After all the press coverage of the last twelve months and the recent reports that China is intending to restrict exports of Rare Earth metals few would dispute that Molycorp Minerals Mountain Pass Mine is a national asset that should be encouraged to come back on stream as soon as possible. The mine was owned by Chevron until last year when it sold the mine, facilities and name to an investment vehicle called Rare Earth Acquisitions LLC, owned in varying degrees by Goldman Sachs, a couple of private equity firms – Resource Capital Funds and Pegasus Partners and others according to this article in Mining Top News.
So we have to ask, when you look at the deep pockets of the private investors (Goldman is reported to have a $6bn compensation and bonus pot to pay its staff this year) why they are lobbying the Federal government for a $3m grant to develop refining technology? Apparently Rep. Jerry Lewis, R-California–whose congressional district includes the Mountain Pass Mine – inserted a $3 million earmark into the House Defense Appropriations Bill. Not that there isn’t some precedent for projects deemed of national interest. In 2005, Brush Wellman received a $9 million federal contract for the engineering and design of a new facility for the production of primary beryllium under the Department of Defense’s Defense Production Act. At the time, the United States had been without a sustainable fully integrated domestic beryllium supply since 2000 and a domestic source was considered of critical importance because beryllium has no viable substitute in a number of DOD and Department of Energy applications.
The cost to bring the mine on line by 2012 is currently estimated by Molycorp Minerals to be $450 million and the consortium has already invested $30m in improving the cracking and solvent extraction processes according to a Mineweb article. If the private investors are struggling (which we doubt) to raise a further $3m what prospect is there for them to raise the $450m to bring the mine on stream? Rightly questions are being asked as to why taxpayers are being asked to fund what is potentially one of the two most valuable Rare Earth resources in the world. Incidentally Goldman Sachs also has a stake in Lynas, the other resource.
With or without tax payers money the Mountain Pass mine will almost certainly come back on stream sometime in the first half of the next decade. The mine has the potential to produce some 40,000 tons of RE’s per year, enough to make the US largely self sufficient in a world that looks increasingly vulnerable to supply disruption from the dominant producer China.