China Begins to Regulate Overproduction - Molycorp and Lynas Look to Benefit

The Paragon Report Provides Stock Research on Molycorp and Lynas

NEW YORK, 06/01/12 - Rare Earth stocks after a respectable start to the year have begun to falter. The Market Vectors Rare Earth/Strategic Metals ETF (REMX) is down over 16 percent in the last month. Prices for rare earth in May have fallen roughly 30 percent from the 2011 average according to data from Lynas Corp. The Paragon Report examines investing opportunities in the Rare Earth Industry and provides equity research on Molycorp, Inc. (NYSE: MCP) and Lynas Corp. Ltd. (PINKSHEETS: LYSCF).


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Platts has previously reported that on May 1 China began issuing value-added tax permits to rare earth companies in Sichaun and Inner Mongolia in an attempt to regulate overproduction. Market observers see the permits as a first step to control overcapacity, illegal mining, and resource draining in the rare-earth industry.

"The new rule will help regulate the market supply to some extent, as rare earth producers will need to sell their finished products according to their output and export quotas in accordance with the new special invoice," a Shanghai trader told Platts. "We believe it is a start that China will undertake to regulate the country's rare earth production, however there is a long way to go," the source added.

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Molycorp has recently announced that the shareholders of Neo Material Technologies Inc. approved Molycorp's acquisition of Neo Materials. "We are very pleased that Neo Materials shareholders, by an overwhelming majority, have voted to approve the combining of these two uniquely positioned companies," said Mark A. Smith, Molycorp's President and Chief Executive Officer. "We have been planning for this combination, and we expect the integration of these two companies to proceed very smoothly after the closing. Once completed, this transaction will create one of the most technologically advanced, vertically integrated rare earth and advanced materials companies in the world today."

Lynas Corporation Ltd is an ASX 100 listed company, with the strategy 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. Lynas is set to provide the first new source of supply of Rare Earths outside of China when it comes online in Q2 2012.

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