Molycorp announces plan to shake up rare earth market
Just two days before Molycorp Inc. ( MCP, quote ) reports earnings on August 2, Beijing Business Today is reporting MCP has announced it is working on a gigantic plan to boost its global share of the rare earth market from its current level of 4 percent to 30 percent.
MCP is currently the largest US-based rare earth mining company; it seeks out the minerals and metals worldwide from developed and emerging markets.
Molycorp’s commitment is no small boast. President and CEO Mark Smith has gone on record stating MCP will be investing $895 million to more than double its rare earth output to 40,000 tonnes. Smith also reaffirmed that even though 2011 production output was 5,000 tonnes, MCP will soon account for more than 30 percent of the global market in rare earth.
China has had an interesting response. Chinese analysts are saying Molycorp will not be able to hit its new targets and that this is simply a stunt to try and reduce European Union, United States and Japanese dependency on China for rare earths, which supplies 95 percent of the rare earth market. Analysts cite the announcement coming right after the WTO setting up a committee to investigate whether China is illegally stockpiling and holding back exports of key rare earths.
Reports have been surfacing that current mining demand for indium, gallium, germanium, phosphorus, and helium is falling short, and appears to be accelerating, squarely impacting the renewable energy sector which spills over to hybrids and electric vehicles.
Currently MCP ships 60 percent of its rare earth material to Japan, with many other consumers grabbing material from the Chinese black market that is smuggled out. The majority of China’s rare earth mining is consumed by China, so I’m not sure why they care if MCP seeks out more mines.
Bottom line : The need for rare earth is not going away, and if China doesn’t want to play with the rest of the world it will only help Molycorp expand its reach into the space. Look to see if Smith elaborates on the plan during the earnings conference call Thursday.
Category: ResourceAsia
