Futures & Commodities

Lynas blames illegal China miners for weak rare earth prices

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Australia's Lynas blamed illegal Chinese miners for adding to an oversupply of rare earths which has driven prices down to historic lows, while demand from magnet users has weakened due to uncertainty over global growth.

Lynas is now the only rare earths miner outside China, which controls about 90 percent of the world's supply, following a move by U.S. rival Molycorp, now in bankruptcy protection, to mothball its Mountain Pass mine due to weak prices.

Lynas reported gross sales revenue fell 11 percent to A$46.2 million in the September quarter from the June quarter as falling prices offset a 14 percent rise in sales volumes to 2,691 tonnes.

Commodity price fallout

Weaker prices were partly due to increasing competition between legal and illegal rare earths producers in China, said the company, which mines in Australia and processes the material at its plant in Malaysia.

"We understand that illegal producers currently represent almost half of China's rare earths production," it said in its quarterly activities report.

"As a result, all rare earths producers inside and outside China are facing extremely challenging conditions."

Lynas said there was a slight recovery in prices at the end of September and hopes magnet users who have delayed purchases will be more active in the market in the December quarter, typically a strong quarter for demand.

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Lynas' main products, neodymium and praseodymium, are used in magnets for motors that drive automated seats and windows in cars, motors for hybrid vehicles and as magnets in electronic products, like DVDs and hard disk drives.