NEW YORK (AP) â¿¿ Shares of companies that produce rare earth minerals fell Thursday after Molycorp Inc. said 2013 revenue will be lower than expected, partially as a result of current rare earth material prices.
The company, based in Greenwood Village, Colo., produces rare earth minerals used in a wide variety of applications, including consumer electronics and hybrid and electric vehicles.
While it blamed the shortfall on production delays at its flagship mine, it also cited current rare earth material prices, which dropped significantly in 2012 after soaring the year before.
Molycorp also said it won't go forward with an expansion project at its mine, which would double its production capacity, until market demand, prices, capital availability and financial returns justify higher production.Molycorp shares tumbled, losing as much as 25 percent. In afternoon trading, they were down $2.43, or 22.6 percent, at $8.36. The company's announcement prompted J.P. Morgan analyst Michael Gambardella, who rated Molycorp "Underweight" to cut his price target to $5 from $8, citing low rare earth prices and expectations that the company won't boost production anytime soon. He added that he remains "very concerned" about what will happen to rare earth prices as increasing supplies from Molycorp and Lynas Corp. run up against lackluster demand from many parts of the world. Elsewhere in the sector, shares of Quest Rare Minerals Ltd. dropped 9 cents, or 7.4 percent, to $1.07; Avalon Rare Metals Inc. fell 9 cents, or 6 percent, to $1.42; Rare Element Resources Ltd. fell 16 cents, or 4.5 percent, to $3.39; and Lynas Corp. Limited shares fell 2 cents, or 2.6 percent, to 73 cents.