US rare earths miner Molycorp Inc. announced in late August
that its Mountain Pass mine in California will be "transitioned
into care and maintenance mode" from October.
"Rare earths production at the Mountain Pass facility will
be suspended no later than 20 October," the company said in a
It added that "the site, including idled machinery and
equipment, will be maintained to ensure that it remains in a
safe and stable condition".
"Moving Mountain Pass to 'limited operations’
was required by the terms of our debtor-in-possession (DIP)
financing, which was approved by the US Bankruptcy Court in
July," a spokesperson for Molycorp told
"The specifics of limited operations, which have now been
defined as 'care and maintenance’ mode, were
recently determined through a collaborative process by the
company and our DIP lender over the past several weeks."
The spokesperson added that the company was not yet certain
how long the facility would remain closed.
"That depends largely on market conditions and other factors
that are difficult to forecast," they said, highlighting the
issue of illegal rare earths production in China as a major
factor undermining the wider market.
Molycorp said that the continuing poor prices in rare earths
were a key influence in the decision to suspend operations at
the plant, but stressed that it plans to continue serving its
rare earth oxide customers via its production facilities in
Estonia and China.
"It is fair to say that the speed with which Mountain Pass
can be restarted will depend in part on whether the US
government decides to lend any active support to a restart
effort," the spokesperson said. "Can production be restarted
there? Absolutely. Mountain Pass is a strategic, national asset
to the US and the West."
Greenwood, Colorado-based Moly-corp filed for Chapter 11
bankruptcy protection in Delaware in June in an effort to
restructure its $1.7bn debts.
The company’s rare earths business has been
loss-making for some time, thanks to a combination of declining
rare earths prices and costly operational glitches at Mountain
Oaktree Capital Management LLC, Molycorp’s most
senior lender, suggested in the course of bankruptcy
proceedings that these losses might be offset by squeezing
funds from Neo Material Technologies Inc., a profitable
business acquired by the firm in 2012, something it wishes to
Rare Earths News Review
China Northern profits edge up
China’s largest rare earths producer, China
Northern Rare Earth High-Tech Group Co. Ltd, recorded a net
profit of Chinese renminbi (Rmb) 261m ($41m*) for the first
half of 2015, up 1.75% year-on-year (y-o-y).
Turnover rose more substantially, by 35.2% y-o-y to Rmb
3.23bn ($507.2m) for H1 2015. The company said that though
turnover had risen, its entire rare earth division gross profit
rate had fallen by 4.7% y-o-y and its rare earth source
material gross profit rate had declined by 8.3%.
China Northern said it had worked to upgrade its techniques
and environmental practices for its source material production
arm. Meanwhile, in its functional material and applications
division, the company said it had intensified its focus on cost
controls, market expansion and R&D in an attempt to
maximise the benefit of its upstream to downstream industry
For now, however, China Northern said that downstream demand
remains insufficient, held down by the slowing wider Chinese
economy, and that the industry’s overcapacity
problem has not yet been solved.
On consolidation, the company announced an increase in its
investment in Gansu Provincial Rare Earth New Material Co. by
purchasing 5% of its shares. Inner Mongolia Shengyilun Material
Co., meanwhile, will see 10% of its shares purchased by the
Public data indicate that in July 2015, Gansu’s
total assets stood at Rmb 3.1bn ($486.8m) and its net assets
stood at Rmb 2.5bn ($392.6m). Shengyilun Material, meanwhile,
has a capacity of 6,500 tpa rare earth oxides (REO).
Looking forward, the general manager of China North, Zhong
Zhang, said that while the current market conditions are poor,
he expects the second half to see an improvement in the
industry and in prices.
Xiamen Tungsten income declines
Xiamen Tungsten’s H1 results, released in early
September, revealed that net profit stood at Rmb 34m ($5.3m)
for the January-June period, down 75.7% y-o-y.
While its tungsten products also performed poorly, the
company’s rare earths business realised a loss of
Rmb 9.6m ($1.5m) in the first half of the year on a 15.8% lower
rare earth product turnover of Rmb 317m ($49.9m).
Xiamen Tungsten entered the rare earth industry in 2006,
first making a profit, of 0.24%, on incomes in 2013. This
expanded slightly in 2014, though net profit as a proportion of
the group only stood at 3.25%.
The company said that it expects its full year net profit
figure to drop by 50% y-o-y.
Chinese export boom
A weak domestic market, combined with export tax reforms,
appears to have led to a record volume of rare earth exports
from China in July, up 103.4% y-o-y to 3,658 tonnes, according
to China Customs.
While rare earth export volumes are typically highly erratic
and non-averaged comparisons are usually unhelpful, this is the
highest volume of rare earths exported in the last four years.
For H1 2015, exports increased by 10.3% y-o-y to 17,500
Inner Mongolia, one of the most important provinces for rare
earths production in China, exported 2,664 tonnes rare earths
in July, up 36.5% y-o-y. Average export prices were down by
34.7% y-o-y, standing at Rmb 32,000/tonne ($5,024/tonne),
China exported 40% and 130% more rare earths to its key
markets, the US and Japan, respectively.
*Conversions made September 2015