Just two days before Molycorp Inc. (
MCP
,
quote
) reports earnings on August 2,
Beijing Business Today
is reporting MCP has announced it is working on a gigantic plan to
boost its global share of the rare earth market from its current
level of 4% to 30%.
[caption id="attachment_57921" align="alignright" width="300"
caption="Molycorp's Mountain Pass, California rare-earth mine and
processing facilities"]
[/caption]
MCP is currently the largest U.S.-based rare earth mining
company; it seeks out the minerals and metals worldwide from
developed and emerging markets.
Molycorp's commitment is no small boast. President and CEO Mark
Smith has gone on record stating MCP will be investing $895 million
to more than double its rare earth output to 40,000 tons. Smith
also reaffirmed that even though 2011 production output was 5,000
tons, MCP will soon account for more than 30% of the global market
in rare earth.
China has had an interesting response. Chinese analysts are
saying Molycorp will not be able to hit its new targets and that
this is simply a stunt to try and reduce European Union, United
States and Japanese dependency on China for rare earths, which
supplies 95% of the rare earth market. Analysts cite the
announcement coming right after the WTO setting up a committee to
investigate whether China is illegally stockpiling and holding back
exports of key rare earths.
Reports have been surfacing that current mining demand for
indium, gallium, germanium, phosphorus, and helium is falling
short, and appears to be accelerating, squarely impacting
the renewable energy sector which spills over to hybrids and
electric vehicles.
Currently MCP ships 60% of its rare earth material to Japan,
with many other consumers grabbing material from the Chinese black
market that is smuggled out. The majority of China's rare earth
mining is consumed by China, so I'm not sure why they care if MCP
seeks out more mines.
Bottom line
: The need for rare earth is not going away, and if China
doesn't want to play with the rest of the world it will
only help Molycorp expand its reach into the space. Look to
see if Smith elaborates on the plan during the earnings conference
call Thursday.
