Rare earths metal (REM) miner Matamec Explorations of Canada and Toyota Tsusho Corp., Toyota Motor's trading company, have entered into a non-binding arrangement to form a possible joint venture that will develop the Canadian company's Kipawa heavy REM deposit in southwest Quebec.

Toyota Tsusho is highly interested to fast track the development of the Kipawa REM mining project in a bid to secure supply of valuable heavy REM needed to produce electric and hybrid vehicles.

As REM get scarcer and pricier by the day, manufacturing industries dependent on the precious metals have been urged to start establishing fallback plans and fast track implementing them if only to sustain their immediate business plans. Experts forecast a further supply crunch as China, the world's stronghold of the precious minerals, will cut down overall production output to just about 70 per cent by 2015.

The potential joint venture between Matamec Explorations and Toyota Tsusho Corp. will depend on the results of an initial assessment into the Kipawa project.

Should the study yield satisfactory findings, Matamec Explorations will control 51 per cent of the joint venture, while Toyota Tsusho Corp. will pay $17.5 million for its 49 per cent part.

Moreover, Toyota Tsusho will buy all of the mine's output, Andre Gauthier, Matamec's chief executive officer, said in Bloomberg News.

Investors of Matamec Explorations cheered the good news, as shares spiked 15.79 per cent to 33 Canadian cents on Monday morning on the Toronto Stock Exchange, its biggest in two months. Matamec Explorations has fallen 49 per cent this year.

This is the second time this month that an Asian company has sought an REM development agreement. Early in December, Korea Resources Corp. led a group of Korean companies entered an agreement with Luxembourg-based Frontier Rare Earths to develop its South African mine.

Non-Chinese REM producers have been scrambling to find alternate locations for REM as China started slashing export quotas in 2009 when it closed some of its REM processors due to environmental concerns. Global consumers have complained China's REM policies not only unfairly shrunk global supplies but also drove prices upward.

Exports of REM from China stood at only 11,000 tonnes from January to September, accounting for only 40 per cent of the overall export quota for 2011. Latest figures likewise showed a 65 per cent fall year-on-year.

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