Molycorp Reports Another Quarterly Loss As Rare Earths’ Dead Cat Bounce Ends

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Last month’s bounce in rare earths prices is starting to look more and more like a dead cat.

Rare-Earths_Chart_May-2015_FNL

The monthly rare earths MMI® registered a value of 27 in May, a decrease of 6.9% from 29 in April.

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The jump that much of the market felt after being featured on “60 Minutes” was gone this month and Molycorp reported another net loss for Q1.

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Molycorp reported higher production volumes in the first quarter of 2015 at its Mountain Pass, Calif., rare earth facility of 1,479 metric tons of rare earth oxide equivalent. This was an 11% increase over the Q4 2014 production of 1,328 mt.

Molycorp reported Q1 2015 product sales volume of 3,436 mt on a consolidated basis, a 9% increase over the Q4 2014. Net revenues for the quarter were $106 million, an 8% decrease from the Q4 2014.

The Greenwood, Colo.-based rare earth miner reported a net loss of $0.42 per share and a reported a net loss of $0.28 per share for the quarter on an adjusted non-GAAP basis, which compares to an adjusted non-GAAP loss of $0.39 in the Q4 2014.

Molycorp was selected by Siemens AG to supply rare earths over the next 10 years for high-power, sintered rare earth permanent magnets used in Siemens’ wind turbine generators, but it’s unlikely that the proceeds from that deal will help its financial position this year. Molycorp reiterated that it would need more financing to continue operations.

Persistent Low Prices

The problem for Molycorp is much the same as that for the entire rare earths industry: low prices. China ending export quotas on the elements has not yet resulted in higher prices and companies such as Molycorp, Texas Rare Earth Resources and Australia’s Lynas Corp. are feeling the pinch as a result. Many high-tech buyers of the magnets and oxides in the rare earths ground have moved on to other sources.

With the dollar weakening, domestic rare earth producers may become a more attractive option to large customers. The ability to guarantee a clean, US-based supply chain is exactly what producers such as Siemens look for. That being said, prices have not moved much at all in the last year. More demand is clearly necessary for the global market.

Actual Rare Earth Prices

After falling 7.2%, europium oxide finished the month at $269.19 per kilogram. The price of terbium oxide closed the month at $604.46 per kilogram after dropping 6.3%. The price of terbium metal fell 5.8% to $789.83 per kilogram. Dysprosium oxide prices fell 5.6% to $270.80 per kilogram. A 4.8% decline for neodymium oxide left the price at CNY 295,000 ($47,551) per metric ton. At $47,712 per metric ton, praseodymium neodymium oxide was down 4.5% for the month. After rising the previous month, neodymium prices dropped 4.2% to $62,541 per metric ton. Following a 3.7% decline in price, praseodymium oxide finished the month at $63,670 per metric ton.

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Hovering around $5,642 per metric ton for the month, yttria remained unchanged. Yttrium held pat last month at $43.52 per kilogram. At a price of $2,095 per metric ton, lanthanum oxide did not budge the entire month. Prices for cerium oxide remained constant this past month, holding at around $2,015 per metric ton. Samarium oxide traded sideways last month, staying around $2,740 per metric ton. Rare earth carbonate experienced a flat month, staying around $4,030 per metric ton.

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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