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.