Molycorp Inc., owner of the largest rare-earth deposit outside of China, rose the most in 12 weeks after saying it completed a project that will more than double output and cut costs at a California facility.
Molycorp jumped 11 percent to $7.36 at the close in New York, the biggest gain since July 10. A new chloralkali plant, which recycles wastewater and produces acid and caustic soda, will help make Molycorp’s Mountain Pass facility competitive with the lowest-cost producers globally, the Greenwood Village, Colorado-based company said in a statement today.
The company also completed the final unit of its multistage cracking plant to help increase output. Delays had hampered the project, which Molycorp has said will expand production from about 7,000 metric tons a year to 19,050 metric tons. The plants will begin operating in the fourth quarter, Molycorp Chief Executive Officer Constantine Karayannopoulos said in the statement.
The news is “welcome and important,” Jonathan Hykawy, a Toronto-based analyst at Byron Capital Markets Ltd., said in an e-mail today. The facilities’ completion “goes directly to major cost reductions and volume increases.”
Once customers are confident that Molycorp’s supplies are a reliable replacement to materials bought from China, “real demand should start to pick up” in the first half of next year, Hykawy said.
Rare earths are 17 chemically similar elements used in applications including batteries, magnets and oil refining. China controls more than 90 percent of global supplies, according to the U.S. Geological Survey.