Colorado-based Molycorp Inc. has had nothing but trouble since it reopened the only U.S. rare earth mine a year ago.

Sinking prices have shafted its market value, its CEO Mark Smith departed last month, it’s the subject of an investigation by the U.S. Securities and Exchange Commission, and it faces a lawsuit alleging citing engineering deficiencies at its Mountain Pass, Calif. mine, which Molycorp opened, after years of dormancy, to patriotic cheers last February.

With the plunge in its stock, various industrial companies may now be trying to acquire it at a bargain price to assure themselves a source of the vital metals currently controlled by China, which has a grip on 95 percent of the world’s supply. Manufacturers build rare earths into smartphones, computers, cars, hybrid and electric vehicles, wind turbines, missiles, light bulbs and many other products.

Suitors include German industrial giant Siemens as well as Japanese and South Korean car makers Nissan and Hyundai, according to a Bloomberg story early this month that cited several industry analysts.

“At this point, Molycorp is definitely in play,” Toronto-based Luisa Moreno of Euro Pacific Capital Inc. told Bloomberg. “It would be a very good target for companies that are interested in being in this space if they recognize the rare earth space is important and they have the cash to take Molycorp and make it a real producing company.”

GOIN’ DOWN DOWN DOWN
Molycorp’s difficulties socked investors with a 61 percent loss in 2012, Bloomberg noted. A stock that had traded as high as $77.54 in May 2011 had tanked to $9.44 on Dec. 31, 2012. Shares have been rising recently on takeover rumors.

One rare earth expert doesn’t believe that Siemens, Nissan and Hyundai stand a chance. Rather, China would be the most likely acquirer, further cementing its hold on the market.

“Molycorp has no value outside of Chinese control,” says Jim Kennedy, president of St. Louis-based rare earth and thorium consulting firm ThREEM3, which also owns right to rare-earth byproducts from Missouri’s Pea Ridge iron ore mine. China’s ability to influence supply and prices means that any other acquirer would struggle to survive, he said. “Why would any corporation buy Molycorp when 83 percent of its production will sell at a loss?” Kennedy wondered in an email exchange with me.

MEET ME IN THE MOJAVE

Adding legs to his assertion: According to one source, Chinese government officials recently toured Molycorp’s Mountain Pass facilities in Mojave Desert, near Nevada. They are not interested in the deposit so much as the company’s refining techniques, the source said.

The Chinese government owns many rare earth companies including giant Baotou Steel Rare-Earth. China has recently imposed production and export cuts in an effort to drive up the price of rare earths. It has also undertaken a massive industry consolidation.

One reason that rare earth prices - and thus Molycorp’s share value - tumbled is that manufacturers have been finding ways around their reliance on rare earths.

They have also been scrambling to circumvent China’s control. (Molycorp faced heavy domestic criticism earlier this year when it became obvious that it was selling much of its U.S.-mined rare earths to China.)

An acquisition of Molycorp would echo a similar move from earlier this year, when an affiliate of Toyota bought half a Canadian rare earth deposit.

Rare earth users have also been casting about for sources of rare earths outside of China. As I noted yesterday, Japan thinks it might have landed a gold mine, so to speak, in Jamaica.

Also as I said yesterday, there’s another country that holds great promise as a future source. It’s a country that you might say is the opposite of Jamaica.

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TUC Resources shares soar following intersections of very high grades of over 90% heavy rare earth at its Stromberg Heavy Rare Earth prospect in the Northern Territory. Shares were up $0.141 a share, up over 113% before trending down to 96.72% at $0.12 a share.

Diamond drilling at the prospect returned 4.2 metres at 0.93% total rare earth oxide with 92% heavy rare earth oxide and included 3 metres at 1.19% TREO.Other intersections included 3 metres at 0.59% TREO including 1 metre at 1.10% TREO with 94% heavy rare earth oxide.

The clay host rock allows the conclusion that the geological processes that have formed at the Stromberg Prospect are similar to those that produced the renowned Southern China Clay rare earth deposits.

