Sumitomo Corp and Molycorp Tie MOU for Mt. Pass Development and Rare Earth Supply to Japan

Sumitomo Corporation, Japanese major general trader, announced on Monday the firm concluded a Memorandum of Understanding with Molycorp, U.S. rare earth mining company, for US$ 130 million funding by Sumitomo Corp to restart and expand Molycorp’s rare earth mine in Mountain Pass, California, the U.S.A. and rare earth supplying by Molycorp to Japanese market. Molycorp will start supply of cerium and lanthanum based products at 2,500 tonnes per year as well as didymium at 250 tonnes per year in February 2011 through Sumitomo Corp’s distributorship in Japanese market.

Sumitomo Corp will subscribe for Molycorp’s newly issued shares at US$ 100 million and loan US$ 30 million to Molycorp. Sumitomo Corp plans to offer financial support to Japan Oil, Gas & Metals National Corporation (JOGMEC).

Molycorp restarts existing rare earth production facilities in Mountain Pass to accelerate rare earth supply commencement to Japanese market. The firm also plans the facilities’ conversion to produce rare earth products fitting Japanese users’ demand.

Meanwhile, the newly constructed facilities have output capacity at 20,000 tonnes per year. The construction will complete in the second half of 2012. After the completion, the supply volume of cerium and lanthanum based products to Japanese market will reach 3,000 tonnes per year.

Molycorp started rare earth mining and production at Mountain Pass in 1952 but suspended the operation since price competitiveness weakened in the international market. In 2008, the firm’s new management team engaged the project to restart the production and construct a new plant. The firm was listed on New York Stock Exchange in July 2010 and raised approximately US$ 400 million from the Exchange. However, the project needed total US$ 500 million investment.