UPDATE 1-Molycorp loss narrows as California rare earth mine ramps up
By Julie Gordon
March 3 (Reuters) - Molycorp Inc reported a narrower fourth-quarter loss on Monday, as the rare earth miner continued to ramp up operations at its revamped Mountain Pass mine and processing facilities in California.
The Denver-area company said with construction complete, it is now focused on optimizing operations at the newly revamped project as it works to increase production to nearly 20,000 tonnes a year.
That optimization work caused production interruptions in the fourth quarter, with output coming in below company expectations at around 1,000 tonnes of rare earth oxides.
Chief Executive Officer Geoff Bedford, who took over the top job in December, said he expects production to reach full capacity in the second half of 2014.
On the other side of the equation, Bedford said demand for Molycorp's rare earth products continues to improve, especially in the magnetic and catalyst sectors.
"Toward the end of 2013, we saw customers working into their inventories and some of that demand coming back, which is good," he said.
The company sold 3,201 tonnes of product at an average sales price of $38.68 per kg in the fourth quarter, compared with some 3,102 tonnes at an average price of $43.28 per kg in the year-ago period.
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 then eased export controls causing prices to drop steeply.
Molycorp also said it had started up the chlor-alkali plant at Mountain Pass, which processes waste water from the facility to recover chemical reagents that can be reused in the separation process, helping to boost volumes and lower costs.
"This is really a milestone for us," said Bedford. "It really was one of the critical steps for us to get through to where we need to be on our cost structure."
Molycorp is eyeing cash costs in the $6 to $7 per kg range once it reaches its full production capacity at Mountain Pass. The company spent some $1.25 billion on the modernization and expansion of the California mine and plant, which is one of the largest single sources of rare earth materials outside of China.
Molycorp also owns rare earth and rare metal processing facilities in North America, Europe and Asia.
The company's net loss was $194.3 million, or 95 cents a share, compared with a loss of $359.6 million, or $2.91 a share, in the fourth quarter of 2012, when it took a $258.3 million impairment charge related to a 2012 takeover.
Adjusted to remove writedowns and other one-time items, the loss was 28 cents a share, compared with a loss of 45 cents a share in the year-ago period.
Analysts, on average, had expected a loss of 29 cents a share, according to Thomson Reuters I/B/E/S.
Revenue slipped 8 percent to $123.8 million.