June 20 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
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
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.