Rare Earths: Mountain Pass sold to Chinese-led consortium

Roskill view: The Mountain Pass rare earths mine and processing facility previously operated by Molycorp was purchased by MP Mine Operations LLC for US$20.5M. MP Mine Operations LLC, a consortium comprised of Shenghe Resources, QTT Financial and JHL Capital, bested a rival bid made by a consortium of ERP Strategic Minerals LLP, Pala Investments and Peak Resources, to win the auction. The Mountain Pass operation was placed on care and maintenance in October 2015 and Molycorp declared bankruptcy shortly after. Prior to its closure in 2015, Mountain Pass had a design capacity to produce 16.1ktpy REO with reserves of 17.8Mt grading 8.10% REO.

Though Shenghe Resource was involved in the consortium through its Singaporean subsidiary, Resource International trading Singapore, it’s likely that Beijing will have an influence over the development and direction of Mountain Pass. The purchase of the Mountain Pass operation by a Chinese-led consortium at first appears controversial, given the concerns by advisors to the US government on developing a source of rare earths independent of Chinese market dominance prior to the auction. The Chinese involvement, however, may be a positive, given the processing expertise which Shenghe Resource can bring to the project and its experience of marketing rare earth products.

At this stage, the restart of production at Mountain Pass in the short term remains unlikely, as prices for many rare earth products remain around the same level as when Molycorp announced bankruptcy in October 2015, and the Shenghe Resources consortium may look to sell-off equipment instead of restarting production. Increasing lanthanum, cerium and neodymium prices since the start of 2017 and growth in demand particularly for REE magnet materials, however, could make restarting production at Mountain Pass more economically attractive.

Roskill’s Rare Earths: Global Industry, Markets & Outlook report was published in October 2016. Click here to download the brochure or sample pages or access further information.

To discuss the rare earths market with Roskill, contact Suzanne Shaw: suzanne@roskill.com or David Merriman: merriman@roskill.com