GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Molycorp, Inc. (NYSE: MCP), the Western hemisphere's only producer of rare earth oxides (REO) and the largest REO producer outside of China, today announced that one of its major supply contracts has been modified to allow for a higher maximum price to be paid to Molycorp for the lanthanum it manufactures in 2011 and 2012 at its current Mountain Pass, California operating facility for this customer.
“The fundamental supply-and-demand situation for rare earths has changed dramatically in recent months," said Mark A. Smith, President and CEO of Molycorp. "This contract modification will help ensure continuity of fair pricing given current market conditions, a goal to which both parties are committed."
Modifications to the supply contract, which covers production in 2011 and 2012, are effective July 1, 2011. Terms were not disclosed.
Molycorp's major lanthanum customer also has contracted with Molycorp for future rare earth production from Molycorp's new, state-of-the-art processing facility, which is expected to begin production at its full Phase 1 rate (19,050 metric tons of rare earth oxide equivalent per year) by the end of 2012. Under this contract, the customer will purchase over 75 percent of the lanthanum produced at the new facility under a market-based pricing mechanism. This contract extends from 2012 until 2015, with a three-year extension at the customer's option.
About Molycorp
Colorado-based Molycorp, Inc. is the only rare earth oxide (REO) producer in the Western Hemisphere and the largest REO producer outside of China. The company currently is expected to produce a total of between 4,541 to 5,813 metric tons of commercial rare earth materials in 2011 from its three facilities. In addition to its flagship rare earth mine and processing facility at Mountain Pass, California, Molycorp also owns a controlling interest in the Estonia-based Molycorp Silmet AS. One of the largest rare earth and rare metal producers in Europe, Molycorp Silmet AS has an annual production capacity of approximately 3,000 metric tons of rare earth products and 700 metric tons of rare metal products. Molycorp also owns Molycorp Metals and Alloys in Tolleson, Arizona. Formerly known as Santoku America, Inc., the facility is one of the leading producers of high-purity rare earth alloys and metals outside of China, and manufactures neodymium-iron-boron (NdFeB) alloy and samarium cobalt (SmCo) alloy, as well as other specialty alloys and products. Following the execution of Molycorp's "mine-to-magnets" strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass. The Company expects to achieve an annual production capacity at Mountain Pass by the end of 2013 of approximately 40,000 metric tons of REO equivalent after the completion of Phase 2. Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.