Min­ing firm files for Chap­ter 11

Moly­corp, a rare earth el­e­ments source, is hit by com­pe­ti­tion from China, fad­ing de­mand.

Los Angeles Times - - BUSINESS BEAT - By Tif­fany Hsu tif­fany.hsu@latimes.com

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.

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