CHICAGO - Rare earth oxide producer Molycorp. Inc. said it will double its rare earth production capacity to about 6,000 tonnes per year from 3,000 tonnes with acquisition of a controlling stake in Estonia's AS Silmet, one of Europe's two rare earth processors.
Molycorp, which is the only REO producer in the Western Hemisphere, is currently modernizing and expanding its Mountain Pass, Calif., processing facility to produce at a rate of 19,050 tonnes per year when Phase 1 work is completed next year and will expand to output of 40,000 metric tons of REO equivalent after completion of Phase 2 at the end of 2013.
Executives said Molycorp had paid approximately $89 million to buy 80% of Sillam"ae, Estonia,-based AS Silmet from AS Silmet Grupp and another 10.023% from Treibacher Industrie AG. AS Silmet Grupp, which is chaired by former Estonian Prime Minister Tiit V"ahi, will retain a 9.977% stake in the company.
The acquisition will provide Molycorp with its first European base of operations. AS Silmet will immediately begin sourcing rare earth feed stocks for production of its products form Molycorp's Mountain Pass rare earth mine and processing facility, making it the first rare earth oxide and metal producer in Europe that is not dependent on rare earth materials sourced from China, the executives said.
The Estonian company, which will be renamed AS Molycorp Silmet, will also continue to process niobium and tantalum, expanding Molycorp's manufacturing beyond rare earths, but will primarily focus on production of rare earth oxides and metals, including didymium metal, a critical component in manufacture of neodymium-iron-boron permanent rare earth magnets, executives said.
"We are very excited to be adding the 550 very talented employees of AS Silmet to the Molycorp family," Mark A. Smith, Molycorp's president and CEO, said in a statement. "And especially to gain the talents, skills, and experience of David O'Brock, AS Silmet's managing director. David has delivered great value to the company and will be an important asset going forward to AS Molycorp Silmet and to our overall growth strategies."
Greenwood Village, Colo.,-based Molycorp.'s share price climbed more than 10% following the announcement of the deal and was trading at close to $66 per share in mid-afternoon New York Stock Exchange action.
Phil Burgert is managing editor of ResourceInvestor.com. He can be contacted at email@example.com.