Mountain Pass sells for $20.5 million

Andrew Topf | June 16, 2017 | 4:30 pm Battery Metals Rare Earth 

The new owner of the Mountain Pass rare earths mine in California is MP Mine Operations LLC – an American-led consortium, with Chinese rare earths miner Leshan Shenghe Rare Earth Co. holding a non-voting minority interest.

The mine, which was the only functioning rare earths mine in the US before it went bankrupt in 2015, went up for auction on Wednesday.

The eventual sale price was significantly higher than ERP’s original “stalking horse” offer of $1.2 million back in April.

MP Mine Operations (MPMO) put in a winning bid of $20.5 million, half a million above the competing consortium made up of ERP Strategic Minerals LLP, Swiss private equity firm Pala Investments and Peak Resources (ASX:PEK), an Australian rare earths company. The losing consortium also includes two creditor groups from the bankruptcy of Molycorp, the mine’s former owner.

The eventual sale price was significantly higher than ERP’s original “stalking horse” offer of $1.2 million back in April. The deal still faces scrutiny from regulators. Rare earths are used in a number of important economic and strategic applications including magnets for green technologies like wind turbines and hybrid cars, aircraft engines and computer hard drives.

Mountain Pass was the only rare earths mine operating in the United States, before it went bankrupt in 2015 – a victim of low rare earth oxide prices. At the time Molycorp listed $1.7 billion in debt. Through bankruptcy proceedings Molycorp was restructured, allowing it to receive $130 million in debt financing.

Molycorp then moved Mountain Pass into care and maintenance, while continuing to serve customers through its production facilities in Estonia and China.

Mountain Pass was expected to be America’s flagship source of rare earths. In 2010 Molycorp sensed an opportunity to capitalize on reduced rare earth oxide exports from China – which supplies about 90 percent of the world’s rare earth minerals – which had caused the prices of REOs to spike. When China subsequently relaxed export rules, however, prices fell, leaving Molycorp to pay the bill for a $1.25 billion state-of-the-art processing facility.

Hit by lower rare earth prices, Molycorp warned it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.

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8 Comments

  • JamesLYoung

    What is the current status, I knew this area Very well 55 years ago.

  • Linton Wildrick

    The US desperately needs to develop REE mining capacity. Currently, the Chinese can bankrupt any mining company that tries to open an REE mine. Perhaps a US government/private partnership could beat this dilemma?

  • vernonslone

    Worked there for 17 years…

  • IceStar

    The US Government should have taken over

  • Bobbie Jones

    So, China undercut the pricing of rare earth, driving Molycorp into bankruptcy, and magically purchases the mine for pennies on the dollar. And Trump’s attack on China’s unfair trade practices is bad?

  • howie1347

    The U.S. is beyond stupid. First, we sell our uranium to the Russians, and now we sell the only rare earth mine in the United States to China. Next, I guess we’ll turn over the keys to Fort Knox to the Iranians. Oh sorry, we did that already.

  • jalon rieber

    Most of Europe and America’s REE are planed to come from Greenland minerals and energy Kanjfeld mine

  • popularopine

    Just did watch the video on Amazon Prime, telling about the struggles of Mountain Pass, and the challenges of Rare Earth Materials, all over the world . But the video is from 2013, so dated now from a current info part. Many is working to eliminate many of the metals from electric motors . It is interesting that Tesla EV cars , has been able to produce electric with few to NONE of the metals . They are able to produce high torque, high reviving motors, and durable electric motors. So there is hope for the other applications as well . With China’s huge grip now, with being able to grab the Mountain Pass location . It is very sad that they will be able to control access and prices almost totally for the world . Japanese have found the Rare Earth metals on ocean floor, but are ONLY talking about sometime in mid 2020’s to mine it . Hopefully by then will not be needed as much . Congress has been informed of the situation and danger to our Military complex, and their usage of much REM’s……………but somehow they failed to stop the winning bidder , since it is a Wholly Chinese owned consortium . Would be nice to know , who screWed up , with allowing this winning bid to go forward ? We know China, does not play fair, and probably NEVER will ……………………………

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