Sumitomo may invest in Molycorp for rare earth supply (Reuters)

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SUMITOMO CORPORATION

8053.T

¥1,174

+3.00+0.26%

10:00pm MST

 

MOLYCORP, INC.

MCP.N

$32.68

-0.18-0.55%

6:43am MST

 

Mitsubishi Shoji Kabushiki Kaisha

8058.T

¥2,173

+8.00+0.37%

12:00am MST

By Yuko Inoue

TOKYO | Tue Dec 7, 2010 3:42am EST

(Reuters) - Sumitomo Corp (8053.T) is in talks with Molycorp (MCP.N) on a rare earth supply deal and may take a stake in the U.S. company, the latest move by a Japanese firm to secure supplies of the crucial minerals outside China.

Japanese trading houses have been scrambling to secure new sources of rare earth -- vital for making auto parts and high-tech products -- in recent weeks after shipments from dominant producer China stalled, possibly due to diplomatic tensions or because its export quotas had run dry.

China, which produces 97 percent of the world's rare earths, set 2010 export quotas 40 percent lower than 2009 levels, raising alarm among buyer nations about supplies.

A spokesman for Sumitomo, Japan's third-biggest trading house, said various options were being discussed for a supply deal, which could lead to it taking a stake in Molycorp, but he gave no further details.

Earlier on Tuesday, the Nikkei newspaper reported that Sumitomo plans to invest 10 billion yen ($120 million) in Molycorp's expansion and is eyeing an equity stake in the company, which has a market value of about $2.3 billion.

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