June 20 (Reuters) - Shares of Molycorp Inc rose more than 12 percent on Wednesday after China denied it was interfering with rare earth prices, saying increases reflected higher customs costs and demands by foreign companies for better-quality products.
China, which exports most of the world's rare earth supplies, also challenged foreign estimates of its resources, saying it has just 23 percent of world totals, not the 36 percent that the United States has estimated.
China's state economic planners are considering ways to reshape the country's program of stockpiling strategic materials and could include metals such as rare earths in the program, according to sources.
The lingering uncertainty around Chinese exports sent Molycorp's shares as much as 12.8 percent higher to $23.29 on Wednesday morning on the New York Stock Exchange, with the stock later trading up 8.9 percent at $22.50.
Molycorp is in the process of modernizing and reopening the Mountain Pass rare earth mine in California, which is expected to come online later this year.
Smaller companies developing rare earth projects in the United States and Canada also climbed, with Rare Element Resources Ltd and Quest Rare Minerals Ltd both soaring more than 10 percent.
China currently produces more than 90 percent of the world's supply of rare earths, essential for everything from smartphones to LED screens. Prices for the group of 17 metals skyrocketed last year as China imposed quotas in what it says is an effort to curtail environmental pollution and resource exhaustion.
"It's remarkable how when they need additional supply, they suddenly find reserves, but when they don't want there to be supply around and it supports their argument, then suddenly the reserves are shrinking," said Jon Hykawy, an analyst with Byron Capital Markets in Toronto.
In March, the European Union, the United States and Japan complained to the World Trade Organization that Beijing had illegally choked off rare earth exports while holding down prices for domestic manufacturers.
Despite a 30,184 tonne export quota in 2011, China says it shipped only 18,600 tonnes last year. The government has said the quota will remain steady in 2012.