"Lynas Rare Earths (ASX:LYC) A$968m [$672 million USD] Deal Doubles Down on the Heavy Rare Earths Race"

The acquirer's stock got walloped on the news of the price paid but the HREE focus is where LYC has a strategic advantage over the American standard-bearer MP Materials.

From Stocks Down Under, October 1:

Investment Case Summary

• Caldeira adds the largest ionic clay rare earth resource outside China and lifts Lynas reserves by 26%.
• The all-scrip structure preserves Lynas A$1.2 billion cash to fund the US$500m-plus Brazil build.
• Brazilian regulatory approval under new critical minerals law is the key execution risk before March 2027. 

The deal doubles the resource base. The real question is whether Brazil approvals arrive on time.

Lynas Rare Earths (ASX:LYC) has agreed to acquire Meteoric Resources in an all-scrip scheme valued at A$968 million on a fully diluted basis. The deal hands Lynas the Caldeira Project in Minas Gerais, Brazil, the largest known ionic clay rare earth oxide resource outside China under the JORC Code.

The exchange ratio of 0.0207 Lynas shares per Meteoric share implies A$0.286 per Meteoric share, a 68.4% premium to the last close of A$0.17. Meteoric shareholders will end up owning roughly 5.9% of the combined group on a fully diluted basis.

The strategic logic is clear enough. Caldeira adds an estimated 802kt of NdPr oxides and 41kt of DyTb oxides to Lynas, lifts Measured and Indicated TREO resources by about 79% and Ore Reserves by 26% on a pro forma basis. It also diversifies Lynas from one tier-one orebody to two, pairing the hard rock Mt Weld deposit in Western Australia with a scalable ionic clay asset in a supportive mining jurisdiction.

Why is Lynas paying up for Caldeira now?

Because scale and heavy rare earths are suddenly the whole game. Caldeira contains both light and heavy rare earth elements, with life-of-mine production of around 3,862 tonnes of NdPr and 127 tonnes of DyTb a year under Meteoric’s definitive feasibility study.

DyTb is the strategic prize. Dysprosium and terbium are the heavy rare earths that go into high-performance magnets for EVs, wind turbines and defence electronics, and China still controls almost all commercial supply. A credible non-Chinese source of DyTb is scarce, and Caldeira is one of the few outside China that has moved through a DFS....

....MUCH MORE 

LYC was down 8.6% (-A$1.19) to A$12.64 on Thursday and year-to-date is up a measly 1.8%:

 

TradingView 

On the Heavy Rare Earth Elements, a couple mentions in the last year (we have dozens on LYC and MP going back to the 2009 - 2011 glory days): 

January 2026 - Rare Earths: "Australia's Lynas reports Q2 revenue surge on higher prices" (LYC.ax)

Our preference among the Western mines due to the heavy rare earth resource/reserves.

October 2025 - Why Did President Zelensky Come Away From His Meeting Without Tomahawk Missiles? Think Rare Earths

There are, of course, a few reasons that President Trump is reluctant to send the missiles to NATO partners for resale to Ukraine, the most commonly uttered example is a determination to not expand and extend the war.

However, there are a couple rare earth angles that are also behind the decision....

***

....One way for China to keep Russia in the fight is to pressure the U.S. generally on the critical minerals.

Another is to focus on the Tomahawks themselves. They cannot be built without the use of dysprosium magnets in the actuators that move the control fins.

Dysprosium is a Heavy Rare Earth Element (HREE) and America's only rare earth mine at Mountain Pass doesn't produce it. Australia's Lynas produces some but unlike the light rare earths, the HREEs are pretty much all found in Chinese geologies.

If interested see last week's reposted article from 2012 "The only five rare earth elements that matter": 

[Jack Lifton writing]....I follow four or five critical REEs that each have individual markets. One of them is neodymium, because it’s the most important REE used in permanent magnets. The others are heavy rare earth elements (HREEs), including europium, terbium, dysprosium and yttrium. The latter isn’t really an REE, but it’s associated with them. As the market corrects to reasonable prices, people are coming to understand this.... 

Neodymium magnets are not as robust as those made from dysprosium and are more likely to fail under thermal and physical stress, leaving you with an unguided missile flying hither and yon.

As things stand right now, China not only has one heck of a monopoly on the majority of the rare earth supply chains, from mine to fabrication but absolutely controls the one for the absurdly critical input into Tomahawk missiles.

Oh, and after lobbing a bunch of the Tomahawks at the Houthis in Yemen, we see this at ZeroHedge October 14: "Military Analyst Warns US Doesn't Have Enough Tomahawks To Send To Ukraine".

All because China found and exploited a point of maximum pressure to implement their geostrategic worldview.

*** 

MP has the backing of the U.S. Government while Australia's richest person, Gina Rinehart owns 8.2% of LYC, formerly worth around a billion U.S.

Fun fact:

Critical Minerals: "Mining tycoon Gina Rinehart buys over $1 billion SpaceX stake" (SPCX)

She also owns 8.4% of MP. 

"How Japan Built a Rare-Earth Supply Chain Without China"

From the New York Times, December 8:

The 15-year effort by Japan is a model for countries now scrambling to reduce their dependence on Beijing’s critical metals. 

Sojitz, a Japanese conglomerate, turned to Lynas, an Australian mining company, to build a rare-earth supply chain outside China. Lynas mines in Australia and refines in Malaysia.

The world reacted with alarm this year when Beijing introduced waves of export controls on rare earths, the minerals vital to the manufacturing of everything from cars to advanced electronics. For Japan, the experience felt like déjà vu.

China maintains a near monopoly on the supply of the metals. Japan learned that the hard way in 2010 when China effectively cut it off during a territorial dispute between the countries. Tokyo has since quietly stitched together a supply chain that is considerably less dependent on China. For Japan, that is an important hedge to political risk, as a recent flare-up in tensions between the nations underscores.

As the United States and other nations scramble to secure rare earths outside China and build up their domestic supplies, Japan’s experience provides lessons in how it can be done, according to interviews with current and former government officials, business executives and industry experts in Japan.

“The urgency of the rare-earths situation is just now dawning on the United States and Europe,” said Naoki Kobayashi, an official working in the minerals division of Japan’s trade ministry. “For Japan, this painful lesson came 15 years ago,” he said.

President Trump has said he believes it will take the United States about a year to secure ample rare-earth supplies. But Japan is a case study in how hard it is to pull out of China’s grip — especially its extremely cost competitive rare-earth processing facilities. Experts say such an effort requires both sustained government support and international collaboration.

Supply Shock
In September 2010, a collision near disputed islands between a Chinese fishing trawler and two Japanese Coast Guard vessels escalated into a diplomatic and economic crisis. Japan detained the captain of the Chinese ship, and Beijing, in retaliation, implemented an unannounced, two-month embargo on rare-earth exports.

At first, the significance of China’s move was lost on some Japanese officials.

Tatsuya Terazawa was in charge of economic policy at Japan’s trade ministry in 2010. He recalled that the ministry’s lead auto industry official rushed to his desk, warning that the entire automotive supply chain could be suspended because of the sudden cutoff.

“I had to confess, I had zero knowledge about rare earths,” Mr. Terazawa said. He said his colleague explained that these materials were essential ingredients for the magnets used in motors across Japan’s auto sector. And Japan, like most industrialized nations, had ceded control of this vital supply almost entirely to China.

Mr. Terazawa was responsible for developing the trade ministry’s next suite of economic policies. He compiled a package, worth a little over $1 billion at the time, aimed at reducing Japan’s supply chain vulnerability to rare earths. It included substantial support for Japanese groups to diversify rare-earth sources.

“At the time, I was criticized that I was demanding much more money than necessary,” Mr. Terazawa said. “But I was determined that Japan never repeat this incident.”

