The Rise and Fall"and Rise Again"of Molycorp

At one point, the majority of the world's rare earths were mined at the Mountain Pass facility. Then, in 1998, Molycorp halted chemical processing at the mine following an environmental disaster; radioactive wastewater flooded the nearby Ivanpah Dry Lake. At the same time, China was dramatically increasing its rare earth production.

The resulting lower market prices forced Molycorp to close their mine in 2002. Although Molycorp has continued to extract metals from stockpiles of ore mined at Mountain Pass, China now produces between 96% and 99% of the world's total rare earth supply. The government carefully allocates supply to individual companies to support domestic electronics production. In 2009, they cut export quotas of rare earths from 50,000 to 30,000 tonnes, sending already-high prices on international markets even higher.

Molycorp has been working for several years to begin mining for rare earths once again, to help wean US manufacturers off Chinese imports. This year, they will reopen the Mountain Pass mine, an operation they've aptly named "Project Phoenix." Getting to this point, however, has been expensive -- about $1 billion so far -- and has required a lot of special environmental permits.

In July 2010, Molycorp went public on the NYSE with an Initial Public Offering of $394 million. In December 2010, they secured permits to start building a mining and manufacturing center so they could resume mining light rare earth elements such as neodymium and europium. The next month, they started mining bastnaesite ore.

In October 2011, Molycorp announced that they discovered a heavy rare earth deposit near their Mountain Pass facility and received permission to drill two months later. The heavy rare earths terbium, yttrium, and dysprosium are necessary for manufacturing wind turbines and solar cells, so the government has a particular interest in finding sources of those elements within the US.

Government Involvement

The Department of Energy released a Critical Materials Strategy report last month, which found that rare earths are necessary for clean energy technology, that the supply of those heavy rare earths is particularly at risk, and that Molycorp is the most promising rare earth project outside of China.

What's Happening at Mountain Pass Today?

I first visited Mountain Pass just over a year ago, when I took the (HDR) photo above. The signs of Molycorp's expansion since then are striking: there are many more buildings (some presumably part of the new processing facility), lots of cars in the parking lot, and employees buzzing around.

A few weeks ago, Molycorp reported that more than 75% of their Phase 1 production (i.e. all the rare earths they will produce between now and the end of September, about 19,050 tonnes) has been spoken for. In preparation, Molycorp has been hiring and expanding dramatically: it plans to hire 25 people every quarter until it reaches 200 employees.