In an announcement that its new manufacturing complex at Mountain Pass, Calif., is now operational and ramping production, Molycorp Inc. (NYSE: MCP) glossed over a few more basic issues.
The company said it expects to “reach or exceed” Phase 1 production of 19,050 metric tons (tonnes) a year by the middle of 2013. The original plan called for Phase 1 production totals to be met by the end of 2012.
Phase 2 of the project, which had been planned to boost production to 40,000 tonnes by mid-2013, has also run into a snag:
[T]he decision to complete Phase 2 construction and start-up will not be made until market demand, product pricing, capital availability, and financial returns justify additional increases in production beyond Phase 1.
The upshot is that Molycorp now expects lower revenue and cash flow in 2013 and the company “is evaluating its capital needs for 2013.”
Demand for rare earth minerals has fallen substantially as the global economy has remained weak. As a result, prices are very low and Molycorp’s biggest problem, common to all miners, is cost control, which in turn affects capital control.
Shares are down 11.5% in premarket trading this morning, at $9.61 in a 52-week range of $5.75 to $35.79.