Sumitomo plans to acquire stake in Molycorp: report

(BestGrowthStock) – Japan’s Sumitomo Corp (8053.T: ) is planning to acquire a stake in U.S.-based rare-earth metals producer Molycorp Inc (MCP.N: ) to stabilize domestic supplies as Chinese imports decline, the Nikkei business daily said.

Sumitomo plans to import cerium, lanthanum and neodymium, among other rare earths from Molycorp, the Nikkei reported.

The paper added that an agreement may be reached this week, and shipments are expected to begin in spring and run through 2012.

Sumitomo, which is planning to invest about 10 billion yen ($121.2 million) in Molycorp’s mine expansion plans, may apply for assistance through the Japan Oil, Gas and Metals National Corp.

The possibility of the investment comes at a time when, according to finance ministry data, Japanese imports of rare earths slumped in October from the month before as China’s de-facto ban on shipments of the minerals that had been in place since late September took its toll.

Japanese companies have been complaining of restrictions on shipments of the metals, vital for making auto parts and high-tech products, by Chinese customs officials following a spat over disputed islands in the East China Sea.

Sumitomo will import nearly 2,000 tons of rare earths next year, including both new output and inventoried stock.

The metal-trading unit of Mitsubishi (8058.T: ) has signed a one-year contract to import a portion of Molycorp’s inventory, the paper added.

($1=82.52 Yen)

(Reporting by Vaishnavi Bala in Bangalore;)

Sumitomo plans to acquire stake in Molycorp: report