Lynas Corporation (ASX: LYC, OTC: LYSDY), which owns the richest known deposit of rare earths in the world at Mount Weld, near Laverton in Western Australia, is in advanced discussions regarding the additional supply of rare earths to Japan.
Japan Broadcasting Corporation reported that major Japanese trading house Sojitz Corporation (2768.T) has acquired the right to buy rare earth metals from Lynas Corporation. The deal will cover nearly 30 percent of the annual demand in Japan.
Sojitz has agreed to pay about $US300 million for the right to buy about 8,500 tonnes of rare earth metals annually from Lynas for 10 years.
Using a semi-government organisation for the purchase, the Japanese government will provide over half of the required funds, which will diversify the countries reliance on China which currently supplies virtually all imported rare earths.
This is the first major joint achievement by Japan's public and private sectors in their efforts to diversify the supply sources of rare earth metals, which are essential for hi-tech products such is the importance of Japan locking-in future supplies of rare earths outside of China.
Lynas' current strategy is to create a reliable, fully integrated source of rare earths supply from the mine through to global customers, with the first feed of concentrate targeted for the third quarter of 2011.
Lynas will concentrate the ore mined at Mount Weld in a concentration plant 1.5km from the mine, which will then be shipped in sea containers to the east coast of Malaysia to the Lynas Advanced Materials Plant (LAMP), within the Gebeng Industrial Estate, Kuantan, Pahang, Malaysia, and processed through to separated rare earths products.
Lynas said the deal would result in 70 per cent of its 22,000 tonnes per year capacity of rare earths being allocated to buyers
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Japan Broadcasting Corp. reported the Japanese government will provide over half of the $US300m with Sojitz Corp to buy 8,500t of rare earth metals annually for the next 10 years from Lynas Corporation's Mount Weld - a coup for Lynas.