The Chinese rare earth deposits are at the forefront of rare earth production because the majority have very low production costs.

TUC hopes to find mineralisation with similar mineral processing characteristics to these Southern China Clay deposits and theorises its chances of doing so are increased due to the large number of prospects on its ground. It recently made breakthroughs in land access that allows it to target nearby Skyfall and Largo prospects.

TUC intends to focus 2013 exploration efforts on this large district potential with work planned to commence next month. Separately, it has entered into a memorandum of understanding with China's Shandong Provincial Bureau of Geology and Mineral Resources to form an alliance for the exploration of eight heavy rare earth tenements in the Stromberg region.

As part of the MoU, TUC will place 22.5 million shares to Shandong at an issue price of $0.10 a share together with 9 million free attaching options to raise a total of $A2.25 million. The options can be exercised at $0.20 a share before 14 August, 2014.

This new partner would fully fund the feasibility , design and importantly construction in return for a 50% share of that project and certain off-take rights.

Stromberg REE tenements

TUC Resources Ltd holds approximately 15,000 square kilometres of prospective land package across 47 (28 under application) tenements making it one of the biggest ground holders in the Northern Territory of Australia.

Last year, TUC focused on developing its Stromberg heavy rare earth elements project towards resource status with additional metallurgical testing. It also undertook geochemical sampling on the nearby Scaramanga and Knightfall prospects.

The Scaramanga prospect was drilled and yielded promising results with first pass drilling  delineating more near surface mineralisation with a high HREE distribution. Dysprosium, Yttrium and Erbium at a high of 7.5%, 64% and 5% of TREO distribution respectively were found.

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Pele Mountain Resources Inc. announced initial drill results from recent drilling at the Eco Ridge Mine Rare Earths and Uranium Project at Elliot Lake.

Highlights from the first five holes drilled in the Northwest Extension (northwest of the Resource Wireframe) include: All five holes intersected the MCB along a strike length exceeding three kilometres; four of the five holes significantly exceeded the average U3O8 and average Total REO grade of the Resource Wireframe; Hole PM214 returned 0.063-percent U3O8 and 2,125 ppm Total REO over a true thickness of 2.99 metres, including 313 ppm neodymium oxide, 102 ppm yttrium oxide,and 22 ppm dysprosium oxide.

Pele’s President and CEO, Al Shefsky, said:

    "These results conclusively demonstrate that the Main Conglomerate Bed continues to the north and west of the current Resource Wireframe, which can potentially add significant resources and years of mine-life to the project. We are particularly pleased to see higher-than-average grades of U3O8 and Heavy REO in the Northwest Extension".

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Japan confirmed that it will launch a survey of its Pacific seabed in the hope of finding rare earth deposits large enough to supply its high-tech industries and reduce its dependence on China, according to a report from The Japan Times.

Researchers from the Japan Agency for Marine-Earth Science and Technology are scheduled to begin the probe later this month near Minamitorishima Island, which is located approximately 2,000 kilometres southeast of Tokyo.

The survey follows earlier findings by Tokyo University professor Yasuhiro Kato, who took mud samples from the area in July last year. Kato has told media sources that he estimates that the deposit, located 5,600 meters beneath the seabed, could host enough dysprosium — used in lasers and commercial lighting — to satisfy Japanese domestic demand for the next 400 years.

Finding large-scale proven reserves inside Japan’s exclusive economic zone would be a significant boost to Japanese industry, which currently relies primarily on REE imports from China.

Toyota issues fourth payment for stake in Canadian rare earth project

Toyotsu Rare Earth Canada, a subsidiary of Toyota Tsusho, paid Matamec Explorations C$1.595 million — the fourth in a series of payments for its committed equity of a 49-percent undivided interest in the Kipawa heavy rare earth element (HREE) deposit. Matamec confirmed the payment last week.

As per the terms of the agreement, the Japanese-owned subsidiary paid C$8.5 million for a 25-percent undivided interest in July. In order to secure the remaining 24 percent, Matamec agreed to receive successive payments to reach the agreed upon total. The third payment was issued last month.

