KAT Exploration Inc (KATX)

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China Vales Big Brother?


China Moves to Gain Total International Market Advantage

http://www.dtic.mil/cgi-bin/GetTRDoc?Location=U2&doc=GetTRDoc.pdf&AD=ADA525378

China’s move to capture the market did not stop at magnet technology and
Magnequench. At one point, the country almost acquired Molycorp, which owns
the Mountain Pass mine in California, the only rare earth mine in the U.S.
Molycorp purchased Mountain Pass in 1951. In 1978, Unocal purchased
Molycorp. In 1982, Mountain Pass Mine began processing samarium oxide and
in 1989, it began processing neodymium oxide, both critical components of two
types of permanent magnets. In 2005, China National Offshore Oil Corporation
(CNOOC) submitted an $18.5 billion cash bid for Unocal, outbidding Chevron by
half a billion dollars. 24 CNOOC’s bid raised a great deal of concern for U.S.
energy security. While there was a media frenzy over these concerns, one issue
received little attention – repercussions of China gaining control over Molycorp
through CNOOCs purchase of Unocal. If the deal were to have gone through,
China would have gained control over Mountain Pass and therefore the country
would have had a complete monopoly over all the current major rare earth
element resources in the world.

China has also pursued a stake in some of Australia’s rare earth
resources. In early 2009, Lynas Corporation, an Australian mining company, had
plans to build a large rare earth mine at Mount Weld in southwestern Australia. In
February, however, the company suspended construction of the project because
of funding problems. In May 2009, China Non-Ferrous Metal Mining Co. was
poised to invest $252 million to provide much needed debt funding in return for a
51.6 percent stake in Lynas. Before the deal could be finalized, the Australian
government had to approve it following a review by the Foreign Investment
Review Board (FIRB). Normally, the board has 30 days to decide. However,
FIRB had requested at least three resubmissions, which suggested that the
Australian government was carefully considering the full implications of the deal’s
impact on the world’s supply of rare earth elements.25 Finally, in September
2009, China backed out of the deal after Australia’s Foreign Investment Review
Board requested several alterations to the deal, “including a reduction of its stake
to below 50 percent.
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