Finding Lynas
The timing was, in some ways, opportune. Sojitz, a Japanese conglomerate, and Jogmec, the government body overseeing mineral resource security, were seeking non-Chinese rare-earth options. And Lynas, an Australian mining company, was dealing with financial difficulties.

Lynas was trying to create the world’s first integrated rare-earths supply chain without using China, instead mining the ores in Australia and refining them in Malaysia. But it was struggling to amass the capital it needed to increase production at its Malaysian refining site.

Sojitz had to find sources of rare earths outside China. Without stable supplies, “factories in many places would have to stop operating,” said Kosuke Uemura, the chief executive of Sojitz. At the time, “Lynas was the only option,” he said.

In 2011, Jogmec and Sojitz did a deal that provided $250 million in loans and equity to Lynas. The transaction secured for Japan a long-term supply of rare earths sourced outside China.

Today, in Western Australia, workers on the remote Mount Weld volcanic plug are flown out from Perth on rotations to extract rare-earth ore from an open-pit mine owned by Lynas

The partially purified concentrate is then shipped 5,000 miles to the company’s facility in Kuantan, Malaysia — until this year, the only large-scale rare-earth separation plant operating outside China. There, the materials are refined through a chemical process into individual rare-earth oxides pure enough to use in manufacturing.

From Malaysia, the metals are transported another 3,000 miles to Japan, where Sojitz manages distribution to domestic magnet makers. In Japan, the magnets are used in a number of products, including vehicles produced by automakers like Toyota.

Early Challenges
Japan has significantly bolstered its supply chain resilience. While industry estimates placed Japanese rare-earth imports from China at 90 percent or more during the 2010 trade dispute, that figure now stands closer to 60 percent to 70 percent.

Sojitz received its first large shipments of rare earths from the Malaysia facility in 2012 and has continued to expand the breadth of metals it imports. In October, it added a type of specialized, heat-resistant magnet ingredients to its portfolio.

According to Mr. Uemura, the Sojitz chief executive, the toughest bottleneck was the refining process in Malaysia. The chemical separation of rare earths produces large volumes of acidic waste and thousands of tons of low-level radioactive residue. Proper management and disposal of the waste is expensive and time consuming.

Between 2011 and 2012, the Lynas facility in Malaysia faced months of delays because of fierce local opposition and legal challenges. The facility began operating only after it revised its residue management plan multiple times.

In contrast, Chinese processing factories are often lightly regulated, and some illegally operated, creating toxic waste sites.

As a result, Mr. Uemura said, Sojitz and Lynas have higher costs than Chinese rivals and require public backing. “If we were to compete normally with China, we’d be playing on a different field altogether,” he said. “This gap is absolutely unbridgeable.”

Export Controls
This year, China introduced expansive rare-earth export controls, first in April and again in October, restricting the materials themselves and the processing technology. Beijing’s measures targeted all exports, not just those bound for Japan....

....MUCH MORE 

Some of our posts along the way: 

May 2021 - "Japan’s global rare earths quest holds lessons for the US and Europe"

The thing that stood out at the time was how open-minded the Japanese were about potential sources. If the scientists said they thought they could recover rare earths from sewage, the government said "Go find out" From offshore deposits? Ditto.*

October 2010:

"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai

 

Oct. 2010  

"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals 

July 2011 
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)

Stocks trade generally mournful and reflective.
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below....

Sept. 2011 
Predictions: Rare Earth Demand 2015-2020 (MCP; REE; AVL)

June 2012 

Japan Makes Huge Rare Earth Find

Japan has taken the rare earth sector very seriously since prices spiked ten-fold a couple years ago, some of our links are below the jump.

July 2021
Japan's Responses In the Event Of A Chinese Attack On Taiwan
You can see Japan's quandary if you follow the islands down to Okinawa and beyond.... 

January 2023
"Japan dives into rare earth mining under the sea"
It's taken them long enough.*

Here's an interesting map from the article, as we've said over the years, Japan has a real interest in who controls Taiwan:

And the reason I said Europe risks becoming a satrapy of China?

Absolutely brutal… 🇺🇸🇪🇺

The EU Commissioner of Industry:

"Last month, I was supposed to go to Brazil to discuss a rare earth mine. 3 days before, we were told that the Americans had already come, put money on the table, and bought all production until 2030." pic.twitter.com/rYLfLJcD0s

— Geiger Capital (@Geiger_Capital) December 9, 2025

The satrapy bit was the outro from December 8's "JPMorgan CEO Jamie Dimon says Europe has a ‘real problem’".

"Australia rare-earth stocks soar as China clamps down on exports"

Lynas is our preferred rare earth name, despite MP getting most of the attention (and U.S. government money). 

From Nikkei Asia, March 27: 

Market cap triples in year for Lynas, largest rare-earth separator outside China, on Japan, US deals 

Rare-earth stocks in Australia have risen sharply over the past year amid growing demand from sources other than China for the metals, found in everything from mobile phones and cars to modern weapons.

Lynas Rare Earths, the world's largest commercial rare-earth separator outside China, announced this month it had locked in purchase price guarantees with a joint venture co-owned by Japanese trading house Sojitz. It marks the first time a Japanese client has committed to a price floor for a rare-earth deal.

"The implementation of fair market pricing will reduce price volatility for Lynas and enable continued growth and investment in our operations," Lynas CEO Amanda Lacaze said in a press release.

The sides have agreed to a minimum price of $110 per kilogram for neodymium-praseodymium, which is used to make magnets for vehicles, among other applications. Lynas is entering into a similar deal with the U.S. Defense Department.

Lynas' market capitalization reached 20 billion Australian dollars ($14 billion) as of Friday, roughly tripling in value over 12 months. The company has surpassed the $9.4 billion market cap of its largest U.S. rival, MP Materials, and is gaining ground on China Northern Rare Earth Group High-Tech, the biggest Chinese player with a market cap of $24 billion....

....MUCH MORE, an excellent overview. 

China Northern is an old friend formerly known as "Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., Ltd." As noted in a 2024 post on Baidu: 

....China has a communist government, they pick winners and losers in business, that's what communists do.

We first became aware of how important this understanding is in the case of the Chinese rare earth companies. Here's a snip from a 2009 post, "Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., Ltd. UP 10% Wednesday (600111: Shanghai)", this is a couple years before the twenty-tweens rare earth mania:

....China's moves to tighten control on the mining and export of a class of metal ores called rare earth are aimed at attracting high-tech manufacturing to Inner Mongolia, and not at dominating the market, a senior Chinese official said.

Wednesday's comments by Zhao Shuanglin, vice chairman of Inner Mongolia Autonomous Region, appear aimed at quelling concerns that China is trying to dominate the global market for rare-earth resources, used in some environmentally friendly technologies. Rare-earth metals greatly improve batteries made for hybrid cars....

...China also is taking steps to consolidate its rare-earth industry. Mr. Zhao, who said he runs the region's industrial policy, said Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co. would lead that consolidation. The move is aimed at creating a group of rare-earth miners and processors in the region's western parts. Inner Mongolia Baotou Steel Rare Earth's stock rose 7.6% in Shanghai trading Wednesday.

"Most of the consolidation is complete," Mr. Zhao said. "We want to build Baotou into an international rare earth production base."....

By November 2010 the story was:
"Rare Earth: Inner Mongolia Baotou Steel Rare Earth Hi Tech Co. Ltd. Reports 369% Increase in Q3 Net":

This is the big dog.
And one that the Chinese government says will be on top of the mandated industry consolidation.

IMBSREHTCL was chosen to succeed.

In the case of artificial intelligence it was apparent by 2017 that Baidu, known in the West as a search engine, was the anointed one for machine learning and such.

