Molycorp and LYNAS Look to Benefit as China Could Be an Importer of Rare Earths by 2015
NEW YORK, 07/23/12 - After a strong start to the year, Rare Earth stocks have struggled in the second quarter. The Market Vectors Rare Earth/Strategic Metals ETF (REMX) has fallen 20 percent over the last three months. Things may be turning around for the industry as a recent article from Reuters suggests that China may become an importer of rare earth by 2014. Five Star Equities examines the outlook for companies in the Rare Earths Industry and provides equity research on Molycorp, Inc. (NYSE: MCP) and LYNAS Corp. Ltd. (PINKSHEETS: LYSCF).
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"By 2014 or 2015, China will probably be in a net import situation for certain rare earths," said Mark Smith, chief executive of Molycorp. "When the demand is there, that's where the supply has to go. Over 80 percent of the magnets produced in the world come from China and that is growing just tremendously every year," Smith said in a recent interview with Reuters.
A recent article in the China Daily stated that China cut the number of rare earth mining permits by 50 percent to 65 nationwide.
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Molycorp last month announced that its acquisition of Canadian-based Neo Material Technologies Inc. has officially closed. With the acquisition Molycorp now has exposure to 100% of the global rare earths market, including China, the world's largest and fastest-growing rare earth consuming nation, consuming approximately 70% of all global rare earth production today.
Lynas' strategy is to create a reliable, fully integrated source of Rare Earths from mine through to market, and to become the benchmark for the security of supply and environmental standards in the global Rare Earths industry. The foundation of this strategy is Mount Weld in Western Australia, the richest known deposit of Rare Earths in the world, and a state-of-the-art Rare Earths processing plant, the Lynas Advanced Materials Plant (LAMP), currently under construction near Kuantan in Pahang, Malaysia.
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