(Note: This news was disclosed during Molycorp's 2Q 2011 earnings call on Thursday, Aug. 11, 2011)
GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Molycorp, Inc. (NYSE: MCP), the Western hemisphere's only producer of rare earth oxides (REO) and the largest REO producer outside of China, announced that it has reached an agreement with Hitachi Metals to supply the company with rare earth magnetic materials, including Didymium (a mix of neodymium and praseodymium) metal and alloy, as well as Lanthanum Oxide.
The three-year deal, which extends and expands upon an existing supply relationship between the companies, significantly increases the amount of rare earth materials that Molycorp will provide Hitachi Metals. The volume begins at a level comparable to the companies' current agreement and grows substantially when Molycorp reaches its Phase 1 production level in 2012 at its flagship rare earth production facility at Mountain Pass, California.
"We are very pleased to be moving forward with this significant supply agreement to produce high-quality rare earth products for Hitachi Metals," said Mark A. Smith, President and CEO of Molycorp. "Hitachi Metals has a long standing reputation as a global leader in the development and manufacture of advanced technology products that require rare earth materials, and we look forward to playing a very prominent role in their production supply chain."
Building upon its "mine to magnets" vertical integration strategy, Molycorp's newly announced supply relationship with Hitachi Metals demonstrates the progress the company has made in developing its downstream manufacturing capabilities over the past year. The oxide and metal production at the Molycorp Silmet facility in Estonia and the alloy production at the Molycorp Metals and Alloys facility in Tolleson, Arizona, will enable the company to produce the upgraded magnetic materials necessary to meet a significant portion of Hitachi Metals' global requirements when Molycorp reaches its full, Phase 1 production levels at Mountain Pass.
"The strategic acquisitions we have made this year and the technology innovations we are building into our Mountain Pass facility position us to produce some of the world's most advanced magnetic materials," Smith said. "We are proud that our rapidly growing manufacturing supply chain will be able to meet the exacting specifications of a renowned global technology company like Hitachi Metals."
Separately, Molycorp and Hitachi Metals announced that they are suspending discussions for now on their December 2010 letter of intent to create a joint venture in the U.S. to manufacture neodymium-iron-boron (NdFeB) alloy and permanent magnets made from the alloy. The companies were unable to reach agreement on certain key matters affecting the value of the joint venture to each party.
"We remain fully committed to producing rare earth permanent magnets and to capturing the highest value of our rare earth materials throughout the supply chain," said Smith. "In fact, we have been in advanced discussions with other companies regarding magnet joint venture opportunities for some time, and we look forward to sharing more details on these developments in the near future."
Colorado-based Molycorp, Inc. is the only rare earth oxide (REO) producer in the Western Hemisphere and the largest REO producer outside of China. The company currently is expected to produce a total of between 4,541 to 5,813 metric tons of commercial rare earth materials in 2011 from its three facilities. In addition to its flagship rare earth mine and processing facility at Mountain Pass, California, Molycorp also owns a controlling interest in the Estonia-based Molycorp Silmet AS. One of the largest rare earth and rare metal producers in Europe, Molycorp Silmet AS has an annual production capacity of approximately 3,000 metric tons of rare earth products and 700 metric tons of rare metal products. Molycorp also owns Molycorp Metals and Alloys in Tolleson, Arizona. Formerly known as Santoku America, Inc., the facility is one of the leading producers of high-purity rare earth alloys and metals outside of China, and manufactures neodymium-iron-boron (NdFeB) alloy and samarium cobalt (SmCo) alloy, as well as other specialty alloys and products. Following the execution of Molycorp's "mine-to-magnets" strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass. The Company expects to achieve an annual production capacity at Mountain Pass by the end of 2013 of approximately 40,000 metric tons of REO equivalent after the completion of Phase 2. Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.
Safe Harbor Statement Regarding Forward-Looking Statements
This release contains forward-looking statements that represent Molycorp's beliefs, projections and predictions about future events or Molycorp's future performance. Forward-looking statements can be identified by terminology such as "may," "will," "would," "could," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp's actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.
Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp's ability to secure sufficient capital to implement its business plans; Molycorp's ability to complete its Phase 1 modernization and expansion efforts and Phase 2 expansion efforts and reach full planned production rates for REOs and other planned downstream products; the final costs of the Phase 1 modernization and expansion plan and Phase 2 expansion, which may differ from estimated costs; uncertainties associated with Molycorp's reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earths materials; Molycorp's ability to successfully integrate recently acquired businesses; Molycorp's ability to reach definitive agreements for a joint venture to manufacture neodymium-iron-boron permanent rare earth magnets and its supply and financing arrangement with Sumitomo; Molycorp's ability to maintain appropriate relations with unions and employees; Molycorp's ability to successfully implement its "mine-to-magnets" strategy; environmental laws, regulations and permits affecting Molycorp's business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining.
For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2010 filed with the SEC. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K reflects Molycorp's current views with respect to future events and Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.
Brian Blackman, +1 303-843-806
Senior Manager, Investor Relations
Gary T. Dvorchak, CFA, +1 310-954-1123
Senior Vice President