After acquiring a 10 per cent stake in a rare earth metals (REM) mine project in South Africa with Canada's Frontier Rare Earths Ltd., Korea Resources Corporation (KORES) of South Korea advanced further to increase its stake allocation to 30 per cent in the Zandkopsdrift project.

"We are now under negotiation with Frontier Rare Earth to increase our share up to 30 per cent," the corporation said in a statement released Sunday. "The securing of the additional shares will increase the acquisition fund to $25 million to $60 million."

The two resources-oriented companies signed a definitive agreement on Thursday where the Toronto, Ontario-based miner in Johannesburg decided to grant South Korean state-run KORES a minimal investment in the REM mining project located in the western Namaqualand region of South Africa.

The 30 per cent stake upgrade enables KORES and its other consortium partners to secure 6,000 tonnes of REM annually once production kicks off as scheduled in 2016. KORES said the amount is already equivalent to twice the amount of local consumption.

KORES' consortium partners include Hyundai Motor, Samsung C&T Corp., GS Caltex Corp., Daewoo Shipbuilding & Marine Engineering and Aju Corp. But as of November, the consortium had yet to be finalised, according to KORES.

"They are either directly conducting resources development projects or needing rare earth metals for the production of their products. We have signed memorandums of understanding with these companies and will seal official agreements with them by early next year," the South Korean resources company said.

The Zandkopsdrift mine is expected to churn annual production of 20,000 tonnes of REM. Its commercial reserves were estimated at about 39 million tonnes, KORES added.

Korea has carried projects to develop REM into materials in China and Mongolia, but this is the first time for Korea to directly develop a REM mine.

"The acquisition of shares in the South African mine will help Korea reduce its dependence on China," KORES said.

China, the world's second-largest economy, is also the stronghold of the planet's precious REM, controlling more than 95 per cent of the world's output of the 17 REM. These elements are are widely used in manufacturing of batteries of hybrid vehicles, computers, digital cameras, televisions, smartphones, in long-lasting light bulbs and serving as critical magnets in guided missiles.

Non-Chinese REM producers have been scrambling to find alternate locations for REM as China started slashing export quotas two years ago 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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China Exports of Rare Earths Fall, Only 40% of Total 2011 Quota