Rare Earths MMI®: Why the Molycorp, Inc. Bankruptcy Was Inevitable

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Yesterday, the only US-based rare earths miner — Greenwood, Colo.-based Molycorp, Inc. — filed for chapter 11 bankruptcy protection as part of a reorganization of the company’s debt.

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This has been expected since Molycorp missed a debt payment early this month. In a statement, Molycorp President and CEO Geoff Bedford said, “The actions we have taken today are important steps toward achieving a restructuring of our $1.7 billion debt with our major creditor constituencies. In doing so, the company expects to exit Chapter 11 with an appropriate financing framework to support our business going forward.”

Rare-Earths_Chart_June-2015_FNL

We have documented the long stock price slide Molycorp has experienced and how many manufacturers have simply found substitutions for the light rare earths they offer. As with any bankruptcy, Molycorp’s shares will be removed from the New York Stock Exchange and move to the OTC pink sheets.

While it’s difficult to say if Molycorp will be able to emerge as quickly as Bedford’s prediction, it will take recovery in the overall rare earths market for it to succeed. Our MetalMiner Indx has documented a steady slide in rare earths prices over the last two years.

What This Means for Rare Earths Buyers

China eliminating quotas and opening its rare earth products up to foreign markets is depressing prices overall. Right now rare earths are in surplus and less production or greater demand will be necessary to bring prices back to 2011 levels.

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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. 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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