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29 March 2010

Molycorp to restart rare earth mining in California

Source: The Press-Enterprise

Efforts to re-establish American production of rare earth elements at a San Bernardino County mine gained momentum in recent days, as lawmakers in Congress voiced their support for the plan to end China's virtual monopoly on the minerals.

During a congressional hearing last week, House members on both sides of the aisle spoke favourably about the push to ramp up operations at the Mountain Pass Mine, with one of them introducing a bill that could help yield funding for the $450 million plan.

The Mountain Pass Mine, northeast of Baker, contains the largest known deposits of rare earth elements outside of the Inner Mongolia region of China. Prized for their unique magnetic and conductive properties, the roughly 15 rare earth minerals – which include europium, neodymium and yttrium – are used to make dozens of products, from DVD players and laptop computers to hybrid cars and guided missile systems.

After decades of production, the High Desert operation all but ceased operations amid environmental concerns in 2002. Since then, well over 90 percent of the world's rare earths, as they are known in the industry, have come from China.

But a growth market is emerging for the elements, which are necessary to produce wind turbines. Many nations are now scrambling to develop renewable energy industries and China, chief among them, is expected to require a greater amount of its own supplies.

The expected decrease of rare earth exports from China comes as Congress considers legislation to combat global warming through an increased reliance on wind power in the United States.

"The demand is going to outpace the supply," said Mark Smith, chief executive for Molycorp Minerals LLC, the Colorado-based company trying to ramp up operations at the San Bernardino County site.

"If we're going to have our elected officials making policy decisions concerning green or clean technologies ... let's make sure we can actually implement the policies we're putting to place here in the country," Smith said.

Smith said Molycorp is on track to produce 20,000 tons of rare earths annually by mid-2012.

The operation would create about 900 permanent jobs and about 700 temporary jobs related to the estimated 22-month construction period, Smith said.

He said Molycorp would draw most of the workers from Inland Southern California and the Henderson-Las Vegas region of Nevada.

But the start-up money remains uncertain. Molycorp is looking into a number of options to raise capital, but one of the most attractive of them was dealt a blow when the firm was deemed ineligible for loan guarantee programs through the U.S. Energy Department.

While Molycorp is a private firm and is likely to eventually turn a profit, some lawmakers, including Rep. Jerry Lewis, R-Redlands, have said American rare earth production is a national security issue, since it is vital for many defense programs.

During a hearing March 16 before the House subcommittee on Science and Technology, the push for federal assistance gained more traction when the panel's chairman, Rep. Brad Miller, D-N.C., described Smith's operation as vital in reducing dependence on the Chinese.

"If we intend to rebuild America's capability to supply its own needs in rare earth materials, if we intend to foster a home-grown capability to make the devices that provide wind energy, we can't succeed unless he and others like him succeed," Miller said.

Separately, Rep. Mike Coffman, D-Colo., the following day introduced legislation that would make Molycorp's plan eligible for the loan guarantee program, which would allow the company to borrow 70 percent of the $450 million cost, to be paid back over 10 years, Smith said.