* Final permits secured; mining to start next year
* CEO says talking to new investors
* Shares rise 9.6 pct
(Changes dateline; adds CEO comments, details)
By Sarah McBride
MOUNTAIN PASS, Calif. Dec. 13 Rare earth metals
producer Molycorp Inc MCP.N has secured final permits to
start building a mining and manufacturing center in California,
enabling the company to begin mining ore next year.
The Greenwood, Colorado-based company, which is the only
rare earth oxide producer in the Western Hemisphere, will break
ground on the $531 million facility in Mountain Pass,
California, on Jan. 2, aiming to reach full capacity by the end
The new source of rare earth minerals -- used in a range of
products from car engines, lasers and fluorescent lightbulbs to
computer hard drives and wind turbines -- may loosen the grip
of leading producer China on the market.
Molycorp shares closed up 9.6 percent at $34.28 on the New
York Stock Exchange. The shares have more than doubled from
their $14 initial public offering price in July.
The company has become a darling of Wall Street since China
cut its export quotas on rare earth elements by more than half,
sending prices of the minerals soaring, particularly hurting
Last week, Japanese trading house Sumitomo Corp (8053.T)
agreed to invest $130 million in Molycorp in exchange for a
guaranteed seven-year supply of the minerals, which are key to
many industries. [ID:nN10286929]
In the wake of that deal, Molycorp is now talking to other
potential investors, Chief Executive Mark Smith told Reuters in
an interview at the site of the new mining center. He said the
investors were from several different countries, including
Japan, but declined to give further details.
The Mountain Pass mine, the company's only mining facility,
was closed in the 1990s due to cut-price rare earths coming
from China. At that time, the leading use for rare earths was
in catalytic converters. Now, businesses using rare earths for
magnets make up two-thirds of sales by dollar value.
The area Smith believes will be the biggest growth driver
for is the wind-turbine business.
"We think the growth rate for our magnets is going to be 10
to 15 percent higher than what experts are forecasting," Smith
The company hopes to build its own rare-earth magnets from
its supplies by 2012 at a yet-to-be determined facility in the
United States, working with an existing magnet maker, he
The company expects to produce about 3,000 tons of rare
earths this year from a stockpile it has left over from earlier
operations, but is starting construction on upgrades that would
allow Molycorp to ramp up production from the 55-acre pit mine
off Interstate 15 near the California-Nevada border.
Workers will start drilling for fresh ore next year and an
upgraded processing facility will come online in 2012. When
construction is complete late that year, the company's
production will be about 20,000 tons a year.
Molycorp executives will decide early next year whether to
double capacity to 40,000 tons annually, which would cost $100
million to $200 million and would take about a year to 18
Prices for rare earths will hold steady in the short term
and increase in the long term, said Smith: "Every supply and
demand fundamental I look at says this is sustainable."
(Reporting by Sarah McBride and Nick Zieminski; editing by
John Wallace and Andre Grenon)