Some more 2009 posts on "IMBSREHTCL":

• With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good ( 600111:Shanghai)
• "Why, Just the Other Day I was Talking About Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co." Canadian Solar Gets 500MW Project (600111: Shanghai)
• Wind/Rare Earth Metals: "China Non-Ferrous Barred From Taking Control of Lynas" And: "China Investment Corp to launch own rare earth mining firm"

Again, years before the mania and "Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., Ltd." being on everyone's lips and our chosen tagline coming from one of the best books on investing ever written:

"...Words like 'uranium', 'rare earths', etc. seem to be magic to

 those unsuspecting who are often fleeced..."

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

"...Is Lynas The Best Rare Earth Play?" (LYC.AX; LYSCF; MCP; AVL.TO; REE)

From 13D.com via ZeroHedge:

...Here is 13D's October 21 take on Lynas:

Lynas Corp (LYC:AU, AU$1.76; LYSCF, $1.73)- which announced a new agreement with a major Japanese firm a day after our last article-remains our favorite in the field, and likely provides the shortest path to free cash flow among major rare earth miners. We expect that recent rare earth supply concerns will enable Lynas to continue signing agreements to sell essentially all phase-1 production and enough phase 2 output to accelerate expansion. Thereafter, it may be able to separate and market rare earth concentrate from other mines, such as its own resource in Malawi and output from Northern Uranium's Australian resource before developing its Crown polymetallic depost.

Another indcator that LYC may be due for a major move higher is the October 26 downgrade by JPM from overweight to neutralm with a A$1.71 price target. As is well known, when a broker is downgrading something, it is buying it from clients. Nuff said. An extract from the JPM report authored by Alistair Reid:

Overall, we believe LYC has a strong competitive advantage given its position as a viable source of new non-Chinese supply of rare earths. However, given the stock’s recent out-performance and potential risks around the timing and cost of delivery of the IREP, we believe investors should consider reducing any OW position. We continue to watch for further progress in bringing the IREP on-line including completion of the concentrator by early CY11E, securing funding solutions for the expansion, executing further customer offtake agreements, updates on the construction schedule and marketing of synthetic mineral products.

Without doubt the stock has had a dramatic run up, and has returned about 194% YTD, and 130% in just the past three months, and is due for a pullback. That said, it would appear that while many of the other names in the space, which have had a comparable move higher, would be far more of the story-type picks, Lynas may be positioned to be a relative outperformer and a likely long hedge to all short "bubble pop" exposure.

We will present more on the name in the coming days. In the meantime we present JPM's initiation report in Lynas for all those who wish to get acquainted with the name....MORE

Rare Earths: "Australia's Lynas reports Q2 revenue surge on higher prices" (LYC.ax)

Our preference among the Western mines due to the heavy rare earth resource/reserves.

From Nikkei Asia, January 21: 

Growing demand for non-China rare earths provides tailwind, CEO says 

Australia's Lynas Rare Earths reported a rise of 43% in second-quarter revenue compared to the same period last year, as increased demand for rare earths outside of China pushed prices higher.

Sales revenue for the quarter ending Dec. 31 came to 201.9 million Australian dollars ($135.9 million), despite a shortfall in production due to two power disruptions at its Kalgoorlie processing facility in Western Australia during November and planned maintenance at its facility in Malaysia. Lynas' Australia-listed shares jumped as much as 8% in morning trading on Wednesday.

Prices of rare earths have been rising as the U.S. and other countries try to reduce dependence on China, which produces the vast majority of the world's rare earth materials. The average selling price for Lynas' products was AU$85.6 per kilogram, and the company said positive market sentiment is expected to continue this month.

Its total rare earth output was 2,382 metric tons, a 40% drop from the previous quarter.

Lynas CEO and Managing Director Amanda Lacaze said prices for the company's products will continue to strengthen in January.

"Frankly, geopolitics continue to be our friend," she said in an earnings call on Wednesday, Australia time. "Although we are yet to finalize various agreements with governments, the policies which have been particularly implemented by the U.S. government have already fostered more functional market dynamics."

Lacaze will step down in June after more than a decade in her role. The company did not share any details on the search for a replacement.

Lynas mines rare earth ore from its Mt Weld mine in Australia and processes it at its Kuantan facility in Malaysia. The company expects to have its first production of samarium, which is used in magnets for defense applications and green-technology, out of Malaysia in the fourth quarter of 2026. It expects to bring online new capacity to separate up to 5,000 ton a year of heavy rare-earth feedstock....

....MUCH MORE 

Rare Earth: Australia's Lynas sees first ore at Mount Weld rare earths plant (LYC.ax; LYSCF)

A quick hit from Reuters:

Australia's Lynas Corporation said on Wednesday it expects the first feed of ore into the concentration plant at its Mount Weld rare earths project in Western Australia in the week starting March 31, provided there are no further weather delays.

The company said in a statement that the first feed of concentrate into the kiln at the Lynas Advanced Materials Plant in Malaysia was on schedule for the third quarter of 2011. (Reporting by Ed Davies)

Previously:

"...Is Lynas The Best Rare Earth Play?" (LYC.AX; LYSCF; MCP; AVL.TO; REE)

Rare Earths: What's in Your Mine? (MCP; REE; RES.tsxv; AVL.TO)

Rare Earth Metals: "Chinese Institutional Investors Look At Rare Metals Overseas" (AVL.TO: LYC.AX; MCP; UCU.V)

...America’s needs for light rare earths will be oversupplied by Molycorp as will Australia’s by Lynas in a massive way. For the heavy rare earths, America’s needs can be meet and exceeded  by Ucore Rare Metals and Rare Element Resources. The needs of China, Japan, Korea and India for heavy rare earths can be met by the Canadian and African operations of Great Western Minerals Group, the Canadian operations of Avalon Rare Metals or Quest Rare Minerals, and the southern African operations of Frontier Rare Earths and Tantalus Rare Earths...

"Rare-Earth Curbs May Prove a Windfall for Molycorp, Lynas as Prices Surge" (MCP; LYC.AX; AVL.TO)

Nothing like a little artificial scarcity to goose the old stock price, eh?
From Bloomberg:

China’s clampdown on exports of rare earths essential for the electronics and new-energy industries may create a windfall for a handful of Western companies seeking to benefit from surging global demand.
Molycorp Inc., owner of the world’s largest non-Chinese deposit of rare-earth metals, and Lynas Corp. both plan to open mines in the next two years to meet the demand, forecast by the Chinese Rare Earths Industry Association to gain by almost two- thirds by 2015.
Their shares have more than doubled this half, tracking gains in prices for rare earths that are used in the manufacture of disk drives, wind turbines and smart bombs.

“There’re only two genuine new companies coming on-stream that can offer a meaningful level of production and that’s Molycorp in the States and Lynas in Australia,” Hunter Hillcoat, an analyst at Investec Bank Australia Ltd., said by phone from Sydney. The risk is “you have to assume they can bring on production seamlessly and that the price is still at the same level by the time they’re in production,” he said.
China, producer of more than 90 percent of the world’s rare earths, reduced its second-half export quota for the minerals by 72 percent in July and is now further restricting exports in the $1.2 billion market, according to industry participants. Prices for some of the minerals jumped as much as sevenfold in the past six months, prompting companies including Glencore International AG, the biggest commodities trader, to seek to restart and open mines.

Mothballed Mine
Molycorp plans to restart a mothballed California mine in the second half of 2011 and produce about 20,000 metric tons of rare earth oxides by the end of 2012. The Mountain Pass mine met almost all the world’s rare-earth metals demand before closing eight years ago. The company may double its planned capacity to 40,000 metric tons, it said Oct. 19. The Greenwood Village, Colorado-based company has surged 144 percent since raising $394 million in a July initial public offering.

Sydney-based Lynas plans to start production from its A$550 million ($541 million) Mt. Weld project in the third quarter next year with initial output of 11,000 metric tons a year, which will double to 22,000 tons by the end of 2012, it said Sept. 28. Its share have soared 210 percent this year.

