologies such as automobile catalytic converters, flat-panel displays for mobile devices, and permanent magnets and rechargeable batteries for the new generation of hybrid and electric cars. Rare earths include lanthanum, neodymium, promethium, terbium and ytterbium, which is named after the Swedish village of Ytterby, where rare earths were discovered in 1787.

Although they are common in the earth's crust, extraction is an expensive process because of the difficulties in separating the rare earths from the base material mined. The major high concentration deposits are found in China, Mountain Pass in California, and at Mount Weld, Western Australia.

China provides about 97% of the world's rare earths, with an annual production of about 120,000 tons. Other producers of rare earths are India, which has a production of 2,700 tons per year, and Brazil, which has 730 tons per year.

World demand for rare earth minerals is about 134,000 tons per year, while global production is slightly less at about 124,000 tons per year. Currently, this difference is made up by previously mined resources. World demand for rare earth minerals is expected to increase to about 180,000 tons by 2012, placing mining companies with access to resources in a premium position.

Lynas is the owner of one of the largest deposits of rare earths in the world. The deposit is at Mount Weld in Western Australia, and the company is developing a state-of-the-art rare earth-processing plant at Kuantan in Pahang, Malaysia. Production from this plant is expected to commence in the third quarter of next year. The Mount Weld deposit contains an indicated and inferred resources value of 37.7 million tons, sufficient to supply 20% of the world's requirement for 30 years.

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