Mining firm files for Chapter 11
Molycorp, a rare earth elements source, is hit by competition from China, fading demand.
Molycorp Inc., whose Mojave Desert mine once supplied the majority of the rare earth elements used in hightech electronics, f iled for Chapter 11 bankruptcy protection amid competition from China and waning demand.
The Greenwood Village, Colo., company, the only producer of the minerals in the U. S., struck a deal with creditors to restructure $ 1.7 billion in debt. Its North American subsidiaries were included in the Thursday filings.
The agreement includes $ 225 million in new financing so that operations, including its Mountain Pass mine in the Mojave Desert, can continue as usual. Employees are working their normal schedules, according to the company.
In February, Molycorp said Mountain Pass production in the fourth quarter of 2014 — including praseodymium and neodymium for use in magnets and lanthanum for batteries — nearly doubled from the previous quarter. About 500 employees work at the mine, according to regulatory filings.
Molycorp said it plans to exit bankruptcy before the end of the year.
As of Wednesday, the company’s shares have lost 59% this year and are down 86% from a year earlier. Molycorp said its stock has already been transferred to an over- the- counter exchange under the symbol MCPIQ, with an official delisting notification from the New York Stock Exchange expected within the next few days.
The company’s operations in Europe and Asia are not included in the f ilings.
Molycorp’s Mountain Pass facility once supplied the majority of the world’s rare earth elements. Just f ive years ago, the mine couldn’t produce the minerals fast enough to satiate companies hoping to use them in smartphone touchscreens, wind turbines and fuel cells.
In 2005, an oil company run by the Chinese government made a play to buy the facility as part of a larger package including its thenowner Unocal Corp. But opposition from Congress, along with a rival bid from Chevron Corp., kept the acquisition attempt from going through.
China, the world’s largest rare earth producer by a wide margin, limited its rare earth exports a few years later, to Molycorp’s benefit.
But the U. S. took issue with the quotas in 2012, filing a complaint with the World Trade Organization arguing that the limits were a violation of China’s free trade promises.
Recently, the Asian superpower relaxed its restrictions and released larger rare earth supplies into the global marketplace.
As the inf lux pressured Molycorp’s pricing, technological advances allowed electronics designers to develop alternatives to rare earths.