Lynas's A$968m Caldeira deal adds a second mine behind LS Cable's rare-earth feedstock partner

Seoul Economic Daily presents the deal as widening LS's options for feedstock outside China, because the metals LS plans to make overlap with Caldeira's planned output ^[1]. On paper the overlap holds. The mine contains samarium, dysprosium and terbium ^[4]. The chain as reported has one feedstock supplier, Lynas ^[2][9], and Caldeira joins it as a second Lynas mine beside Mount Weld in Australia ^[6].

If the Meteoric deal closes and Caldeira comes online, LS buys from a partner that can also source light and heavy rare earths from South America ^[6]. If the deal stalls, LS keeps the Mount Weld-based supplier it has now. A third case is that Lynas sends Caldeira's heavy rare earths to other customers first, and LS gets nothing from the overlap. The report does not mention any contract committing Caldeira output to LS, so I would put more weight on the second and third cases than the report does. The counter-case is fair, though: one established non-Chinese supplier with two mines may hold up better than two small ones.

Lynas is paying in its own shares, at a value of about A$968m, according to industry sources cited by Seoul Economic Daily ^[3]. Spread over Caldeira's planned lifetime output of 287,500 tons of oxide (12,500 a year for 23 years) ^[13], that comes to about A$3,367 a ton ^[14]. The figure leaves out the cost of building the mine and any discount for tons that arrive two decades from now. LS's money sits downstream. It has put 150 billion won into Korea Motion Works ^[8] and committed 11.6 billion won to the Vietnam plant ^[7], 161.6 billion won in all ^[15], and none of it goes into a mine. The magnet plant gets about 13 times what the metal step gets ^[16].

How much Caldeira material LS could actually use depends on Vietnam. "We expect that South Korea, despite its scarcity of rare-earth resources, can emerge as a key pillar of the global supply chain," an LS Eco Energy official said ^[17]. The first metal line behind that ambition is sized at 240 tons of samarium a year ^[7], about 1.9% of Caldeira's planned annual oxide tonnage ^[12]. The ratio sets one metal beside a mixed oxide, so it measures scale only. Samarium goes into samarium-cobalt magnets, which keep their strength at high temperatures and are used in fighter jets and missiles ^[11]. LS Eco Energy plans to add other processed products after samarium ^[10].

My view is wrong if Lynas signs a contract committing Caldeira tonnage to LS, with volumes attached.