Molycorp stock soars as main mine revamp nears completion
(Reuters) - Shares of Molycorp Inc (MCP.N) rose sharply on Wednesday after the U.S. rare earths producer announced two of the final milestones in a $1.25 billion modernization and expansion at its main mine, Mountain Pass in California.
Molycorp's stock was up 11 percent up at $7.40 on the New York Stock Exchange on Wednesday afternoon. It hit a high of $7.59 earlier in the session.
The Colorado-based company said earlier that Mountain Pass's chloralkali plant was now mechanically complete and full-scale commissioning operations had started.
The plant will help Molycorp cut production costs, a move the company says will make it competitive with the world's lowest-cost producers.
Molycorp also announced that the final unit of its multi-stage cracking plant at the same site is now mechanically complete and being commissioned. This unit will help to increase rare earth recovery rates.
"In essence they are reducing costs very considerably but they are also increasing production, therefore revenue. So that is why the market took this as a good sign," said Jon Hykawy, an analyst at Byron Capital Markets.
"These are the last major construction activities of Project Phoenix, the re-build of Mountain Pass, and we expect these units to be commissioned and enter into production in the fourth quarter of 2013," Molycorp's chief executive and president Constantine Karayannopoulos said in a statement.
Produced primarily in China, rare earths are an essential part of many high-tech products including smartphones, tablets and hybrid vehicles. Prices skyrocketed in 2010 and early 2011 as China clamped down on exports, but it has eased export controls since then and prices have declined.
Molycorp's shares are down 29 percent this year, hurt by a slump in demand, higher costs and weak rare earth prices.
(Reporting By Nicole Mordant in Vancouver; Editing by Bernard Orr)
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