Shane Lasley asks what does Molycorp Inc. bankruptcy have to do with the price of rare earths in China? Some analysts say everything, while other experts in the field point to other weaknesses as the root cause of the American REE mine undoing.
When China put a choke hold on its exports of rare earth elements in 2010, Molycorp was already well on its way to seizing the opportunity to reopen the Mountain Pass Mine in California, an operation hailed for its ability to re-establish an American supply of these coveted high-technology minerals. As a result of this move to be a major non-Chinese source of rare earths, Molycorp stock rocketed from around US$10 per share in April 2009 to US$74 a share one year later. Five years hence, stock in the American rare earth miner has plummeted to less than US10 cents per share and in a bid to keep Mountain Pass in operation the company has filed for protection from its creditors under Chapter 11 reorganization.
While rare earth prices are only a fraction of what they were when Mountain Pass went into production, at least one rare earths expert contends that Molycorp troubles are largely a product of dumping too much money into restarting the California rare earth mine and not enough into the needed supply chain infrastructure.
Despite Mountain Pass troubles, there is still hope for the next generation of United States rare earth mines, including Ucore Bokan Mountain, Rare Elements Bear Lodge and Texas Rare Earth Resources Round Top project near El Paso. Unlike Mountain Pass, all three of these projects are rich in the more valuable heavy rare earths, and smaller mines requiring less capital are planned. Looking ahead, Lifton believes that once Molycorp bankruptcy dust settles, Neo Technologies could play a role in the success of three next-generation American rare earth producers.
Through the formation of strategic alliances and off-take agreements with Rare Elements, Ucore and Texas Rare Earth, Neo could emerge.
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