“Lynas is in a good position because it signed a number of” sales agreements, Andrew Sullivan, an analyst at BBY Ltd., said from Sydney. “It definitely has first-mover advantage for Western or non-Chinese rare earths users that are looking to diversify. The same could be said about Molycorp. It’s got agreements in place for quite a bit of its production.”...MORE

If I were the Chinese I'd be tempted to keep prices up until MCP came online and then, well, crush 'em.
I'm just sayin'.

 We have so many posts on rare earths and the companies that I've stopped putting the links in subsequent posts. Instead you can, if interested, use the search this blog box, keywords rare earth.

Wind/Rare Earth Metals: "China Non-Ferrous Barred From Taking Control of Lynas" And: "China Investment Corp to launch own rare earth mining firm"

First up, Bloomberg:
China Non-Ferrous Metal Mining (Group) Co. was blocked by Australia from buying a majority stake in rare-earth producer Lynas Corp. as the government seeks to preserve local control of the nation’s resources.

Australia’s Foreign Investment Review Board ordered China Non-Ferrous to limit its stake in Lynas to less than 50 percent, the Sydney-based company said today in a statement. China accounts for more than 90 percent of global output of rare earths, used in iPod music players, liquid crystal displays, hybrid cars and wind turbines.

Investments by Chinese companies have faced scrutiny from Australia as the biggest metals consumer accelerates takeovers. Australia blocked a A$2.6 billion ($2.3 billion) bid by state- owned China Minmetals Corp. for OZ Minerals Ltd. in March on national-security concern and review board director Patrick Colmer said today overseas investors should limit proposed stakes in major mining companies to no more than 15 percent.

“What FIRB doesn’t want to see is something as significant as a rare-earths project, where China controls so much of the world’s production, fall under the control of one country,” said Peter Strachan, a Perth-based analyst for independent company StockAnalysis.

Lynas, which says it owns the world’s richest deposit of rare earths, has risen more than threefold since China Non- Ferrous agreed May 1 to pay A$252 million for a 51.6 percent stake. It advanced 3.5 percent today in Sydney trading to 90 cents....MORE

And from Reuters, our old pal*, Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co trades limit up in Shanghai:

China's CIC may launch domestic rare earth company

China's sovereign wealth fund, fresh from a series of investments in the global commodities sector, may launch its own domestic rare earth firm, a banking source and newspaper report said on Thursday.

China Investment Corp (CIC) could do so through Jianyin Investment, its wholly-owned domestic industrial investment arm, said the source, who is familiar with CIC. The $298 billion sovereign wealth fund's primary focus is on foreign investments.

Rare earths are metals used in high-tech devices and green products. For a factbox, click on [ID:nSYD28850].

CIC and Jianyin are talking with Baotou Steel (600010.SS) and the government of Baotou city in Inner Mongolia about setting up a rare earth company, state-run Economic Information Daily said.

"The talks are in a framework under which the two parties would set up a multi-billion yuan company to specialise in rare earth exploration and stock building," the paper cited an unnamed source with knowledge of the issue as saying.

"It will also help restructure Inner Mongolia's rare earth mining industry and CIC will hold a more than 80 percent stake," the source told the paper.

Shares of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech (600111.SS) soared by the daily limit of 10 percent on the news. The company said in a statement to the Shanghai stock exchange that it had met with CIC officials earlier this month to discuss cooperation, but that no agreement had been reached yet....MORE

*See:

"Why, Just the Other Day I was Talking About Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co." Canadian Solar Gets 500MW Project (600111: Shanghai)

With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good ( 600111:Shanghai)

or use the search blog box, keywords: rare earth.

"Malaysia gives nod for Australian miner Lynas to import, process rare earths until March 2026" (LYC.ax)

The stock is up 12.36% (+0.75) at $6.82 on the news.

From the Associated Press, October 24:

Malaysia’s government said Tuesday it will allow Lynas Rare Earth to continue to import and process rare earths until March 2026, after the Australian miner proposed a new technology to extract radioactive elements from the waste it produces.

The Lynas refinery in Malaysia, its first outside China producing minerals that are crucial to high-tech manufacturing, has been operating in central Pahang state since 2012. But the company has been embroiled in a dispute over radiation from waste accumulating at the plant.

The government had ordered Lynas to move its leaching and cracking processes — which produce the radioactive waste from Australian ore — out of the country by the year’s end. It also was not allowed to import raw materials with radioactive elements into the country....

....MUCH MORE 

A couple previous thoughts on the importance of the processing refining and fabrication part of the supply chain:

And as noted in "Rare Earths: Reminder, Combined Brazilian and Vietnamese Resource Base Approximately Equals China's Proven and Probable Reserves":
Mining the stuff is relatively straightforward. The huge difference is that Brazil and Vietnam do not have the refining and fabricating infrastructure that China does....

Another 2023 post on rare earths, this one January 14:

"Huge rare earth metals discovery in Arctic Sweden"
They aren't that rare. Just hard to find in the right proportions of the different rare earth elements. And in concentrations high enough to make extraction a paying proposition.

And requiring some technical expertise to fabricate into end products. It's not as if there are neodymium magnets just laying around... 

And in 2022's "Huge rare earth reserve discovered in Turkey, but experts caution that ‘grade is king’"

Not just grade. The composition of a deposit, the amounts of the 17 rare earth elements is critical. As one example, the Mountain Pass mine in the U.S. despite its relatively high grade (8% REEs) is actually not as valuable as some lower grade mines with a more profitable mix.

Additionally, exploitation of a REE resource is highly dependent on processing and supply chain factors that can not quickly be brought into being, it's one thing to have the deposit, quite another to have, for example, the end product, a neodymium magnet.

We have some experience with this stuff, if interested see after the jump....

....(we've been tracking the doings of the big dog since 2009's "With a Name Like Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., it has to be good (600111:Shanghai)"

If interested we have hundreds of posts on rare earths.

And dozens on thorium:

Nuclear: "Bill Gates Is Beginning to Dream the Thorium Dream"

The promise of thorium has been a siren song for the last couple decades, back in 2008 I dropped this comment at the WSJ's Environmental Capital blog:

• • • 8:37 am July 22, 2008
    • Climateer wrote:

    C’mon guys, get with it!
    Global warming is so last year.
    Everybody, from Al Gore to the blogs you link to are reinventing themselves and talking energy.
    Energy production
    Energy cost.
    Energy security.
    It’s all about framing and re-framing.
    Low impact man’s time has come and gone. The eco-soirée has moved on to erudite discussions of thorium between nibbles at the canapés.
    By this winter the only references to carbon among the salon crowd might be Carbonic acid (H2CO3).
    You watch.

Okay, so I was early.

"Greenland bans uranium mining, blocking vast rare earths project"

The rare earths are often found in proximity to uranium and thorium with their radioactivity:

 

...Words like "uranium", "rare earths", etc. seem to be magic to

 those unsuspecting who are often fleeced...

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

 

The ban seems to be aimed at just the radioactive stuff so shouldn't shut down Bill Gates' exploration for cobalt.*

*May 2019
Bezos, Andreessen and Gates Looking For Cobalt In Canada

Not them personally, can you imagine? Tramping around northern Saskatchewan?

Jeff: Bill, does this rock look blue to you?
Bill: I can't see it, let me get my glasses.
Marc: Guys, have I told you all the things I've wanted to tweet since I quit Twitter?
Jeff and Bill: Oh Gawd

No, it's a company they're invested in....

 "Experimental reactor could hand China the holy grail of nuclear energy"

 This article is a bit hyperbolic but the fact China is getting close to firing it up is a pretty big deal.

I wish India were still pressing ahead. Fifteen years ago I would have bet on thorium reactors tripling India's GDP over a few decades but they decided to stick with coal....

