Rare Metals Limit imposed by China - sign of things to come? TNR.v, AVL.v, RES.v, REE Metals, REM.v, LYC.asx

Lynas to benefit from China cuts

Rare earths explorer Lynas Corporation Ltd says it is well placed to meet any increase in demand that arises from China's recent tightening of export quotas.

The Chinese Ministry of Commerce has cut the approved export quota of rare earths for the second half of 2010 to 7,976 tonnes, down 72 per cent on last year's second quarter quota of 28,417 tonnes.

The reduction brings Chinese supply for 2010 to 30,259 tonnes compared with 50,145 tonnes last year.

China supplies over 90 per cent of the world's rare earths, which have a wide range of uses, including in mobile phones and car engines.

Lynas says it expects its Mt Weld mine site in WA, one of the richest known deposits outside of China, to commence production in 2011.

"The tightening of supply regulations provides additional opportunity for Lynas to meet the supply deficit outside of China," Lynas chairman Nicholas Curtis said in a statement.

"Lynas owns the richest known deposit of Rare Earths outside of China at Mount Weld in Western Australia and the company is progressing well with plant construction to be in a position to commence supply in the (third quarter of 2011)."