Lynas Signs Contract With Japan Rare Earths Consumer Amid `De Facto' Ban
Lynas Corp., building a A$550 million ($532 million) rare earths project in Australia, agreed to supply a Japanese customer, a day after Japan said China’s “de facto” export ban on the materials may harm its economy.
“Lynas is extremely pleased to sign this contract with one of the leading companies in their specific market,” Executive Chairman Nicholas Curtis said, without identifying the customer. The rare earths will be supplied from the Sydney- based company’s Mt. Weld project and produced at its plant in Kuantan, Malaysia, when it starts up next year.
China, which controls more than 90 percent of the global rare earths market, last week stopped exports to Japan, Japanese Economy Minister Banri Kaieda said yesterday. In July, China cut export quotas for this half by 72 percent to bolster prices and ensure domestic supplies of rare earths, a group of 17 metals used in weapons, liquid crystal displays, hybrid vehicles and laptop computers.
“Rare earths are becoming a major raw material in electronics,” Peter Strachan, a Perth-based analyst for independent advisory firm StockAnalysis, said today in a phone interview. “When China announced it was restricting exports, prices started to rise dramatically. That’s what has focused the attention on companies like Lynas.”
Aggregate prices for the rare earths to be mined at Mt. Weld have risen to $51 a kilogram, from an average of $16 a kilogram in the second quarter, according to Lynas. The company’s shares rose 2.6 percent to close at A$1.36 in Sydney trading, taking the gain for the year to 147 percent.
Strained Ties
Ties between Asia’s two biggest economies soured over the detention of a Chinese fishing boat captain whose ship collided with Japanese Coast Guard vessels. Japan’s decision to release him last week initially failed to assuage China, which demanded compensation for the seizure of the trawler and crew.
China ended its effective ban on rare-earth exports to Japan yesterday when it began accepting customs applications, the Asahi newspaper reported today, citing unidentified Japanese companies.
Companies were able to apply for customs clearance over the Internet yesterday and may be able to obtain permits as early as today, the newspaper said. China had halted customs procedures since Sept. 21, it said.
Automaker Task Force
Japan takes about 65 percent of China’s rare earth exports, according to a Sept. 24 report by Macquarie Group Ltd. Automakers such as Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., which require rare earth elements for vehicle development, are among the companies most affected by restrictions on trade, Macquarie said.
Toyota set up a task force last quarter to explore alternative procurement sources for rare earths and recycling of used parts, the Nikkan Kogyo newspaper reported today. Toyota spokesman Paul Nolasco confirmed the company has set up such a team, without providing further details.
Lynas will start production in 2011’s third quarter with initial output of 11,000 metric tons a year, which will double to 22,000 tons by the end of 2012, Matthew James, vice president of corporate and business development, said in an interview from Sydney yesterday.
Lynas has signed contracts for about half of its planned production, including a 10-year deal with France’s Rhodia SA, James said. It doesn’t have any contracts with Chinese companies, he said, declining to name other buyers.
To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
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