The president and CEO of Molycorp, Inc. shares his thoughts on the how the U.S. can fit into the increasingly important global rare earth metals industry.
In this, the first of two interviews, Hard Asset Investor's Tom Vulcan talks with Mark Smith, president and CEO of Molycorp, Inc., the Western Hemisphere's only producer of rare earth oxide, about the revival of the rare earths manufacturing supply chain in the U.S., rare earths in green energy applications, and new sources of rare earths and recovery rates.
Tom Vulcan (Vulcan): With Molycorp moving forward as it is, and with a number of other prospects in North America looking as if they have at least some chance of actually producing rare earths, do you see any serious re-creation or revival of the rare earths manufacturing supply chain in the U.S.?
Mark Smith (Smith): There is no doubt in my mind that you are going to see a re-creation and revival of the rare earth manufacturing supply chain in the U.S., particularly as it relates to mining through magnets. And I will also say that there is one company that is going to be doing that. I don't know, though, that I can speak very highly about the prospects of other companies being involved in it.
Vulcan: And that one company is ... ?
Smith: ... Molycorp. I don't want to sound too negative, Tom. But the other ore grades that we see out there, the ore bodies, in terms of continuity, and the complete lack of any start on permitting, financing or metallurgical work, suggests that even if something does come on-line in North America, other than Molycorp, it's going to be a long, long time yet.
Vulcan: Added to all those factors, Mark, isn't it also true that there's no one out there, except for yourselves, with the requisite experience?
Smith: Right. Particularly when you talk about going all the way to metals. And actually, we have significant experience in the alloy business as well. The other issue—and it is a huge threshold issue for anyone—is the intellectual property involved in the production of neodymium-iron-boron alloys and magnets. And we now have that resolved, as well, by virtue of our arrangements with Hitachi. We announced the Hitachi deal in December last year.
I would have to say that I didn't have as good of an appreciation as I needed two years ago, in terms of the intellectual property requirements, for this alloy and magnet production business. It is enormous! And we have partnered with the right company to address that issue so that such production will become a reality in the United States. It will be real by the end of 2012.