Molycorp Says China May Become Net Importer of Rare-Earth Minerals by 2015

Molycorp Inc. (MCP), owner of the largest rare-earth deposit outside China, said Chinese leaders have said the country may become a net importer of the minerals by 2015 as internal demand grows and it seeks to consolidate its industry.

“Senior government leaders in China consistently stress China’s intent to continue to restrict rare earth exports, and the possibility of China becoming a net rare earth importing nation by 2015,” the Greenwood Village, Colorado-based company said today in a statement announcing fourth-quarter earnings. “China’s internal consumption of rare earths will continue to increase as its gross domestic product increases.”

China controls 95 percent of global supply, according to the U.S. Geological Survey. Rare earths -- 17 chemically similar metals used in products including batteries, electric cars and wind turbines -- have soared in price since July, when China said it would cut exports by 72 percent. Molycorp restarted operations in December at its mine near Mountain Pass, California, that had been shut since 2002.

The company’s fourth-quarter net loss narrowed to $7.9 million, or 10 cents a share, from $9.1 million, or 22 cents, a year earlier, Molycorp said in the statement. Sales climbed almost 10-fold to $21.7 million from $2.2 million.

Molycorp advanced $1.28, or 2.6 percent, to $49.90 at 7:20 p.m. after the close of regular New York Stock Exchange trading. The shares have more than tripled since its July 29 initial public offering.

Old Stockpiles

Molycorp now is generating revenue by selling rare earths from stockpiles left from previous mining. It plans to begin new production in the second half of 2012 and boost mining capacity to 40,000 metric tons annually in 2013.

The company said supply will be further restricted as countries including China, South Korea and Japan are increasing their stockpiles of rare earths.

For China “to go from a substantial exporter to an importer would have a dramatic impact on the price,” said Anthony Young, an analyst with Dahlman Rose & Co. in New York.

“Commencing production in 2012 and increasing in 2013 -- leading to substantial profitability for these guys -- should be more than enough to get investors interested in the name," Young said today in a telephone interview.

Molycorp said it won’t comment on acquisition speculation, adding that while it’s always seeking opportunities to add value for shareholders, there are few good rare-earth resources available.