Blue Line CEO on rare earths: The world is dependent on China for these critical materials

Blue Line CEO Jon Blumenthal on rare earths and the mounting trade war with China.
Rare earth elements are used every day. They are metals that are used in everything from cell phones to cars, televisions, military jet engines and medical devices. 
China's price manipulation bankrupted the American company!

Why rare-earth mining in the West is a bust

Author’s note: Four years ago the future looked brilliant for Molycorp, the owner-operator of Mountain Pass, the United States’ only rare-earth mine. Rare-earth prices were sky-high thanks to Chinese market manipulation; in Washington, politicians were backing domestic production to the hilt; and investors were bullish. Measured by its stock price, Molycorp was a $6 billion company. As of this writing, on June 15, Molycorp was worth $101 million. Its shares have fallen from a high of nearly $80 to just 36 cents. The company is $1.7 billion in debt, unable to make payments, and likely to declare bankruptcy at its annual shareholders meeting June 25 in Toronto. If Vegas were giving odds, I’d be willing to bet that soon the U.S. will not have a single rare-earth mine in operation.
I’d also bet that we won’t have one again any time soon, nor a new lithium mine (to add to the single, small one now operating), nor a vanadium mine (despite promising new uses for the metal), nor any mine for any of the 62 so-called energy-critical elements. Each is vital to modern digital or energy technology. The U.S. contains potential sources for many of them, and powerful voices in politics and business insist that the country must exploit them. But despite skyrocketing demand for the energy-critical elements, would-be domestic producers just can’t compete with global forces. This then is a story of comprehensive failure — but not the obvious one. Molycorp’s impending demise reflects failure by politicians and the media to understand how weak China’s grip on the metals market really is, and failure by Wall Street to understand the most basic dynamics of supply and demand, and failure by Silicon Valley to distinguish between hype and hard numbers. Whatever happens next week in Toronto, Molycorp’s story shouldn’t be seen as singular. It should be seen as a warning.
But if the camps apprehend the situation differently — a confident “we will dig” versus a fretful “we must dig” — they share two basic assumptions. Both are certain that America’s chief prospects for producing energy-critical elements lie in the West, the nation’s mineral breadbasket. And both believe that the West is just the stroke of a pen away from yet another resource boom.

Only producing U.S. rare earths mine goes on the block

The gavel is coming down on Mountain Pass tomorrow, as the only producing rare earths mine in the United States goes up for auction.
The California mine formerly owned by Molycorp closed in 2015, when the Colorado-based company, once valued at $6 billion, went bankrupt.
According to Wyoming Business Report there are two rival groups bidding for the mine: ERP Strategic Minerals, Swiss private equity firm Pala Investments and Peak Resources (ASX:PEK), an Australian rare earths company. The other potential buyer is a group of Molycorp's creditors including QVT Financial of the US and Chinese rare earths mining company Shenghe Resources.
ERP Strategic Minerals was selected as the "stalking horse bidder" by the Chapter 11 trustee for Molycorp Minerals LLC, a unit of Molycorp, at the end of April. A stalking horse bidder is the first bidder to make a bid out of a bankruptcy.
Mountain Pass was the only rare earths mine operating in the United States, before it went bankrupt in 2015 – a victim of low rare earth oxide prices. At the time Molycorp listed $1.7 billion in debt. Through bankruptcy proceedings Molycorp was restructured, allowing it to receive $130 million in debt financing.
Molycorp then moved Mountain Pass into care and maintenance, while continuing to serve customers through its production facilities in Estonia and China.
Mountain Pass was expected to be America’s flagship source of rare earths. In 2010 Molycorp sensed an opportunity to capitalize on reduced rare earth oxide exports from China – which supplies about 90 percent of the world's rare earth minerals – which had caused the prices of REOs to spike. When China subsequently relaxed export rules, however, prices fell, leaving Molycorp to pay the bill for a $1.25 billion state-of-the-art processing facility.
Hit by lower rare earth prices, Molycorp warned it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.