By Stephen Bell
Special to DOW JONES NEWSWIRES
PERTH (Dow Jones)-Australia's Arafura Resources Ltd. (ARU.AU)
said it's in talks to sell rare earths to Japan from its 1 billion
Australian dollar (US$996 million) Nolans project, the latest
challenge to China's domination of trade in a key raw material used
to produce mobile phones and handheld devices.
"There is a lot of interest in Japan in Arafura and our
product," said Steve Ward, the company's chief executive, who
travelled to Tokyo last month to speak at a conference for Japan's
Metal Research Bureau.
Japan is stepping up efforts to diversify its supply of rare
earths away from China after companies reported in September
disruptions to scheduled deliveries caused by more stringent
customs checks by Chinese authorities, a claim China's government
denied. Beijing has tightened quotas for the export of the group of
minerals known as rare earths, giving its own consumers an
advantage as international demand picks up. China produces 97% of
the global supply of rare earths and has a 16.7% stake in Arafura
held by East China Exploration & Development Bureau.
In November, Japan's Sojitz Corp. (2768.TO) said it will partner
with Lynas Corp. (LYC.AU), another Australian miner, to supply rare
earth metals to Japan. At the same time, U.S. producers are
speeding up development of rare earth mines to challenge China's
near-monopoly control over supply. U.S.-based Molycorp Inc. (MCP)
recently began preparations in an open-pit mine in the California
desert that had been the world's dominant rare-earth supplier
before mining stopped in 2002.
Perth, Western Australia-based Arafura hopes to secure funding
for its Nolans mine by the end of the year, with rare earth
production expected to start in the second half of 2013. After a
lull in marketing after the global financial crisis, Arafura
restarted its sales pitch last year, Ward said.
"It's fair to say there has been a huge amount of interest,"
said Ward, adding that the company is talks with several rare earth
customers.
Arafura is being backed by the Australian government to develop
its processing technology for Nolans, and is seeking further help,
said Ward. Last year, Australia's government offered support to
domestic miners to help the country become a stable, long-term
supplier of rare earths to Japan.
"We will be pursuing Federal and state government incentives,"
said Ward.
Arafura plans to mine rare earths at its deposit in Australia's
Northern Territory state and process the material at a
purpose-built chemicals facility at Whyalla, in South Australia
state, to produce 20,000 metric tons a year of rare earth
oxides.
The company says rare earths prices have continued to rise this
year, mainly on supply-side concerns.
Prices of neodymium and cerium, rare earths used respectively in
magnets and catalytic converters, are currently around five times
and 17 times their 2009 prices, according to Sydney-based
Lynas.
-By Stephen Bell, contributing to Dow Jones Newswires;
61-8-9244-4243; sgbell@bigpond.com