North America's largest rare earth mine—and the only one in the United States—will finally re-open for business by the end of the year after an eight-year hiatus. The re-opening is prompted, largely, by stiff competition from China, the world's leading supplier and exporter of rare earth metals.
The mine is located in Mountain Pass, California, and is owned by Molycorp Minerals; the re-opening is made possible by a capital partnership with the Japanese firm, the Sumitomo Corporation.
This news follows a political mishap wherein a Chinese fisherman roamed into contested waters, the Japanese detained the fisherman and the Chinese halted all exports of its rare earths to Japan. That caused Japan, in turn, to frantically look elsewhere for the goods, and the world to wake up to the fact that its dependence on China's rare earth metals—which make up 97% of the world's current supply and are key ingredients in everything from clean energy technology components to batteries to smartphones and wind turbines—is devastatingly dangerous.
So, naturally, it is in Japan's interest to find an alternate rare earth source and that is why Sumitomo is financing $100 million of the $531 million necessary to re-start the mine's operations. Molycorp also received a hefty loan from a major French bank and listed shares on the New York Stock Exchange.
Molycorp plans to produce 3,000 tons of rare earth materials next year and 20,000 in 2012, with the goal of reaching 40,000 annually. If you think that sounds ambitious, consider that the firm also plans to cut its production costs down to $2.77 per kilogram by 2012, compared with China's $5.58 per kilogram.
The competition with China has driven innovation on Molycorp's part—to save costs the firm will use a new technology that purifies the excess salt water found in the extractions.
The focus, as expressed by Molycorp CEO Mark Smith, is on meeting domestic demand in the United States, then demand from Japan and Europe. As part of the co-financing from Sumitomo, however, Molycorp is expected to initially supply Sumitomo and Mitsubishi, in addition to U.S-based customers.
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[Image by Plazak]