U.S. rare earth minerals miner Molycorp Inc. (NYSE: MCP) announced after markets closed today that it had begun production at its Project Phoenix concentrate facilities in Mountain Pass, California. The company’s president/CEO said:
[W]e remain on track to achieve full Phase 1 production rates at Mountain Pass in the fourth quarter of this year. The heavy rare earth concentrate we will produce at Mountain Pass will support our production of a full range of high-purity, custom-engineered materials from light, medium, and heavy rare earths. Such vertical integration strongly positions Molycorp to compete successfully across multiple markets.
The heavy rare earth concentrates at Mountain Pass contain several of the scarcer heavy rare earths, including dysprosium, which is used in making engines for all-electric cars. Molycorp said it is on schedule to reach its phase 1 target production level of 19,500 tons by the end of this year.
The company’s phase 2 production target of 40,000 tons is expected by mid-2013. China has recently set a new quota for rare earths exports of just under 31,000 tons a year. Last year China exported less than 19,000 tons even though the quota was slightly more than 31,000 tons.
When Molycorp reaches full production in the middle of next year, there will be more than twice the amount of rare earths on the market as there is right now. And prices are lower now than they were a year ago. To make profits even harder to come by, several companies, including Toyota Motor Corp. (NYSE: TM) are developing substitutes for the relatively expensive rare earths. That, too, will keep prices down.
But Molycorp’s shares are getting a pop in the after-hours market, up 5% to $10.00 in a 52-week range of $9.40-$58.74. The 52-week low was set today.