Molycorp Borrowin’ Money, Rare Earths Price Index Crash Continues

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There’s really no end to our rare earths price index’s decline – prices keep dropping, while Molycorp needs a liquidity infusion to cover its operating costs for production.

MetalMiner‘s monthly Rare Earths MMI® registered a value of 23 in November, a decrease of 8.0% from 25 in October. We may have to change the y-axis on our monthly charts, as the January 2012 baseline of 100 is getting farther and farther away from where this index has been bobbling over the past two-and-a-half years.

For more on the fundamentals behind the decline, read last month’s report.

Molycorp and Oaktree Capital Management

As a likely effect related to the above cause, Molycorp is having trouble keeping up with its minimum production capacity requirements. During a recent conference call with analysts, “Molycorp CEO Geoffrey Bedford said the company has drawn an initial $250 million of a $400 million financing arrangement with Oaktree Capital Management,” according to Mineweb. “The arrangement with Oaktree mandates Molycorp achieve two consecutive quarters of at least 4,000 metric tons of production at Molycorp’s flagship Mountain Pass facility near Las Vegas, Nevada.”

Molycorp has had a hard time getting enough hydrochloric acid for their processing needs, which is why their quarterly capacity clocked in far below their expected 20,000-ton annual rate.

According to Bedford, the company’s customers are focusing on so-called “magnetic” REEs, especially the light rare earths neodymium and praseodymium and the heavy RE zirconium. “Our customers are interested in securing stable, long-term supplies in neodymium and praseodymium, which comprise the majority of the rare earth content in recent items,” he is quoted as saying.

This Month’s Rare Earths Price Trends:

* Get the complete prices every day on the MetalMiner IndX℠

The price of europium oxide fell 15.4% to $358.20 per kilogram. After falling 12.5%, lanthanum oxide finished the month at $2,279 per metric ton. At $586.15 per kilogram, terbium metal was down 10.0% for the month.

Praseodymium oxide prices dropped by 8.5% this month to $78,968 per metric ton. A 8.2% drop over the past month left praseodymium neodymium oxide at $45,590 per metric ton. Yttria prices fell 7.5% to $6,024 per metric ton. A 7.1% decline for terbium oxide left the price at CNY 2,600 ($423.33) per kilogram. Following a 6.8% decline in price, neodymium oxide finished the month at $44,775 per metric ton. The price of cerium oxide closed the month at $2,279 per metric ton after dropping 6.7%. At $58,127 per metric ton, neodymium was down 4.8% for the month. Dysprosium oxide fell 2.1% to $231.20 per kilogram.

At a price of $4,070 per metric ton, rare earth carbonate effectively did not budge the entire month, although still dropped. Samarium oxide stayed around $3,012 per metric ton. Prices for yttrium remained constant this past month, holding at around $43.96 per kilogram.

What do the historical trends tell us? Get historical reports here.

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends over a 30-day period. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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