Demand for Molycorp’s rare earth products “appears to be returning to more normalized levels, albeit at a subdued pace, as customers have been reducing inventories and adjusted their purchasing plans accordingly, Molycorp CEO Geoff Bedford told analysts Tuesday.
“Overall in the rare earth market, we’re starting to see less price volatility, which is positive as it brings confidence back to the market and encourages customers to increase their use of rare earths,” he noted, adding “it can also lead to new application growth across our supply chain.”
In the near to mid-term, Bedford continues to expect to see rare earth volumes increase, price volatility decrease, and margins return to more typical levels as demand continues to normalize. “Longer term, we continue to expect global demand for rare earths to increase across most sectors,” he predicted.
After more than three years of construction and commissioning of complex and interconnected systems, Bedford told analysts that all 12 of the Mountain Pass operating systems are now in operation. “That alone is a major accomplishment, and one of which everyone at Mountain Pass and across the company are very proud.”
Mountain Pass employees are now working to optimize and debottleneck the facility’s processes.
Molycorp’s chloralkali plant is now operational and utilizes recycled water, which will reduce water discharge by as much as 70%. The hydrochloric acid and caustic produced in the plant is consumed internally in Mountain Pass rare earth separation process, which will drive additional cost savings.
However, even as Mountain Pass production volumes are increased, Bedford warned, “it is likely that we will continue to encounter unforeseen interruptions. We anticipate production in the first half of 2014 to be below the design capacity of 19,050 metric tons on an annualized basis.”
“As our production rates rise, we expect our unit production cost to continue to decline,” he advised.
“On the demand side, we are encouraged by the demand outlook we are hearing from customers, both internal and external, for lanthanum, neodymium, praseodymium, and light rare earth concentrate, which we call alloys,” said Bedford.
“We are encouraged in terms of customer interest, in increased output of Mountain Pass, and the revenue we can generate from converting Mountain Pass products into higher value specialty and engineered rare earths materials in our downstream business,” Bedford stressed, adding “we have quite a bit of interest in the Japanese and some of the European markets for material that’s coming out of Mountain Pass.”