Exploding Rare Earth Prices: Be Careful What You Wish For (AVL; MCP; REE)

Following up on this morning's "Prices of Certain Heavy Rare Earths Have Doubled in the Last Two Weeks (AVL;REE; MCP; FRO.tsx: UCU.v)".

From RareMetalBlog:

Be careful what you wish for. That could be the take-home message from comments made to RareMetalBlog by Australian REE expert Dudley Kingsnorth. He says the continuation of present high prices, and especially any significant further rises, will just give greater emphasis to the need by end users to find substitutes for REE. After all, we have already seen the Japanese government put up funds to promote the identification and use of substitutes for REE and also to lift recycling of the elements - the whole idea being to free Japanese manufacturers from being hostages to the rare earth miners.

Kingsnorth, who runs Perth-based Industrial Minerals Co. of Australia, said that a few months ago he had forecast that, in 2015 and taken across the whole industry, REE producers would receive an average of between US$30/kg and US$40/kg rare earth oxides (REO). It is noteworthy that the figure for the first quarter of 2010 was between US$12/kg and US$15/kg REO and today it is between US$120/kg and US$150/kg REO. He adds that, when one considers that Lynas is forecasting their costs of production at US$10/kg, one can understand why many analysts are recommending Lynas as a ‘buy’ – it is a mark-up that even the iron ore miners can only dream about! Kingsnorth's latest estimates for 2015 prices is that they will probably be in the range of US$40/kg to US$60/kg REO. The recent rise of dysprosium from US$750/kg to US$1,500/kg is, in his view, unsustainable. Already the high prices are having an effect: producers are selling much lower REE quantities than they were a year ago.

He sees some of the heavy rare earth oxides being in continuing short supply, but many of the others are likely to come off by substantial amounts.

This is not to say that mining REE will be unprofitable, says Kingsnorth. Those companies that get the financing to develop REE mines will, he says, be very profitable businesses. As noted above, Lynas Corp., at its operations in Western Australia and Malaysia, has target production costs of around US$10/kg, and Molycorp at Mountain Pass, California, lower again....MORE

We had a post that touched on the issue back in January:

"New Magnets Could Solve Our Rare-Earth Problems" (MCP; REE; AVL; SHZ; GE)
Our pitch for the catalyst of the next secular bull market has been "some combination of material sciences, advanced manufacturing and nanotechnology".
From MIT's Technology Review:

Researchers are working on composites that would make strong magnets that need less of the hard-to-get ingredients.

Stronger, lighter magnets could enter the market in the next few years, making more efficient car engines and wind turbines possible. Researchers need the new materials because today's best magnets use rare-earth metals, whose supply is becoming unreliable even as demand grows.

So researchers are now working on new types of nanostructured magnets that would use smaller amounts of rare-earth metals than standard magnets. Many hurdles remain, but GE Global Research hopes to demonstrate new magnet materials within the next two years.

The strongest magnets rely on an alloy of the rare-earth metal neodymium that also includes iron and boron. Magnet makers sometimes add other rare-earth metals, including dysprosium and terbium, to these magnets to improve their properties. Supplies of all three of these rare earths are at risk because of increasing demand and the possibility that China, which produces most of them, will restrict exports.

However, it's not clear if the new magnets will get to market before the demand for rare-earth metals exceeds the supply. The U.S. Department of Energy projects that worldwide production of neodymium oxide, a key ingredient in magnets, will total 30,657 tons in 2015. In one of the DOE's projected scenarios, demand for that metal will be a bit higher than that number in 2015. The DOE's scenarios involve some guesswork, but the most conservative estimate has demand for neodymium exceeding supply by about 2020.

"A lot of the story about rare earths has focused around China and mining," says Steven Duclos, manager of material sustainability at GE Global Research. "We believe technology can play a role in addressing this." The DOE is funding GE's magnet project, and one led by researchers at the University of Delaware, through the Advanced Research Projects Agency-Energy (ARPA-E) program, which fosters research into disruptive technology....MORE

HT on the Tech Review story: Dr. Hazlett

Goldman Sachs: China to Benefit From Rare Earth Prices until Oversupply in 2013 (MCP; REE; AVL)

Okay that wasn't exactly what Goldman said.
In our Jan. 6 post "UPDATED: Rare Earth Mania: What the Heck is Molycorp Worth? (MCP; SHZ; REE; AVL)" I repeated a thought first presented the prior week:

...My short side radar is starting to glow. The perfect play for the Chinese would be to maintain a very tight supply to Japan and the West until MCP, Lynas and REE go into production and then crash the market.
There is currently no way to figure discounted cash flow values for these mines so folks are taking proven, probable and even possible reserve numbers, multiplying by their favorite integer and then forgetting to discount back. That spells opportunity to those panthers sharp enough to wait patiently in the tree until the moment comes to pounce....

We got a three-week triple out of  the puts: "Rare Earth Mania: The Coming Opportunity for Buyers of Molycorp Puts (MCP)".

Here are two versions of Goldman's thinking, first up, MarketWatch:
Rare earths to swing to surplus by 2013: Goldman

A global deficit in supply of rare earth elements is likely to peak this year before moving into surplus by 2013, according to Goldman Sachs analysts.

In a research note Thursday, analyst Malcolm Southwood said the world was likely to see a deficit of 18,734 metric tons of the metals this year, equivalent to 13.2% of demand, before slipping into a surplus in 2013 which will rise to 5,860 tons the following year, or 3.2% of projected demand. 

However, prices will likely continue to rise, the bank said. "We envisage that the market for rare earths will remain in severe deficit in 2011 and 2012, and that prices will trend higher over the next 18 months. We envisage a closely balanced market in 2013, and modest surpluses thereafter--at least, for some of the more abundant light rare earths--with some price softening in the 2013-2015 period."...MORE 

Here's another outpost of Rupert's empire, from the Wall Street Journal:

Rare Earths Seen Growing Less Rare

Demand for rare earth elements that has driven up prices more than tenfold since 2009 is likely to be met by a surplus of supply by 2013, as Western companies start up new mines to compete with the Chinese firms that now dominate the market, Goldman Sachs analysts predicted Thursday. 

The forecast calls into question the sustainability of the current boom in rare earths, a suite of 17 elements used in products from high-powered magnets, and fuel refining to energy-efficient light bulbs and mobile phone screens, as well as the shares of companies seeking to produce them.

Prices of rare earths hovered between $5 a kilogram and $20 a kilo from the early 1990s until 2010. But a 40% cut in export quotas by China, which accounts for 90% of global rare earth production, sent prices soaring. The basket price of rare earths held in Lynas Corp. Ltd.'s Mount Weld deposit in western Australia—the largest non-Chinese mine, due to come to production in the next few years—has jumped to an average of $162.66 kilos from just $10.32 kilos in 2009.

Goldman's view differs from that of miners. In a presentation last month, Lynas forecast that global demand for rare earths, which include neodymium, cerium and lanthanum, will outstrip supply by 35,000 tons this year and in 2012. Annual supply shortfalls of around 20,000 tons are expected in 2013 and 2014, it added. It predicted long-term prices in the $120/kg-to-$180/kg range....MORE

Comparing the TMR Advanced Rare-Earth Projects Index and the Bloomberg Rare Earth Mineral Resources Index (MCP; REE; AVL; LYSCF)

Two from Technology Metals Research. First up, from Friday:
Introducing The TMR Advanced Rare-Earth Projects Index

...Note that I am first and foremost interested in the rare-earths sector from the strategic point of view. I am interested in the potential value that specific rare-earth deposits and their development could have, in the furtherance of the needs and demands of the overall technology supply chain. In theory, projects that are good for the supply chain in this way, should also be good investments, or more specifically, the companies that own and operate such projects (if they can do so profitably). Obviously things don’t always quite mesh in this way, but you get the idea.

