Chinese-led consortium MP Mine Operations (MPMO) put in the
winning bid for the only commercial rare earths mine in the
US, but the deal will now have to face scrutiny from
regulators, as political opposition to the overseas ownership
of rare earth assets grows.
Mountain Pass, a rare earth mine in Southern California, was
up on the auction block on 14 June, following the bankruptcy of
its owner and former operator Molycorp.
The auction was won by MPMO with a $20.5m bid, beating out
the stalking-horse bidder ERP, a venture led by US coal
billionaire Tom Clarke.
MPMO is a joint venture of QTT Financial and JHL Capital,
two US-based noteholders from the Molycorp bankruptcy, and the
Chinese rare earths company Shenghe Resources.
Shenghe, which is participating in the joint venture through
the holding company Resources International Trading Singapore,
is part-owned by the Chinese government, as well as regional
state institutions in its home region of Szechuan.
"If the acquisition is approved by the US government, the
future development of Mountain Pass will be made through
Resources International Trading Singapore," Shenghe said in a
statement on 16 June.
|The Mountain Pass mine in Southern California.
The deal is bound to face scrutiny in the US, both by the
courts and then by the Committee on Foreign Investment in the
United States (CFIUS).
MPMO announced a plan to sign the asset purchase agreement
for Mountain Pass in the near-term, before submit it to the US
court for review.
The US court will be holding a hearing on 23 June to
announce the final decision for the acquisition, according to
This is prior to any investigation the deal may face by
CFIUS, which is mandated to look at the national security
implications of overseas investment.
CFIUS has the power to block the purchase of "critical
infrastructure" by overseas interests.
In March, the Southern Californian Republican congressman
Duncan Hunter introduced the Materials Essential to American
Leadership and Security Act, which would expressly instruct
CFIUS to reject any bids for rare earths resources by Chinese
Key mineral deposit
The USGS estimates the Mountain Pass reserves at 20m tonnes
bastnasite ore, with an average grade of around 9% rare earths
oxides, particularly rich in cerium, lanthanum and europium
when compared to Chinese reserves.
Mountain Pass was once the world’s main
producer of rare earths, but production fell off sharply in the
'90s with competition from burgeoning Chinese supply.
Production was revived by Molycorp after it took over the
site in 2008, investing some $1.5bn in ramping up production,
but stalled again when Molycorp declared bankruptcy in
Rare earths constitute the 15 lanthanide elements in the
Periodic Table, plus yytrium, a naturally occurring mineral.
They are often used in a myriad of end markets, including glass
polishing (cerium’s main end market use), and in
high strength magnets, used in complex electronics, including
smartphones and military technology.
Despite their name, rare earths are relatively common, but
concentrated deposits which are commercially exploitable at
current price levels are unusual, and Mountain Pass represents
the only known deposit of this type in the US.
China dominates the rare earth market, producing far more of
the minerals than the rest of the world combined, leading to
concerns about the ability of other countries to source such
supplies at short notice.
Baotou to tackle rare earth waste problem at Bayan
At a seminar organised by the Baotou municipal government to
discuss green development of Bayan Obo, held in Beijing on 10
June, delegates heard that the rare earth reserve in this mine
accounts for 80% of China’s resource but the
recovery rate is low.
As Xiulian Wang, vice-mayor of Baotou, told delegates, the
figures do not match the title of the biggest rare earth mine
in the world, and Bayan Obo’s output levels and
recycling rate are long-term strategic problems.
Baogen Shen, academician at the Chinese Academy of Sciences,
suggested that state-level research was required on the
environmental impact of rare earth tailings, with a view to
developing effective plans for ecological protection and
treatment, as well as work on recycling technology.
The tailings pond from this rare earth mine consists of 200m
tonnes of waste, he said, including 10m tonnes of rare earths
and waste acids, representing a huge amount of waste and
risking significant damage to the environment.
Solid wastes from the Bayan Obo mine come from tailings
mostly, both in the east and west iron ore mining
The east mine produces 7m tpa tailings, which are stored in
the rare earth reserve warehouse, with a rare earth recovery
rate of about 10%. The west mine produces 5-6m tpa tailings
as normal solid wastes, but output is iron ore only and no
rare earth is mined. Associated minerals such as fluorspar,
thorium and niobium are mostly wasted.