The company’s press release notes that to date, Matamec has received C$12,155,019 of the maximum C$16 million for the completion of a definitive feasibility study on the deposit, which is expected in the second quarter of 2013.

Matamec’s president and CEO, Andre Gauthier, said, “[t]he partnership with Toyotsu provides Matamec with the financial resources to continue in the execution of its long-term strategic plan to become a leading global rare earth company.”

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The US Department of Energy (DOE) will allocate up to $120 million for the creation of a rare earths research facility aimed at decreasing the country’s dependence on rare earth elements (REEs) from China.

The new research center will be called the Critical Materials Institute (CMI) and will bring together leading researchers from academia, the private sector and four DOE national laboratories.

The new hub will focus on developing technologies that will enable the US to make better use of materials it has access to as well as on eliminating the need for materials that are subject to supply disruptions, according to a DOE press release. To do so, the CMI will “leverage … existing research programs into a larger, coordinated effort designed to eliminate materials criticality as an impediment to the commercialization of clean energy technologies.”

The center will also address challenges across the entire lifecycle of REE materials, from enabling new sources to improving the economics of existing sources to accelerating material development and deployment.

The move is partially a response to findings reported in the DOE’s December 2011 Critical Materials Strategy document, which notes that supply challenges for five rare earth metals (dysprosium, terbium, europium, neodymium and yttrium) are likely to affect clean energy technology deployment in the coming years.

Market round-up

Praseodymium/neodymium metal prices remained stable last week, but Chinese suppliers intend to increase offer prices in the near term, according to a report by Metal-Pages.

Market sources confirmed that prices for 99-percent praseodymium/neodymium metal are currently around $64,370 to $65,980 per tonne, while some suppliers have increased offer prices to as high as $69,200 per tonne.

A Beijing-based trader noted that praseodymium/neodymium metal prices have been rising recently. “It is difficult to buy the material at low prices and news has been heard that suppliers will adjust up offer prices,” he told Metal-Pages.

Lanthanum metal prices remained unchanged in response to persistently weakening downstream demand.

A supplier in Southern China said that lanthanum metal prices have been trading around $12,875 per tonne due to weak demand. “Sales of lanthanum metal have been poor and the market is quiet. Prices lower than 12,875/tonne are acceptable,” he explained to Metal-Pages.

Sources indicate that tightening supply means that REE prices are unlikely to drop again in the run up to Chinese New Year on February 10.

Company news

Pele Mountain Resources sold its Pigeon River project to Zara Resources for $700,000 (payable in Zara stock).

Al Shefsky, president and CEO of Pele, stated: “[i]n order to better focus on advancing development at our Eco Ridge Mine Rare Earths and Uranium Project, our goal is to find qualified partners to fund and operate our non-core projects or to sell them outright. We believe Zara and its team will capably explore the project and we are pleased to convert our stake into an equity and royalty interest.”

In 2009, Pele staked the Pigeon River project, which is currently comprised of 418 mining claim units in the Pigeon River area of Northwest Ontario, 80 kilometers southwest of Thunder Bay. The property covers large unexplored magnetic targets near the basal contact of the Duluth Complex.

Mkango Resources renewed its exploration license for its flagship Songwe Hill rare earth project in Malawi for an additional two years.

The Phalombe licence has been renewed for a further two years, effective January 20, 2013, and grants the company exclusive rights to carry on prospecting operations for all 17 rare earth elements — such as yttrium, strontium and niobium — as well as a number of other elements, including iron ore, manganese, gold and silver, according to a company press release.

The company’s main priority with respect to the Songwe Hill project is completion of scoping metallurgical test work and further mineralogical studies, both of which are partially funded by external research programs in South Africa and the United Kingdom.