To put things in context, as of the beginning of January 2011, I’m tracking 275 rare-earth projects that are being worked on by 180 individual companies in 30 different countries. This does not include projects in China, India or Russia, or projects that are not at least partially owned or operated by corporations or other non-state-run entities. It also does not include projects whose information is not in the public domain, and / or are simply not known to me at the present time....
...As of January 6, 2011, the TMR Advanced Rare-Earths Project Index includes 17 advanced rare-earth projects, being worked on by 16 different companies and located in 8 different countries. Those projects are:

• Bear Lodge (Bull Hill Zone) – Wyoming, USA : Rare Element Resources Ltd. (TSX.V:RES, AMEX:REE)
• Cummins Range – Western Australia, Australia : Navigator Resources Limited (ASX:NAV)
• Dubbo – New South Wales, Australia – Alkane Resources Ltd. (ASX:ALK, PK:ALKEF)
• Hoidas Lake – Saskatchewan, Canada : Great Western Minerals Group Ltd. (TSX.V:GWG, OTCBB:GWMGF)
• Kangankunde – Balaka, Malawi : Lynas Corporation Ltd. (ASX:LYC, PK:LYSCF)
• Kutessay II – Chui, Kyrgyzstan : Stans Energy Corp. (TSX.V:RUU)
• Kvanefjeld – Kujalleq, Greenland : Greenland Minerals and Energy Ltd. (ASX:GGG, PK:GDLNF)
• Mount Weld – Western Australia, Australia : Lynas Corporation Ltd. (ASX:LYC. PK:LYSCF)
• Mountain Pass – California, USA : Molycorp Inc. (NYSE:MCP)
• Nechalacho (Thor Lake Basal Zone) – Northwest Territories, Canada : Avalon Rare Metals Inc. (TSX:AVL, AMEX:AVL)
• Nolans Bore – Northern Territory, Australia : Arafura Resources Ltd. (ASX:ARU, PK:ARAFF)
• Norra Karr – Småland, Sweden : Tasman Metals Ltd. (TSX.V:TSM, PK:TASXF, F:T61)
• Sarfartoq (ST1 Zone) – Qaasuitsup, Greenland : Hudson Resources Ltd. (TSX.V:HUD, OTCQX:HUDRF)
• Steenkampskraal – Western Cape, South Africa : Great Western Minerals Group Ltd. (TSX.V:GWG, OTCBB:GWMGF) & Rare Earth Extraction Co. Ltd.
• Strange Lake (B Zone) – Quebec, Canada : Quest Rare Minerals Ltd. (TSX.V:QRM, PK:QSURD)
• Zandkopsdrift – Northern Cape, South Africa : Frontier Rare Earths Ltd. (TSX:FRO)
• Zeus (Kipawa) – Quebec, Canada : Matamec Explorations Inc. (TSX.V:MAT, PK:MTCEF)

...MORE 

And from yesterday:
The Bloomberg Rare Earth Mineral Resources Index

...In the first iteration of the Index, Bloomberg chose the following companies and weightings:

Member companies of the Bloomberg Rare Earth Mineral Resources Index and their weightings

Company	Ticker Symbols	Weighting (%)
Molycorp Inc.	NYSE:MCP	16.4
Lynas Corporation Ltd.	ASX:LYC, PK:LYSCF	15.0
Avalon Rare Metals Inc.	TSX:AVL, AMEX:AVL	11.4
Rare Element Resources Ltd.	TSX.V:RES, AMEX:REE	11.2
Arafura Resources Ltd.	ASX:ARU, PK:ARAFF	10.0
Greenland Minerals and Energy Ltd.	ASX:GGG, PK:GDLNF	6.7
Quest Rare Minerals Ltd.	TSX.V:QRM, PK:QSURD	6.3
Frontier Rare Earths Ltd.	TSX:FRO	5.9
Alkane Resources Ltd.	ASX:ALK, PK:ALKEF	5.0
Tasman Metals Ltd.	TSX.V:TSM, PK:TASXF, F:T61	4.6
Great Western Minerals Group Ltd.	TSX.V:GWG, OTCBB:GWMGF	4.2
Navigator Resources Limited	ASX:NAV	2.1
Matamec Explorations Inc.	TSX.V:MAT, PK:MTCEF	1.2

Subscribers to the Bloomberg information service can track the Index via its ticker symbol BNREMS. We’ll update the above list periodically, as and when Bloomberg makes changes to its composition. In the meantime, you can see the latest data for the Index, on its Web page.

...MORE including a short comparison of the criteria for inclusion

"Japan’s global rare earths quest holds lessons for the US and Europe"

The thing that stood out at the time was how open-minded the Japanese were about potential sources. If the scientists said they thought they could recover rare earths from sewage, the government said "Go find out" From offshore deposits? Ditto.*

From Quartz, April 22, 2021

In 2010, the Japanese government had a rude wakeup call: Beijing had abruptly cut off all rare earth exports to Japan over a fishing trawler dispute. Tokyo was almost entirely dependent on China for the critical metals, and the embargo exposed this acute vulnerability.

The silver lining to this incident, which sent global rare earth prices skyrocketing before they crashed down as the speculative bubble popped, is that it forced Japan to rethink its critical raw materials policy. A decade on, it has significantly reduced its dependance on China for rare earths, and continues to diversify its supply chain by investing in projects around the world. Its model may have lessons for the US, which desperately wants to break China’s rare earths monopoly. Rare earths are a group of 17 metals that are crucial in the manufacturing of high-tech products.

“Japan experienced what the US faces now: a political conflict with China, in which China seems to be willing to exploit its dominance in the [rare earths] market,” wrote Marc Schmid, who researches rare earths at the Martin Luther University Halle-Wittenberg. “The US appears to be in a similar vulnerable position as Japan was about a decade ago.”

A state-led, global quest

Central to Japan’s rare earths procurement strategy is the Japan Oil, Gas and Metals National Corporation, or Jogmec, a state-backed company governed by the ministry of economy, trade, and industry. Though Jogmec was established in 2004 through the merger of two decades-old oil and metals mining entities, it was only after China’s embargo that it turned its attention to rare earths, said Nabeel Mancheri, secretary-general of the Brussels-based Rare Earth Industry Association: “The focus started from the 2010 crisis.”

A key prong of Jogmec’s strategy was to diversify Japan’s supplies. That meant investing in and partnering with rare earths companies around the world starting soon after the Chinese embargo, including rescuing Australia’s Lynas from collapse, in order to build a wider portfolio of suppliers. It also supports efforts to recycle rare earths, as well as research to develop rare earth substitutes. That strategy has been largely successful: Japan slashed rare earth supplies from China from over 90% of imports to 58% within a decade, according to UN Comtrade data. It aims to bring that below 50% by 2025.

As the global shift to electric vehicles and renewable energy is expected to drive a surge in rare earth demand, Japan is set to further increase funding for the exploration and mining of rare earths, according to Nikkei. One consideration is to lift the current 50% cap on state funding for resource exploration projects, which could ease the private sector’s financial burden in inherently risky mining projects.

Industry experts say Japan’s example illustrates the importance of targeted state-led investment in the rare earths sector. Through Jogmec, Japan could direct substantial government funds to support different mining projects, and secure rights to a certain amount of rare earths in what’s known as offtake agreements. Often, that means Japan is able to lock in a specified quantity of rare earth imports over a designated time frame. That also stabilizes the volume and price of supplies, which is important for the sustainability of downstream manufacturers that use rare earth materials to produce batteries and magnets that go into things like electric vehicles and wind turbines.

For instance, Jogmec and top Japanese trading firm Sojitz invested $250 million in Lynas in 2011 in return for a steady supply of rare earths. The loan terms were restructured in 2016 to keep the ailing Lynas from going bust, and restructured again in 2019 to ensure Japan gets “priority supply” of its rare earths through 2038....

