The only US rare earths miner may miss a payment deadline today, President Obama signed an extension of funding for the Highway Trust Fund for just two more months and US economic growth actually contracted in the first quarter.
Molycorp Loan Payment Due Today
Rare earths miner Molycorp is expected to announce it will skip a $32.5 million loan payment today, triggering a 30-day grace period that could lead to a bankruptcy filing before the end of June, the Wall Street Journal reported, attributing the information to people familiar with the matter.
In 2010, after Molycorp — formerly a unit of Chevron Corp. — was sold to private-equity firms in 2008 for $80 million— the company was able to raise $394 million in a public offering. Around that time, China tightened existing quotas on rare-earths exports in a bid to rein in overproduction and keep more supply available for domestic manufacturer and prices soared.
Since 2011, however, rare-earths prices have been on a long slide downward. Now with a market capitalization of around $150 million, Molycorp is indebted and unprofitable. Customers are putting in orders, but the company hasn’t met production targets at its Mountain Pass, Calif., mine and is in restructuring talks with firms representing its creditors.
Obama Signs Highway Funding Extension
President Obama on Friday signed a two-month extension of highway funding into law, the White House announced in an evening statement.
The measure, dubbed the Highway and Transportation Funding Act of 2015, extends several aspects of infrastructure funding through the end of July. That includes highway aid and transit programs under the Highway Trust Fund, as well as freeing up monies in the fund and allowing tax revenues to be deposited in the fund.
White House press secretary Josh Earnest criticized the short-term funding measure earlier as lawmakers punting on the issue, encouraging Congress to pass a longer-term deal. The stopgap measure represents the 33rd temporary fix for road project funding since 2008, Earnest noted, leading to some uncertainty among states for major highway plans.
US GDP Contracted in Q1
US economic growth in the first three months of the year was even weaker than initially estimated. The Commerce Department said Friday overall economy, as measured by the gross domestic product, shrank at an annual rate of 0.7% in the January-March period. That’s down from 2.2% in the fourth quarter of 2014.
GDP is the broadest measure of US economic strength, seeking to measure the total value of all goods and services produced in a calendar year.