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VANCOUVER, BRITISH COLUMBIA - Jan.17,2013 - CAVAN VENTURES INC. ("Cavan" or the "Company") announces today it has received significant rare earth element (REE) assays from its 2012 prospecting program at its 100% owned Pythonga Property, located approximately 15 kilometers west of the town of Maniwaki, Quebec. The property consists of 110 map staked claims covering an area of approximately 6,523 hectares. The claims are divided in three blocks: the East Block (35 claims), the Central Block (71 claims) and the SW block (4 claims).

The prospecting program was executed by the team of Magnor Exploration Inc. under the supervision of Dr. Christian Derosier, P.Geo, Cavan's Consulting Geologist and Qualified Person for the Pythonga Lake Rare Earth Element project. The program consisted of prospecting along recently-built timber roads, channel sampling, limited line cutting, limited radiometric survey and delimiting the future stripping areas. All this work has been conducted within the East Block boundaries.

A total of 42 channel samples were taken and assayed by ALS Minerals lab in North Vancouver, B.C. The method of analysis recommended by the exploration team and the laboratory for rare earth and trace elements uses the lithium metaborate/tetraborate fusion followed by Inductively Coupled Plasma (ICP) for the major oxides and by Inductively Coupled Plasma Mass Spectrometry (ICP-MS) for a series of 38 elements which include the REE's.

Most samples which returned appreciable REE values (higher than 0.20% TREE) were obtained from pink to red coarse-grained pegmatite that returned more than 400 counts per second (cps) with the radiometric field instrument. These samples were selected close to already known mineralization, or on their on strike extensions.

Sample P268092 was collected at a new location. This new discovery gave 390.1 ppm U, 1149 ppm Th and 13600 cps with the instrument. The "Frog" occurrence is in mafic gneiss mixed with some pegmatite dikes. The outcrop is 1-2m wide and was followed over 25m in length. This occurrence is open in both directions.

This new discovery as well as the new channel sampling increase the economic potential of the Pythonga REE project and justify a more aggressive exploration program which will be started as soon as the snow cover clears.

Mr. Peter P. Swistak, President of Cavan Ventures states, "The Pythonga REE project continues to reveal a real potential for economic rare earth mineralization. We are preparing a focused exploration campaign which will begin with geophysical surveys, a trenching and stripping phase, followed by a diamond drilling program."

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 A team led by Ames Laboratory in the US is to undertake research into solutions to the shortage of materials that are essential in the manufacturing of renewable energy equipment.

The US Department of Energy has awarded the lab awarded a five-year, $120 million grant to establish an ‘energy innovation hub’ research centre in Iowa.

The centre will be named the Critical Materials Institute and will explore how the country’s clean energy industry can overcome the shortage of materials such as rare earth metals, which are used in solar panels and wind turbines.

David Danielson, Assistant Secretary for Energy Efficiency and Renewable said: “Rare earth metals and other critical materials are essential to manufacturing wind turbines, electric vehicles, advanced batteries and a host of other products that are essential to America’s energy and national security.

“The Critical Materials Institute will bring together the best and brightest research minds from universities, national laboratories and the private sector to find innovative technology solutions that will help us avoid a supply shortage that would threaten our clean energy industry as well as our security interests.”

In 2011, a DOE critical materials strategy reported that supply challenges for five rare earth metals – dysprosium, terbium, europium, neodymium and yttrium – may affect clean energy technology deployment in the coming years.

The centre will focus on developing technologies capable of making the best use of what materials are available and that eliminate the need for scarce materials altogether.

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Jamaica could become a major player in the rare-earth market, which is currently dominated by China.

According to Jamaica's minister of Science, Technology, Energy and Mining, Philip Paulwell, a recent survey carried out by Japanese researchers has found high concentrations of rare-earth elements in bauxite residue. Mind you, the Japanese should be pretty good at finding stuff in the dirt, since Japan doesn't really have any noteworthy natural resources.

In a report to Jamaica's Parliament, Paulwell pointed out that the researchers believe Jamaica's rare-earth elements could be efficiently extracted, indicating that commercial production could be possible. The discovery could potentially turn Jamaica's economy around.

