Last August 26, the US Company Molycorp announced the closure of its rare earth mine in Mountain Pass. This decision follows the announcement of the bankruptcy of the company in June. Management has announced that it may restart its mine based on "market conditions and other factors that are difficult to predict." This is a blow to the developed countries that relied on this source of rare earths to reduce the Chinese monopoly on global production.
After a reduction of export quotas decided by Beijing which had increased the prices of some metals by about 20 Mountain Pass reopened in 2010, the US Government, wishing to strengthen its independence and protect its mining industry of rising prices, had supported Molycorp to open its mine closed 10 years ago.
Producer of the less strategic rare earths, Molycorp has suffered very quickly from the market downturn in 2012. The market cap of the company has lost 86% of its value in four years and it now displays a debt of 1.7 billion dollars. The closure of its mine puts developed countries in a situation of stronger dependency on China, even as these metals are increasingly essential to the industry of energy and defense in Europe. This closure makes more necessary than ever the constitution of rare earth stocks in Europe and the United States. MTL Index aims to be a major player in this storage policy.
MTL Index offers since 2013, to individuals who want to diversify their savings, to invest in strategic metals lots. The company has supported nearly 1,500 clients in their investments; this activity allowed the formation of large stocks of rare earths, currently stored in Germany and Switzerland. In case of new strategic metals shortages, these stocks will cushion the financial shock that would represent a new price surge.
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Source: MTL Index via Globenewswire
