Indian processing plant could produce 5% of global rare earths

By Antonio Torrisi, James Sean Dickson
Published: Monday, 22 September 2014

Japan and India look to partnership; plant could be operational Q1 2015

Indian Rare Earths Ltd (IREL) is to construct a 5,000tpa rare earth oxide (REO) plant which could supply about 5% of the global demand for the critical metals.

Japan’s Toyotsu Rare Earths India Pvt. Ltd. (TREI) will sign a contract to buy between 2,000-2,300 tpa, meeting approximately 15% of Japanese domestic demand, which varies between 20,000 and 30,000 tpa.

About 2,000 tpa could be exported via TREI to Japan as soon as February 2015.

The plant, to be built in the east-coast Indian state of Odisha, will produce REOs by processing monazite from beach sands.

IREL is a subdivision of the Indian Department of Energy. The head of the rare earths division of IREL, S Surya Kumar, said that up to half of the output of the factory would be the REO forms of lanthanum and cerium.

Indian Prime Minister Narendra Modi and Japanese leader Shinzo Abe met in Tokyo to sign further agreements with Toyota Tsusho to produce REOs. India and Japan signed a memorandum in 2012 to co-operate in the REO market.

“Discussions are on between Japan and India for an alliance in the area of rare earth chemicals,” RN Patra, managing director of IREL, said.

“As part of the plans, IREL a state owned company will supply raw materials to a greenfield Japanese rare earth production unit in Vizag.”

“The talks are being held under the memorandum that the two countries have in this field. However, these plans are subject to approval by the government,” he added.

Japanese rare earth supply concerns

Given the importance of REO supply to Japanese industry, the country’s government and private businesses have pledged to invest billions of dollars to reduce the supply risks associated with Chinese REO imports.

Japan is the second largest consumer of REOs in the world. The country produces a large proportion of the world’s high technology products that require rare earth elements.

The strong supply position of China, which produces 90% of the world’s REO export, and the weak position of Japan as a dependent buyer is intensified by historically poor Sino-Japanese foreign relations, meaning that supply risks are a genuine concern for the Japanese economy.

Until the middle of the 20th century, a significant proportion of world REO production came from the East Indian coast. IREL shut down operations on its Kerala mine in southwest India in 2004 following Chinese market supply influences.

Since the Kerala mine closure in 2004, however, the Indian supply has increased, with IREL’s Keralan Chavara mine, in particular, resulting in Indian exports in REO being only second to China, while still very small in comparison.

*Conversions made September 2014

Rare Earths News Review

China Minmetals takes stake in HREE miner

China Minmetals Rare Earth Group Co. has signed an equity transfer agreement with Guangzhou Jianfeng Minmetals Rare Earth Co. to buy equities in the Guangzhou-based heavy rare earths (HREE) producer.

Following the transaction at a value of Chinese renminbi (Rmb) 38.6bn ($6.2bn*), China Minmetals will become the largest shareholder in Guangzhou Jianfeng, with a 75% equity share, with the remaining 25% held by Guangzhou Jianfeng’s director, Zhang Wenhai.

China Minmetals is planning to integrate of Guangzhou Jianfeng’s HREE business, in line with the consolidation policies pursued by major producers in August.

Guangzhou Jianfeng operates a processing facility near the town of Conghua, with a capacity of 3,000 tpa HREE.

China rare earths exports jump

Chinese companies exported about 2,400 tonnes rare earths in August, up nearly 31% compared with July exports, according to China’s General Administration of Customs (GAC).

Exports fell to 1,556 tonnes in June, the lowest level in 2014. However, exports rose 35% year-on-year (y-o-y) in the first eight months of this year, amounting to 18,200 tonnes.

This represents almost 60% of the full-year quota of 30,600 tonnes, which was announced by Beijing in July.

In 2013, China exported almost 22,500 tonnes rare earths, up 38.3% y-o-y, but well below the export quota of 31,000 tonnes. In 2012 exports accounted for just over the half of the full-year quota.

Following the World Trade Organization’s (WTO) final verdict against China exports quota released in August, the Chinese government is considering other policies to tackle illegal mining and oversupply in the domestic industry and to preserve natural resources.

According to IM sources, Beijing is planning to cancel both export quotas and tariffs in 2015.

Lynas halts financing negotiations

Australian rare earth producer Lynas Corp. has ceased negotiations with Japanese financial firm Nomura about an amendment of its senior debt facility.

The company has been negotiating with Nomura to refinance a repayment of $35m for its senior debt with Sojitz and Japan Oil, Gas and Metals National Corp. (Jogmec).

Lynas proposed to replace its existing semi-annual repayments with one full repayment in June 2016 and hoped to reach an agreement before the end of September.

The rare earths producer said it is now engaging with other potential financiers and investors to restructure its present debt, raise potential additional facilities and seek other investment opportunities.

The company has a total debt of $225m for the Sojitz/Jogmec facility following the agreement entered with the two Japanese companies in March 2012 to develop its Mount Weld rare earths project in Western Australia and build its Lynas Advanced Material Plant (LAMP) in Malaysia.

In the last six months of 2013 the company posted a net loss of Australian dollar (A$) 59.3m ($53.2m) to the negative impact of low rare earth prices on revenues, despite a ramping up rare earths production at the LAMP.