....MUCH MORE

 Some of our posts at the time:

October 2010:

"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai

June 2012  

Japan Makes Huge Rare Earth Find

Japan has taken the rare earth sector very seriously since prices spiked ten-fold a couple years ago, some of our links are below the jump.
From the WSJ's Japan Real Time blog:

Clear As Mud: The Answer to Japan’s Rare Earth Concerns

Amid mud on the seabed 2,000 kilometers from Tokyo, Japan may have found the answer to its rare-earth supply concerns for centuries to come.

For the first time, Japanese explorers have discovered large deposits of rare-earth minerals on the ocean floor within the country’s exclusive economic zone.

The researchers estimate about 6.8 million metric tons of rare earth minerals, including dysprosium, exist in the mud across a 1,000-square-meter seabed near Japan’s easternmost island, Minami-torishima, about 2,000 kilometers southeast of Tokyo.

The volume is impressive: The recoverable minerals could be enough to supply Japan’s rare earth metal consumption for at least 200 years, team leader Yasuhiro Kato, an earth sciences professor at Tokyo University, said on Friday.

The underwater discovery of the minerals – a centerpiece in rising global trade tensions with China – could be a valuable boon for Japan. In March, Asia’s second-largest economy joined an international trade action lodged by the U.S. and European Union against China, which produces more than 95% of the world’s rare earth supplies over curbed exports of the minerals....MORE

Previously:
Oct. 2010 
"Japan Scrambles for Rare Earth" (AVL.TO; LYC.AX; MCP) 600111: Shanghai
Oct. 2010 
"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals
July 2011 
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)

Stocks trade generally mournful and reflective.
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below.

Sept. 2011 
Predictions: Rare Earth Demand 2015-2020 (MCP; REE; AVL)

Rare Earths: "Lynas joins forces with Siemens" (LYSCF; LYC.ax; SI)

Very smart, taking a page from Molycorp's j.v's.
Lynas goes further up the value chain.*
From the Sydney Morning Herald:

Lynas Corp will team up with Siemens in a joint venture that will help the German technology giant secure a long-term source of supply-constrained rare earth elements, coveted for their use in hybrid car engines, smartphones, iPads and other modern technologies.

The two companies have signed a letter of intent to form a joint venture, of which Siemens will own 55 per cent, that will specialise in the production of high-powered rare earth magnets used in energy-efficient engines and wind turbines.

‘‘This planned joint venture would be an important strategic pillar for us to pursue a long-term and stable supply with high performance magnets,’’ Ralf-Michael Franke, chief executive of Siemens’ drive technologies division, said....MORE

*From our June 15 post "Implications For Investors Of The Dramatically Increasing Chinese Virtual Demand For Rare Earths" (AVL; MCP; REE):
...China is not shy about wanting to own the entire supply and fabrication chain:

Source: Molycorp final prospectus, June 9, 2011

Molycorp is attempting to do the same thing to capture more of the value-added, witness the acquisition of Silmet, the investment by Sumitomo and particularly their joint venture with Hitachi:

....This downstream integration, which we refer to as our “mine-to-magnets” strategy, would make us the only fully integrated producer of NdFeB magnets outside of China, helping to secure a rare earth supply chain for the Rest of World. In addition to the foregoing, we continue to explore additional joint ventures or other arrangements with third parties for the production of NdFeB alloys and/or magnets.

Rare earth “mine-to-magnets” production supply chain

For more on the downstream challenges see:
Repost: Hard Truths About the Rare Earth Element Business 
and
"New Magnets Could Solve Our Rare-Earth Problems" (MCP; REE; AVL; SHZ; GE)
Both posts link to MIT's Technology Review blog....

UPDATED--Frontier Rare Earths in Partner Talks for South African Mine and an Interview with the CEO (FRO.tsx)

 UPDATE: "Well this is Timely: Frontier Rare Earth and Korean Government-owned Corp Sign Development Deal (FRO.tsx)"
Original post:
The stock was up 16 cents yesterday and another 9 cents today, currently $2.10 Cdn.
See the "Mom I Was Kidding" post for Investor Risk Tolerance (basically "Wanna cut the cards for a thousand?" No? it's not for you)
We've mentioned this one a few times:
Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx)
Alrighty then. 
Rare Earths: Pssst, You Want a Hot Tip in the Market? (FRO.TO; FRO.WT)

On page 254 of Edwin Lefevre's Reminiscences of a Stock Operator (online version) we read:

...At the same time I realise that the best of all tipsters, the most persuasive of all salesmen, is the tape....

Read the book, it's the best tip I've got.
Livermore understood markets.
Mr. Lefevre also wrote a short story called The Tipster, published in 1901.

If, on the other hand, monsieur et madame should be in the market for say, a wild-ass mining speculation, I would like to draw your attention toward:

A Luxembourg based company with
An undeveloped South African rare earth deposit whose stock
Trades on the Toronto stock exchange.

I'm thinking the warrants...

Frontier Rare Earths Ltd.: "Mom I Was Kidding" (FRO.tsx)

The reason for this attention? A comment that Jack Lifton made:
Rare Earth Metals: "Chinese Institutional Investors Look At Rare Metals Overseas" (AVL.TO: LYC.AX; MCP; UCU.V)

...America’s needs for light rare earths will be oversupplied by Molycorp as will Australia’s by Lynas in a massive way. For the heavy rare earths, America’s needs can be meet and exceeded  by Ucore Rare Metals and Rare Element Resources. The needs of China, Japan, Korea and India for heavy rare earths can be met by the Canadian and African operations of Great Western Minerals Group, the Canadian operations of Avalon Rare Metals or Quest Rare Minerals, and the southern African operations of Frontier Rare Earths and Tantalus Rare Earths...

Here's the latest. First up, Reuters:

* Sees economic assessment of Zandkopsdrift project to complete by Q4
* Sees partnership soon (Follows alerts)
(Reuters) - Frontier Rare Earths Ltd said it would complete a preliminary economic assessment of its Zandkopsdrift project in South Africa in the fourth quarter and was in talks with potential partners for the mine.

The Toronto, Ontario-based miner said it expects discussions to lead to a partnership being agreed upon soon.

"The results of this study will confirm that Frontier has the potential to not only be one of the first new large scale producers of rare earths outside China after Molycorp and Lynas , but also become one of the world's most economically viable," it said in a statement....MORE 

And from Highgrade Review:

The completion of an IPO earlier in late 2010 marked the arrival of a new late-stage player on the Canadian listed rare earths scene, Frontier Rare Earths. Frontier began trading on the TSX exchange on November 17th, 2010 after the completion of a $60 million unit financing at $3.40 concurrent with the company’s IPO. The unit offering consisted of 1 share and 1/2 share purchase warrant at $4.60 expiring after 2 years. Since then, the company's shares have been trending down hitting a low of $1.86 earlier this month and are now trading at $1.97.

Frontier's flagship project is the Zandkopsdrift rare earth element deposit in the Northern Cape province of South Africa. The company's NI 43-101 technical report states that Zandkopsdrift is one of the largest known undeveloped rare earth deposits outside China. The independent report, prepared by South African consultants MSA Group in October, 2010, identifies an indicated resource of approximately 23 million tonnes at an average grade of 2.32 percent TREO, representing 532,000 tonnes of contained TREO. In addition, the report identifies an additional inferred resource of approximately 21 million tonnes at an average grade of 1.99 percent TREO, representing 415,000 tonnes of contained TREO. Frontier hopes to supply up to 20,000 tonnes per year of REO and is working on validating the production potential from the ongoing prefeasibility study projected to be completed towards the end of this year. The company is quick to point out that their Zandkopsdrift B Zone, which is contained within the overall Zandkopsdrift resource estimate, is the third highest grade rare earth deposit outside of China after Lynas and Molycorp.

