By Robert Sullivan - Exclusive to Rare Earth Investing News

Two of the biggest names in the rare earths industry outside of China have endured a stark contrast in fortunes over the past two weeks.

Colorado-based Molycorp Inc. (NYSE: MCP) announced on October 20 that it would be opening a new processing plant in California months ahead of schedule, with the expected start-up date now slated for early 2012.

To coincide with the early start for the new facility, Molycorp also announced they would soon be restarting operations at their Mountain Pass mine in order to build stock for the plant.

The 3,500 tonnes of rare earth oxides equivalent (REO) expected from the facility should push Molycorp's total output in 2012 up to 8,000-10,000 tonnes of REO.

Capacity at Mountain Pass is then anticipated to jump to 19,050 tonnes of REO in 2013 with the completion of Phase 1 of Project Phoenix, a $781 million expansion and modernization project at Mountain Pass that could eventually see the complex generating 40,000 tonnes of REO per year.

In a company statement, CEO Mark Smith explained that “[Molycorp] are accelerating our start-up because of robust rare earth oxide markets and very favorable project economics.”

“By accelerating our start-up, we also further de-risk the overall project by allowing for a more orderly and sequential start-up of the various circuits of this highly complex plant," he added.

Analysts speaking to Reuters pointed out that the acceleration was a positive sign for Molycorp in the face of lingering criticism that the company lacks significant reserves of high value heavy rare earth elements (HREE), and added that the news could add some stability to prices that are expected to rise in late November when China is scheduled to release its rare earths production and export quotas for 2012

Lynas suffers Malaysia import license setback

Lynas Corp. (ASX: LYC), meanwhile, suffered a setback in their quest for a license from the Malaysian government to import rare earths from their Mount Weld mine in Australia to an advanced materials processing plant the company is building in Kuantan, Malaysia.

A joint statement released on October 19  by the Malaysian Ministry of International Trade and Industry and the Ministry of Science, Technology and Innovation confirmed that “[Lynas] is not authorized to import any rare earth ores into Malaysia without the prior approval of the Atomic Energy Licensing Board (AELB).”

“For the importation of rare earth ores into Malaysia, a would-be importer has to be issued a two-stage authorisation…at this point in time, Lynas was neither issued an AELB Class E (Import/Export) license nor does it qualify yet for a permit to import rare earth ores into Malaysia.”, the statement went on to clarify.

A response from Lynas immediately following the statement from the Malaysian government pointed out that “no decision is expected to be made for some weeks,” and highlighted pressure from activist groups and politicians who oppose the Kuantan facility as the reason behind the announcement from the Malaysian authorities.

A week earlier on October 12, the AELB revealed that it had received a long-term waste management plan from Lynas, which an IAEA panel had recommended the company submit before the import licensing phase for the Kuantan facility went ahead.

Speaking with The Star in Malaysia, AELB director-general Raja Datuk Abdul Aziz Raja Adnan confirmed the “[AELB] have received the long-term waste management plan from Lynas but we have not analysed it yet.”

“The plan will not be made public as I do not consider it submitted until we make sure it is in accordance with international standards,” he added.

Analysts believe Lynas will eventually secure an import license, but cautioned that the politics surrounding the deal did pose a legitimate threat.

“If it was a regulatory decision, Lynas should be able to jump through any hoops. But if it is a political decision, then the risk of a more negative outcome increases,” Mike Harrowell, rare earths analyst at BBY, told the Financial Times.


Disclosure: I, Robert Sullivan, hold no direct investment interest in any company mentioned in this article.

Contrasting Fortunes for Molycorp and Lynas from Rare Earth Investing News