"The government of Jamaica perceives the extraction of the rare-earth elements that are present in Jamaica to be an exciting new opportunity to earn much needed foreign exchange and create jobs," Paulwell told lawmakers.

AP reports that Nippon Light Metal, the company behind the survey, has already agreed to invest $3 million in buildings and equipment for the pilot project.

Rare-earth elements produced during the pilot project will be jointly owned by Jamaica and the company, while negotiations on full scale commercialisation are expected at a later date.

China currently dominates the rare-earth market and it has a virtual monopoly on supplying rare-earth elements to manufacturers. In recent years China scaled back exports, causing alarm among foreign companies and governments. In response, the US, EU and Japan filed formal complaints about China's decision to curtail exports of rare-earth minerals.

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The prime minister of Greenland says he will not favour the EU over China or other investors when granting access to highly prized rare earth minerals.

Kuupik Kleist said it would not be fair "to protect others' interests more than protecting, for instance, China's".

Greenland, a vast autonomous Danish territory, is not in the EU, even though Denmark is.

Jamaica may be able to benefit from newly found deposits of rare-earth elements that are key ingredients for smartphones, computers and numerous other high-tech goods, the Caribbean island's top mining official said Tuesday.

Science, Technology, Energy & Mining Minister Philip Paulwell said Japanese researchers believe they have found "high concentrations of rare-earth elements" in the country's red mud, or bauxite residue.

China is now the world's main supplier of rare-earth elements, which are minerals that play a critical role in making products from basic communication devices to high-tech military weaponry. Worried by that dominance, manufacturers around the globe have been spurring searches for other sources that could be profitably mined.

In a statement to Jamaica's Parliament, Paulwell said researchers from Japan's Nippon Light Metal Co. Ltd. believe rare-earth elements can be efficiently extracted in Jamaica, where a once-flourishing bauxite industry has fallen on hard times.

Paulwell touted the discovery as a potentially significant boon for the Caribbean island's chronically sputtering economy.

"We are at the starting line of an opportunity that has the potential to redefine Jamaica's economic prospects in a positive way," he told lawmakers. "... The government of Jamaica perceives the extraction of the rare-earth elements that are present in Jamaica to be an exciting new opportunity to earn much needed foreign exchange and create jobs."

A pilot program will establish the scope of any potential commercial project on Jamaica, which is about the size of the U.S. state of Connecticut. The environmental and planning agency has already authorized the pilot program but other government agencies still need to examine it.

Nippon Light Metal has agreed to invest $3 million in buildings and equipment for the pilot project while also being responsible for operating costs. Any rare-earth elements produced during this phase will be jointly owned by Jamaica and the Japanese company. Negotiations for commercialization are expected to occur at a later date.

China has built a virtual monopoly on supplying rare-earth elements to the world's manufacturers, thanks to cheap labor and low environmental standards. It alarmed companies around the world in recent years by reducing exports and at the same time building up its own industries, saying the curbing of rare earth exports was needed for environmental protection.

Last year, the World Trade Organization created a panel to evaluate China's rare earth exports after the U.S., the European Union and Japan complained about the curtailment of Chinese sales of rare earth minerals.

Rare earths aren't scarce, but few places exist with enough concentrations to mine profitably, and they are difficult to isolate in a purified form and require advanced technology to extract.

Jamaica had previously tried to get rare earth minerals from the country's red mud around bauxite mining grounds, but Paulwell said it faced major challenges in attempting to extract minerals from the bauxite tailings.

Last January, Nippon Light Metal approached Jamaica saying it had the capacity to extract rare-earth elements and wanted to evaluate the local red mud. Since then, it has done chemical research and successfully extracted some rare-earth elements, Paulwell said.

Representatives of the company could not immediately be reached for comment.

If the pilot project is a success, Nippon Light Metal hopes to extract 1,500 metric tons of rare-earth oxides annually, Paulwell said.

"It is clear that this resource presents an opportunity Jamaica must pursue, and which must be managed in such a way that Jamaica and Jamaicans benefit significantly," he said.

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