UPDATE 1-Rare earth producer Molycorp wins OK for mine

Mon Dec 13, 2010 4:04pm GMT
 

* Final permits secured

* Shares up 7.4 pct

NEW YORK Dec 13 (Reuters) - Rare earth metals producer Molycorp Inc (MCP.N: Quote) said it has secured the remaining permits necessary to start building a mining and manufacturing center in California, enabling the company to begin mining ore next year.

Molycorp will break ground on the $531 million facility in Mountain Pass, California, on Jan. 2. The facility is scheduled to reach full capacity by the end of 2012, the company said.

Molycorp, the only rare earth oxide producer in the Western Hemisphere, has begun pre-stripping operations after winning state approval for altering a streambed, the last of several environmental permits needed.

Molycorp shares were up 7.4 percent to $33.62 in morning trading on the New York Stock Exchange.

Last week, Japanese trading house Sumitomo Corp (8053.T: Quote) agreed to invest $130 million in Molycorp in exchange for a guaranteed seven-year supply of the minerals, which are used in products ranging from wind turbines to MP3 players. [ID:nN10286929]

Greenwood, Colorado-based Molycorp has become a darling of Wall Street since China cut its export quotas on the elements -- also used in computer hard drives -- by more than half, sending prices of the minerals soaring. Molycorp shares are up about 140 percent from their $14 initial public offering price in July.

Molycorp last month reported a quarterly loss as it modernizes its mine, and said it would not issue sales or earnings targets because of volatile rare earth prices. Its CEO said global supply and demand would remain out of balance for the foreseeable future. [ID:nN15274207] (Reporting by Nick Zieminski; editing by John Wallace)

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