Jacob Securities Analyst Luisa Moreno likes Frontier Rare Earths, she has a price target of $9.83 on the stock. In a report from June 8th, 2011, she states, "Although Molycorp's grade at Mountain Pass deposit is 8.28% compared to Frontier's with 2.16% TREO, Frontier's critical heavy element grades (dysprosium, europium and terbium) are higher, which means that Frontier will be able to produce more of these critical materials (circa 370 tonnes) and generate higher sales for these elements than Molycorp (circa 80 tonnes) despite Molycorp's overall production target being twice that of Frontier."

The Prospecting Right for Zandkopsdrift is held by Sedex Minerals, a South African company that is 74% owned by Frontier while the remaining 26% of Sedex is held by South Africa's Black Economic Empowerment (BEE) through which 21% ownership is extended to Namaqualand Empowerment Trust (NET). NET is a broad-based community trust established for the benefit of historically disadvantaged South Africans principally in the Namaqualand region of the Northern and Western Cape Provinces of South Africa. From the BEE Commission Report in 2002, the post-apartheid program is aimed at redressing the imbalances of the past by seeking to substantially and equitably transfer and confer ownership, management and control of South Africa's financial and economic resources to the majority of the citizens. It seeks to ensure broader and meaningful participation in the economy by black people to achieve sustainable development and prosperity. An interesting approach that has proven to be successful in South Africa.
Although Frontier has a direct 74% interest in Zandkopsdrift, company Chief Executive James Kenny noted that the provisions of  Sedex’s shareholder agreement in fact gives Frontier an effective 95% economic interest in Zandkopsdrift when he connected with Highgrade Editor Kirk Exner.

Frontier recently completed an IPO on the TSX raising $60 million via a unit offering at $3.40 per unit on the strength of your rare earth project in South Africa. Could you talk about the genesis of the project prior to your IPO?

...MORE

Luxembourg-based Rare Earth Company Hoping to Mine in South Africa by 2014 Does Oversubscribed IPO in Toronto (FRO.tsx)

Alrighty then.
Here's Bloomberg:

Frontier Rare Earths Ltd. raised C$60 million ($59.8 million) in an initial public offering, 50 percent more than planned, to develop a South African deposit of rare metals used in computers and car batteries, said two people familiar with the sale.

The Luxembourg-based company sold 17.65 million units consisting of one share and half a warrant for C$3.40 each in the Canadian offering, according to the people, who asked not to be identified because the plans aren’t public. Frontier sold a 19.8 percent stake, based on 89.08 million shares outstanding, valuing the company at C$302.9 million.

Frontier is developing the Zandkopsdrift deposit in South Africa’s Northern Cape Province, the company said in a Sept. 30 filing with Canadian regulators. Frontier aims to become one of the leading producers of rare-earth metals outside of China and one of the first new producers of the elements after Lynas Corp. and Molycorp Inc.
 
The rare earths, a group of 17 metals including neodymium, lanthanum, cerium and europium, have industrial uses such as petroleum refining, fiber-optic transmission, and military radar and missile-guidance systems. China dominates the market because it’s been able to produce the elements more cheaply and with fewer environmental restrictions than its competitors.

Frontier, which initially sought to raise C$40 million, will trade on the Toronto Stock Exchange under the symbol FRO starting Nov. 17. CIBC World Markets led a group of banks including Canaccord Genuity, Cormark Securities Inc., Byron Securities Ltd. and National Bank Financial for the sale, and they have the option to sell another 15 percent of the offering....MORE

I hope that headline didn't sound too snarky, our September 9 post, "Rare Earth Metals: "Chinese Institutional Investors Look At Rare Metals Overseas" (AVL.TO: LYC.AX; MCP; UCU.V)" ended:

...America’s needs for light rare earths will be oversupplied by Molycorp as will Australia’s by Lynas in a massive way. For the heavy rare earths, America’s needs can be meet and exceeded  by Ucore Rare Metals and Rare Element Resources. The needs of China, Japan, Korea and India for heavy rare earths can be met by the Canadian and African operations of Great Western Minerals Group, the Canadian operations of Avalon Rare Metals or Quest Rare Minerals, and the southern African operations of Frontier Rare Earths and Tantalus Rare Earths....MORE

See also:

Rare Earth Metals: Stocks and a new ETF (AVL.TO; NEM.TO; QRM.X)

Here are some of our other rare earths posts.

"The Consequences of China’s New Rare Earths Export Restrictions" (LYC.ax; MP)

From The Center for Strategic & International Studies, April 14:

On April 4, China’s Ministry of Commerce imposed export restrictions on seven rare earth elements (REEs) and magnets used in the defense, energy, and automotive sectors in response to U.S. President Donald Trump’s tariff increases on Chinese products. The new restrictions apply to 7 of 17 REEs—samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium—and requires companies to secure special export licenses to export the minerals and magnets.

Q1: To what extent will the most recent export restrictions on rare earths impact U.S. sourcing of these critical minerals for defense technologies?

A1: There are various types of export restrictions: non-automatic licensing, tariffs, quotas, and an outright ban. The new restrictions are not a ban; rather, they require firms to apply for a license to export rare earths. This development has three implications: first, there will likely be a pause in exports as the Chinese government establishes this licensing system. Second, there is also likely to be disruptions in supply to some U.S. firms given that the announcement also placed 16 U.S. entities on its export control list, limiting them from receiving dual-use goods. All but one of the firms on the list are in the defense and aerospace industries. It is unclear how China will implement the new licensing system. And third, the licensing system may be dynamic and could incentivize countries across the world to cooperate with China to prevent disruptions in their rare earths supply.

Q2: What is the significance of the focus on heavy rare earths given U.S. supply chain vulnerabilities?

A2: The restrictions apply to seven medium and heavy rare earths: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. The United States is particularly vulnerable for these supply chains. Until 2023, China accounted for 99 percent of global heavy REEs processing, with only minimal output from a refinery in Vietnam. However, that facility has been shut down for the past year due to a tax dispute, effectively giving China a monopoly over supply. China did not impose restrictions on light rare earths, for which a more diverse set of countries undertake processing.

Q3: Why are rare earths significant to U.S. national security?

A3: REEs are crucial for a range of defense technologies, including F-35 fighter jets, Virginia- and Columbia-class submarines, Tomahawk missiles, radar systems, Predator unmanned aerial vehicles, and the Joint Direct Attack Munition series of smart bombs. For example, the F-35 fighter jet contains over 900 pounds of REEs. An Arleigh Burke-class DDG-51 destroyer requires approximately 5,200 pounds, while a Virginia-class submarine uses around 9,200 pounds.

The United States is already on the back foot when it comes to manufacturing these defense technologies. China is rapidly expanding its munitions production and acquiring advanced weapons systems and equipment at a pace five to six times faster than the United States. While China is preparing with a wartime mindset, the United States continues to operate under peacetime conditions. Even before the latest restrictions, the U.S. defense industrial base struggled with limited capacity and lacked the ability to scale up production to meet defense technology demands. Further bans on critical minerals inputs will only widen the gap, enabling China to strengthen its military capabilities more quickly than the United States.

Q4: Is the U.S. rare earths industry ready to fill the gap in the event of a shortfall?....

....MUCH MORE

Although MP Materials is getting the attention in the U.S., Australia's Lynas has a better mix of the various rare earths.

If interested we have quite a few posts on both, in the case of MP back before the bankruptcy and reorg, when it was known as Molycorp, e.g. 2011's

Molycorp Beats; Raises; Decries Shortsellers as Spawn of Satan (MCP)
[a close reading of the press release reveals there is no use of the term 'Spawn of Satan' -ed]

Often introducing a post with a quote from one of the, if not the, best books on investing and life:

...Words like "uranium", "rare earths", etc. seem to be magic to

 those unsuspecting who are often fleeced...

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

If interested use the 'search blog' box upper left: Molycorp and Lynas.

Always keeping in mind it's the refining capacity that is the rare bit.
(not to be confused with the Welsh dish)