By Adam Currie — Exclusive to Rare Earth Investing News
The global rare earth market has been witness to an eventful month, with attention being shifted to the recent announcement by US Congress that domestic rare earth supplies will sufficiently meet the US defense industry's needs by 2013. This assessment was given much needed emphasis recently when Molycorp Inc. (NYSE: MCP) announced that its proven and probable reserves of rare earth minerals at its Mountain Pass, California facility have increased by 36 percent. Updated resource estimate The updated estimate, undertaken by independent consulting firm SRK Consulting, expanded Molycorp's reserves to 18.4 million short tons of rare earth ore at an ore grade of 7.98 percent and a cut-off grade of five percent. Many feel that the announcement is likely to have an influential effect on the market as it is a substantial increase on the previous estimate of 13.6 million short tons. SRK estimates that the proven and probable component of Mountain Pass' ore body contains approximately 1.3 million metric tons of contained rare earth oxide (REO) equivalent. The estimate was based on analysis of an updated mine plan that calculated material volumes, tonnes, in-situ grades, and concentrate tonnes. At a time when consumers are searching for sources of rare earth elements (REEs) outside of China, the deposit presents an enticing market opportunity. Location and history The company's Mountain Pass facility is situated on the southern flank of the Clark Mountain Range and just north of the unincorporated community of Mountain Pass, California. The mine has had a colorful history in that it once supplied most of the world's REEs and is now seeking to re-emerge as a major global supplier. The rare earth carbonatite complex was discovered almost by accident in 1949, when two prospectors, using a borrowed a Geiger counter, staked a series of claims on a radioactive outcrop that they believed had potential as a uranium resource. Samples sent to the US Geological Survey (USGS) for analysis were identified as the rare earth fluorocarbonate bastnaesite. The USGS immediately undertook a detailed field survey of the area and found a much larger, non-radioactive deposit of bastnaesite on the adjoining land. One of the two original prospectors, a metallurgist for Molycorp, urged the company to claim the land. The corporation was acquired by Union Oil in 1977, which in turn became part of Chevron Corp. (NYSE: CVX) in 2005. Geology According to a company description, the Mountain Pass deposit is in a 1.4 billion year old Precambrian carbonatite intruded into gneiss, and contains eight to twelve percent REOs, mostly contained in the mineral bastnasite. Gangue minerals at the site include calcite, barite, and dolomite.