Molycorp shares soar on rare earth uncertainty

CHICAGO (Reuters) - Shares of rare earth mining company Molycorp Inc (MCP.N) rose as much as 6.5 percent on Wednesday, one day after China announced new cuts in exports of the minerals, the latest step in a clampdown that has sent users scrambling to find alternate suppliers.

In morning trading on the New York Stock Exchange, Molycorp shares were up 5.3 percent at $48.63 after hitting an early high of $49.20. Shares of other global rare earth prospectors also jumped on Wednesday.

China produces about 97 percent of rare earth elements, which are used in high-technology, clean energy and other products that exploit their properties for magnetism, luminescence and strength.

Prices have surged for these minerals, used in everything from Apple Inc's (AAPL.O) iPods to fluorescent light bulbs, since authorities in Beijing slashed their rare earth exports by 40 percent this summer, saying China needed them for its own economic development.

Japanese companies, which bore the brunt of China's action, have been scrambling to secure reliable supplies of the minerals.

Last week, Hitachi Metals Ltd (5486.T) signed a joint venture with Molycorp to help ensure a steady supply -- an announcement that sent its shares soaring 15 percent in a single trading session.

That followed word earlier this month that Sumitomo Corp (8053.T) agreed to invest $130 million in Molycorp to secure a seven-year supply of the materials.

Since debuting in late July at $14, Molycorp's stock price has nearly quadrupled. The company owns a rare-earth mine in Mountain Pass, California, that is scheduled to come back on line next year.

The Mountain Pass facility, which it bought from Chevron (CVX.N) in 2008, has not mined or milled rare earth oxides since 2002, according to an S1 form that the company filed with the U.S. Securities and Exchange Commission this spring in association with its initial public offering.

The company is modernizing and expanding the facility, but does not plan to reach full planned production rates before 2012.

(Reporting by James B. Kelleher, editing by Maureen Bavdek)