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“Dust to dust” — Molycorp’ is shutting down its Mountain Pass rare earth facility (Image courtesy of Molycorp).
After months of uncertainty, the fate of Molycorp Inc.’s (OTCMKTS:MCPIQ) Mountain Pass rare earths mine in California has been sealed, as the company announced Wednesday it has decided to shut it down, at least for now.
Molycorp, the U.S.’s only miner and processor of rare earths, said it would transition the facility to a “care and maintenance” mode, adding it plans to continue serving its rare earth customers via its production facilities in Estonia and China.
Mountain Pass was expected to be America’s flagship source of rare earths. But the company struggled to ramp up production, and the mine operated in the red for years.
Hit by lower rare earth prices, Molycorp had warned in March it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.
“Rare earth pricing, which has declined dramatically over the past four years, was a key factor in the decision to suspend rare earth production at Mountain Pass,” Molycorp said in the statement. It didn’t say how many employees would be affected by the decision.
Only last month, the troubled miner said it was weighing a number of options for the California operation, adding that a complete shutdown was not an option.
The company, which went public in 2010 and two years later paid $1.3 billion for Canada’s Neo Material Technologies, carries a $1.7 billion debt load, with $206.5 million in convertible notes that mature in June 2016.
Shares collapsed on the news. They were down over 7% in New York at 10:00am ET. In the last three months, the stock has lost more than 80% of its value.
3 Comments
Philip S. Baker
It is likely that within the next 18 months conditions in the REEs market could receive a boost from the dynamic interplay of geopolitical developments in the South China Sea and a global shift towards the adoption of stricter environmental regulations. Indeed, the growing commitment by major emitters to substantially cut GHG levels should trigger significant investment in REEs-intensive green technology applications in sectors such as transport, agribusiness, residential and commercial construction and power generation. Admittedly, recycling of REEs from end-of-use electronic products will also be a source of satisfying some of the anticipated increase in market demand.
CM
🙂 If I can, I’d buy that mine.
george dawes
This should not have been a surprise to anyone in the rare earth industry. China has beaten Molycorp into previous shutdowns in the 90’s by flooding the market with low quality/low price rare earth chemicals and metals every time Molycorp was poised to make any money. This ore body was very heavy on the light REs and very light on the heavies which is the opposite of what the world needs.