NEW YORK (

TheStreet

) --

Molycorp

(MCP)

is competing for federal loans guarantees to support its development of rare-earth mining and manufacturing projects, according to

Bloomberg.

The report cites the company as saying that it wants the loan guarantees to help convert the rare-earth materials that it mines into metals, alloys and magnets -- boosting supply chain efficiency. The company is lobbying against efforts by competitors to speed up environmental assessments that it has already gone through.

Bloomberg

reports that Molycorp said late last year that it was planning to form joint ventures with Japan's

Hitachi Metals

to make alloys and magnets in the U.S. "It's a very jealous industry," said a source cited by

Bloomberg.

The report comes as U.S. lawmakers work to rejuvenate U.S. production of rare earths after China announced it was slashing its exports of the materials this year.

Molycorp anticipates that its rare-earth mine at Mountain Pass, Calif. will commence production in the back half of 2012.

Moly rival

Lynas

(LYSCF.PK)

said that its concentration plant at Mount Weld in Western Australia is due to begin operating in February, despite some prelaunch delays. It also said its Lynas Advanced Materials Plant (LAMP) in Malaysia remains on schedule for its first production of rare-earth materials in the third quarter of 2011.

Even though a bulk of the rare-earth companies, including

Rare Element Resources

(REE)

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and

Avalon Rare Metals

(AVL)

have a long way to go before reaching production phase, rare-earth stocks outside China have been heating up with particular force since China's announcement in late December that it would cap rare-earth exports by 35% in the first half of 2011 versus the same time last year.

More than 95% of the world's rare-earth minerals supply comes from China.

On Friday,

CNBC

reported that James Tuer, president of Canadian rare-earth outfit Hudson Resources, said he doesn't see a bubble forming among the rare-earth companies any time soon, even as skeptics continue to express doubts about many of them. "I don't see a reduction in the underlying rare earth prices," he said. "In fact, I see the prices going up."

Shares of Molycorp have fallen 5.1% to $46.40 in midday trading, as Rare Element tumbles 6% to $13.56. Avalon has dropped 7.2% to $5.69 and Lynas has fallen 1.9% to $2.02.

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-- Written by Andrea Tse in New York.

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