Lynas Corporation Ltd says it is will secure up to $US250 million ($A257.
41 million) in funding with the help of a major Japanese trading house to expand production and
ensure additional supplies of rare earth products for the Japanese market.
Lynas, a minerals explorer and developer, and trading house Sojitz Corp agreed on Wednesday to off-take, distribution and financing arrangements as part of a strategic alliance agreement signed between the two companies.
Click here for a ‘supply and conflict’ map of rare earth around the world
Sojitz is the largest supplier of rare earths into Japan and will be Lynas’ exclusive distributor into that country, with about 70 per cent of the Australian company’s 22,000 tonne capacity now allocated.
The funding and off-take agreements will also enable the acceleration of phase two of Lynas’s rare earths mine and concentration plant at Mount Weld in Western Australia next year, as well as Lynas’ advanced materials plant (LAMP) in Kuantan in eastern Malaysia.
The deposit at Mount Weld, 35 kilometres south of Laverton, is the world’s richest known rare earth deposit.
“This landmark agreement will enable Lynas to accelerate marketing to Japanese customers,” said Lynas executive chairman Nick Curtis.
“If implemented, it will enable phase two construction to be committed in April 2011 and be online in 2012, expanding the capacity of the LAMP to 22,000 tonnes rare earth oxides per annum,” Mr Curtis said in a statement on Wednesday.
Sojitz will also request financial support from the Japan Oil, Gas and Metals National Corporation (JOGMEC) for the expansion of the project and allocate a minimum of 8,500 tonnes a year to the Japanese market over the next 10 years, upon securing this funding.
The use of rare earth elements in modern technology has increased dramatically over the past few years.
Rare earth elements are now incorporated into many devices, including superconductors, some magnets, magnesium alloys, electronic polishers, refining catalysts and hybrid car components.
Lynas said it would concentrate the ore mined at Mount Weld in a concentration plant about 1.5 kilometres from the mine and then ship the ore to Malaysia to be processed as separated rare earths products.
China has reduced its exports of rare earths by about 40 per cent and it was reported, but officially denied, that China instituted an export ban on shipments of rare earth oxides to Japan in September in response to the detainment of a Chinese fishing boat captain.