Major Molycorp Rare Earth Supply Contract is Modified to Better Reflect Current Pricing
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.
Molycorp, Inc.
Jim Sims, 303-843-8062
Vice President of
Corporate Communications
Jim.Sims@Molycorp.com
or
Investor
Relations:
ICR, LLC
Gary T. Dvorchak, CFA, 310-954-1123
Senior
Vice President
Gary.Dvorchak@icrinc.com