Lynas Weighs Molycorp Bid as Rare Earths Suitors Open Talks

  • Producer says is interested in understanding any synergies
  • BASF SE said to be discussing possible asset purchases

Australian miner Lynas Corp Ltd. is weighing a bid for bankrupt rare-earths producer Molycorp Inc. as the company begins drawing interest from potential buyers in Asia and Europe.

Lynas, one of only two major rare earths producers outside China, is “interested to understand" the cost savings that could be available from a combination with Molycorp, the company said in an e-mailed statement. Others that have held discussions about buying the assets include German chemicals giant BASF SE, according to two people with knowledge of the matter, who asked not to be named discussing a private sale.

Molycorp, which filed for bankruptcy in June, announced on Oct. 21 it was looking to sell the entire company, including the idled Mountain Pass mine in California. It said it was in the process of signing confidentiality agreements giving 17 potential buyers access to detailed business information. The parts of the company that sell the processed metals are considered more valuable than the U.S. mine.

“Molycorp is the only non-Chinese supplier of any substance, other than Lynas, so it’s in their best interests to stay in the field,” Rob Brierley, a Perth-based analyst at Patersons Securities Ltd. said by phone. “It’d be crazy for them to say they wouldn’t look at it.”

Price Collapse

Lynas, which operates the Mt. Weld mine in Australia and a processing plant in Malaysia,  rose as much as 1.7 percent before closing unchanged at 5.9 cents in Sydney trading Wednesday, as an index of energy and commodities producers declined 1.4 percent.

Jim Sims, a spokesman at Molycorp, didn’t respond to messages seeking comment. Jennifer Moore-Braun, a spokeswoman for BASF in Ludwigshafen, Germany, declined to comment on whether it is bidding for the assets.

“As the only successful non Chinese miner and processor, we are interested to understand the Molycorp business and its operations and whether there would be synergies available from a combination of assets,” Kuantan, Malaysia-based Lynas said Tuesday in the statement.

Molycorp has suffered amid a collapse in prices for rare earths -- used in products including smartphones, magnets for electric cars and wind turbines. Prices of some products fell to the lowest on record in the three months through Sept. 30, Lynas said Oct. 14 in a filing.

Prices have retreated since reaching a 2011 peak
Prices have retreated since reaching a 2011 peak

Exports from China, which accounts for more than 80 percent of global production, reached the highest level in more than four years in July, according to government data. Shipments have increased after the nation ended its 15-year-old export controls, and then in April removed a tax on ore shipments.

Lynas, which has a market valuation of about A$208 million ($148 million) had long term debt of A$278.4 million at June 30, according to a September statement. The producer announced a reorganization of its debt in August.

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