* Co to pay $89 mln for 90 pct stake
* Deal to double co's rare-earth oxide production capacity
* Shares jump 5 percent in pre-market trade
(Adds details on AS Silmet's ops, background and share
April 4 Molycorp , the largest U.S.
producer of rare-earth metals, bought a controlling stake in
Estonia-based AS Silmet for about $89 million, in a move that
will mark its foray into Europe and double its rare-earth oxide
Western rare earth suppliers have been scrambling to boost
production to plug a supply gap created last year when No. 1
producer China sharply cut its exports of the metals, used in
products ranging from laptop computers to hybrid-electric cars.
After the deal, AS Silmet will source rare-earth feed from
Molycorp's facility in California, becoming the first rare earth
oxide and metal producer in Europe not dependent on China for
AS Silmet is one of the two rare earth processing facilities
in Europe, producing up to 3,000 tonnes rare earth products and
700 tonnes of rare metal products annually.
The buy also expands Molycorp's manufacturing capabilities
into rare metals niobium and tantalum -- used widely in
electronics, materials manufacture and power generation systems.
"This acquisition provides Molycorp with a European base of
operations as well as a larger global customer base, greater
rare earth production capacity, and an expanded product line,"
Molycorp's CEO Mark Smith said in a statement.
The acquisition doubles Greenwood, Colorado-based Molycorp's
current rare earth production capacity from about 3,000 tonnes
per year of rare earth oxide equivalent to 6,000 tonnes.
The company is redeveloping the California rare earth mine,
closed in the mid-1990s when prices of the minerals were very
low, and aims to bring it back on line this year.
Molycorp acquired 90.023 percent of AS Silmet, while AS
Silmet Grupp will retain 9.977 percent ownership. It acquired
the stakes from AS Silmet Grupp and Treibacher Industrie AG.
Molycorp's shares, which went public in July 2010, rose 5
percent in pre-market trade on Monday. They closed at $59.25 on
Friday on the New York Stock Exchange.
(Reporting by A. Ananthalakshmi and Swetha Gopinath; Editing by