Australian's Lynas Corporation Ltd, which signed a letter of intent with a unit of Siemens today to form a joint-venture company for magnet production, will source raw materials for the partnership from its Gebeng rare earth plant in Kuantan.

Its Executive Vice President Strategy and Corporate Communications, Dr Matthew James, said the joint venture company with the German Siemens Drive Technologies Division was expected to be incorporated by year end while production was expected to start in the first half of 2013.

The joint venture company will be established for the sustainable production of neodymium-based rare earths magnets to serve Siemens' production requirements

for energy-efficient drive applications and wind turbine generators.

"The capacity of the supply for the JV has not been determined as we are still finalising the partnership which will be available by end of this year.

"Only then we will be able to talk about the capacity," he told Bernama in a phone interview from Australia today.

The mining giant Lynas, which had been embroiled in a controversy over its proposed rare earth plant in Gebeng, will hold a 45 per cent shareholding and will provide raw materials for the JV through a long-term supply contract.

Rare earth growth expected

The magnet to be produced by the JV will be one of the products for which the raw materials will be sourced from the Gebeng plant.

"The location of the JV for magnet production is not confirmed but Malaysia is the top consideration. This location of the JV will further attract downstream industries," he said.

The partnership will secure a long-term and sustainable end-to-end supply chain from mine to magnet to end application.

Meanwhile, in a statement today, Lynas Executive Chairman Nicholas Curtis said rare earth magnets have tremendous growth potential in this field.

"We are pleased to be able to provide the necessary ingredients of a stable, secure economically and environmentally sound supply chain which is required to enable this market to grow to its full potential," he said.

The government on Monday said that it would ensure that Lynas complied with all recommendations made by the International Atomic Energy Agency before proceeding with any operations at the Gebeng plant.

- Bernama