Rare Earths Index Holds Steady, Molycorp Attempts Reorganization

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The Rare Earths MMI held steady at 18 for the third straight month, settling in at a low price point that it has fluctuated around for the entire year.

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In the bearish commodity environment, specialty metals such as rare earths are not likely to break price resistance anytime soon without a major supply shock. The biggest news in rare earths this month was that US producer Molycorp Inc. filed its restructuring plan in bankruptcy court.

Rare-Earths_Chart_November-2015_FNLMolycorp’s recovery plan envisions a dual-track process wherein its assets are actively marketed for sale, either as a whole or through the separate sale of its business units. Molycorp’s four business units are chemicals and oxides, magnetic materials and alloys, rare metals, and resources, which consists primarily of its assets at its Mountain Pass, Calif., mining facility which it shut down in August. Molycorp previously said it would continue production at its mines in Estonia and China.

“If approved, the plan would help to significantly reduce our $1.9 billion of debt and cut our interest expense, putting us on a more solid financial and operational footing going forward,” said Geoff Bedford, Molycorp President and Chief Executive Officer.

While the plan looks like it could work, it would make Molycorp a US-based producer in name only and cause the nation to lose one of its few remaining miners, depending on who purchases the business units at Mountain Pass. The lengthy process to restart mining at Mountain Pass would likely mean it will be years after a sale before production could begin anew.

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Our recommendation remains the same for manufacturers looking to purchase rare earths, remain conservative and do not attempt to catch falling market knives.

Actual Rare Earths Prices

Yttrium increased from 37.74 to 37.99 per kilogram this month. Neomdymium increased from $49,540.22 to $49,857.55 per metric ton.

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