Siemens, Lynas in high-tech joint venture

Age
8 July 2011, Page: 3

Lynas Corporation will team with Siemens in a joint venture that will help the German technology company secure a long term source of supply constrained rare earth elements, coveted for their use in hybrid car engines, smart phones, iPads and other technologies. The two companies have signed a letter of intent to form a joint venture, of which Siemens will own 55%, that will specialise in the production of high powered rare earth magnets used in energy efficient engines and wind turbines.

"This planned joint venture would be an important strategic pillar for us to pursue a long term and stable supply with high performance magnets", said Ralf Michael Franke, chief executive of Siemens' drive technologies division. Lynas Corporation chief executive Nicholas Curtis said the deal was part of its strategic objective to become integrated into the supply chains of its customers. "It's strategically, in my opinion, very significant", Mr Curtis said. "We see our sustainable competitive advantage not as the mine [in Mount Weld], but as the integration in the supply chain and the intimacy with our end customer this is an example of that".

Despite negative publicity over its plans to build the world's largest rare earth refinery in Malaysia, Mr Curtis said Siemens and major Japanese investor Sojitz were satisfied with the environmental credentials of Lynas Corporation. Shares in Lynas Corporation suffered their biggest one day fall in two years last week after the Malaysian government imposed environmental and safety conditions on the refinery, where all of its rare earths ore will be processed.

"[Siemens have] reviewed it fully, they understand and are comfortable with the reality of our operations, as are the Japanese", Mr Curtis said. Siemens employs 36,000 staff in its drive technologies division. The companies will work on confirming the financial details of the joint venture, but it is believed the effect on the expected production of Lynas Corporation will be modest to begin with.