Siemens inks rare earth metals supplier agreement with Lynas

Rare earth metals are an exceedingly critical component in the construction and assembly of a myriad of electronic and industrial devices. In an effort to ensure that it has a constant supply of the metals, Siemens announced this week that it has inked a supplier agreement with Lynas Corp., according to a published report.

Bloomberg reports that Siemens, which is one of the world's biggest engineering firms, announced a supplier agreement with Australia-based Lynas to form a joint venture that will supply the minerals used in magnets made by Siemens. Lynas will hold a 45 percent stake in the partnership, with Siemens owning 55 percent.

According to industry analysts, the deal will help Siemens to procure rare earth metals that are critically important to the production of a number of its product offerings, including its energy efficiency engines and wind turbines. Siemens ultimately chose Lynas as its partner even amid controversy surrounding the company's planned rare earth mine in Malaysia, according to the Sydney Morning Herald.

"This fits the strategy of Lynas, which is really designed to encourage continued stable and safe growth of these rare earths for new technologies," Lynas chief executive Nicholas Curtis said in an interview this week. "We're not necessarily thinking short-term off-take contracts, we’re more thinking strategic relationship with a key end user to give them the security they need for their supply chain."

The prices of rare earths surged over the first six months of this year. China commands a stranglehold on the global supply of rare earths and according to some estimates, it owns at much as 95 percent of the global supply of the metals. Last year, China temporarily cut off the supply of rare earths to Japan following a naval dispute, as well as the U.S. and Western Europe.

Though it never officially announced the embargoes, many industry analysts contend that China is increasingly using its market dominance to control supplies. Siemens' deal with Lynas will help the company to maintain its production schedules.

"This planned joint venture would be an important strategic pillar for us to pursue a long-term and stable supply with high performance magnets," Siemens drive technologies division chief executive Ralf-Michael Franke said in a statement.