Great Western Great Western, with a market capitalization of C$300 million ($308 million), and Ucore, which has a value of C$157 million, would be likely targets for Molycorp, Hykawy said. Great Western, which has posted annual losses since at least 1991, specializes in processing rare-earth elements into alloys used to make batteries, magnets and products for the aerospace industry. The producer said on March 2 it increased its stake in a rare-earth exploration company that owns the shuttered Steenkampskraal mine in South Africa to 93 percent. In January 2009, Great Western said it was working with the mine’s owner to restart the mine, giving it exclusive access to rare-earth metals at the site. The company’s shares have advanced 249 percent in the past year. “We are not aware of anyone looking at us as a takeover target,” Gary Billingsley, chairman of Saskatoon, Saskatchewan- based Great Western, said in an e-mail. Partly because of the South African mine “we might look attractive to certain groups,” he said. Bokan Mountain Ucore operates a former uranium mine at Bokan Mountain in southeastern Alaska. The 19-mile Bokan site is estimated to be one of the largest combined heavy and light rare-earth mineral deposits within the U.S., according to the company’s website. Ucore mines for “heavy’ rare- earth minerals such as dysprosium, which is used to make wind turbines and electric vehicles. The company met with U.S. lawmakers in February to discuss initiatives that would allow the U.S. to recapture market share in the rare-earth magnet manufacturing industry. Ucore’s CEO Jim McKenzie has said his goal is to become the first company to produce dysprosium for magnets entirely on U.S. soil. Shares of Ucore have almost tripled in the past year. “There are players out there right now that I’m sure would be interested in acquiring our deposit at these levels,” McKenzie said in a phone interview. “That doesn’t mean we want to be acquired at these levels.” Alpine Mutual’s Hennessey favors Quest Rare Minerals and Avalon as takeover targets for Molycorp. The companies hold two of the largest deposits of “heavy” rare-earth elements in the world, according to Mackie Research. Strange Lake, Nechalacho A portion of Quest’s Strange Lake project in northern Quebec holds about 1.15 million tons of the metals, according the company’s website. About 43 percent are “heavy” rare-earth elements. Avalon controls the Nechalacho deposit near Thor Lake in the Northwest Territories of Canada, its website said. The site holds an estimated 1.3 million tons of rare-earth elements, with “heavy” types accounting for about 20 percent, according to Mackie Research. Avalon is forecast to start producing from Nechalacho in 2015, with Quest’s Strange Lake deposit reaching production a year later. Quest has doubled in value in the past year, while Avalon has almost tripled, data compiled by Bloomberg show. Neither company has any reported revenue, the data show. The weighted-average price of rare-earth metals at Avalon’s Nechalacho site is estimated to be $94 per kilogram and $120 a kilogram at Quest’s Strange Lake deposit, according to Mackie Research. That’s 45 percent to 85 percent higher than Molycorp’s Mountain Pass mine, which is valued at $65 a kilogram. ‘Everybody’s Looking’ “There should be consolidation because of this valuation discrepancy,” said Alpine Mutual’s Hennessey. “It makes a whole lot of sense.” Peter Cashin, CEO at Montreal-based Quest Rare Minerals, didn’t respond to a phone message outside normal business hours. “We have no direct knowledge that Avalon is presently a takeover target,” said Donald Bubar, Toronto-based Avalon’s CEO. “We have heard such speculation occasionally, but to my knowledge, there is no substance to it.” Molycorp’s Bhappu said last month rivals approached it seeking investment in their projects. The companies, which he declined to identify, are “all over the world, from Africa, Australia, Canada, the U.S., South America,” he said. “The real focus for us is, rather than acquiring, better evaluation and expansion of what we have on our own property.” Companies that rely on rare-earth metals to make their products such as Toyota may also be looking to buy assets or secure supply agreements, according to Lifton. That may hasten consolidation in the industry, he said. “Our purchasing groups are leading various efforts to mitigate any potential supply disruption and ensure that we have a stable supply for our production needs,” Jeff Makarewicz, vice president of materials engineering at Toyota, said in an e- mail. Rare-earth mining companies are “already talking to each other and to companies like Molycorp and Toyota,” Lifton said. “Everybody’s looking for heavy rare earths right now.”