MP Mine Operations, a consortium led by Chinese rare earths mining company Shenghe Resources, submitted a bid of $20.5 million for the Mountain Pass rare earths mine in California. MP Mine Operations, won the auction for the lone functioning rare earths mine in the United States by outbidding a consortium made up of ERP Strategic Minerals LLP, Swiss private equity firm Pala Investments and Peak Resources (ASX:PEK), an Australian rare earths company.
The Mountain Pass Mine was owned by Molycorp which looked to capitalize on reduced imports of rare earth oxides (REO) from China in 2010. The company invested $1.25 billion in a state-of-the-art processing facility when the price of REO’s spiked, but when China eased its rules on exports the price of REO dropped and Molycorp began a tailspin that would end with the company filing for chapter 11 bankruptcy protection. The Mountain Pass Mine was put into care and maintenance. 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.
The sale of the mine still faces scrutiny from regulators, who may take issue with foreign ownership of a strategic asset. Rare earths are used in a number of important economic and strategic applications including magnets for green technologies like wind turbines and hybrid cars, aircraft engines and computer hard drives.
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.