EDITOR: | April 15th, 2015 | 10 Comments

Molycorp Chosen to Supply Rare Earths for Use in High-Efficiency Siemens Wind Turbine Generators

| April 15, 2015 | 10 Comments
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April 15, 2015 (Source: Globe Newswire) — Siemens AG (“Siemens”) has selected Molycorp, Inc. (NYSE:MCP) (“Molycorp”) to supply rare earth materials over the next 10 years from its Mountain Pass, California facility for incorporation into Siemens’ high-efficiency, direct drive wind turbine generators. Molycorp will supply rare earth materials to Shin-Etsu Chemical Co., Ltd. (“Shin-Etsu”), which will produce the rare earth magnets Siemens intends to utilize in its wind turbines.

Siemens officials noted that key factors in choosing Molycorp were Molycorp’s ability to provide greater global diversification and reliability to its supply chain, as well as the environmental and process innovations Molycorp has built into its Mountain Pass rare earth facility. Among those innovations are the facility’s ability to recycle water, regenerate the chemical reagents needed in rare earth production, generate power from a high-efficiency natural gas cogeneration power plant, and dispose of mine tailings through an innovative paste tailings system.

Siemens officials said that the magnets to be used in its direct drive wind turbines will contain reduced levels of heavy rare earth elements (HREEs), such as dysprosium. In collaboration with Siemens Wind Power, Molycorp and Shin-Etsu will improve the magnet material to reach zero HREEs, Siemens said. At the same time, Siemens added, supply chain reliability will be increased and costs will be reduced.

“The contract with Shin-Etsu and Molycorp is an important step for us in sourcing magnet materials for our direct drive wind turbines,” said Morten Rasmussen, Head of Technology at Siemens Wind Power and Renewables Division. “We strive for diversification in the sourcing of these components to improve independency from specific markets.”

“We are very pleased to have been selected to supply Siemens and Shin-Etsu with rare earth magnetic materials for this important clean energy supply chain project,” said Geoff Bedford, Molycorp’s President and Chief Executive Officer. “This agreement underscores Molycorp’s commitment to partner with our customers to support their product development efforts and serve as an integrated, long-term provider of reliable rare earth supply.”

More information on Siemens’ direct drive wind turbines can be seen here:

  • Siemens’ D3 Platform: http://www.energy.siemens.com/hq/en/renewable-energy/wind-power/platforms/d3-platform/
  • Siemens’ D7 Platform: http://www.energy.siemens.com/hq/en/renewable-energy/wind-power/platforms/d7-platform/

ABOUT MOLYCORP

Molycorp is the only advanced material manufacturer in the world that both controls a world-class rare earth resource and can produce high-purity, custom engineered rare earth products to meet increasingly demanding customer specifications. With production facilities on three continents, the Company produces a wide variety of specialized products from rare earth elements and five rare metals (Gallium, Indium, Rhenium, Tantalum and Niobium). The Company produces rare earth magnetic materials through its Molycorp Magnequench subsidiary, including neodymium-iron-boron (NdFeB) magnet powders, used to manufacture bonded NdFeB permanent rare earth magnets. The Company also markets and sells a line of rare earth-based water treatment products. For more information please visit http://www.molycorp.com.

SAFE HARBOR STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This release contains forward-looking statements that represent Molycorp’s beliefs, projections and predictions about future events or Molycorp’s future performance. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp’s actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements.

Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp’s ability meet the standards necessary to maintain its listing on the New York Stock Exchange or other stock exchange, including its ability to cure any non-compliance with such listing standards; the need to secure additional capital to implement Molycorp’s business plans, and Molycorp’s ability to successfully secure any such capital, including the ability to successfully access the remaining commitment under the financings with certain funds managed by Oaktree Capital Management, L.P.; Molycorp’s ability to make interest payments on its existing debt; Molycorp’s ability to repay its debt, whether at maturity, pursuant to any acceleration, or otherwise; Molycorp’s ability to optimize and ramp up production at its Mountain Pass rare earth mine and processing facility, which we refer to as the Mountain Pass facility, and the ability to develop internal and external demand for REO and other downstream products, including the ability to operate at commercial production rates and competitive cash production costs, in each case within the projected time frame; Molycorp’s  ability to economically produce chemical reagents from waste water at the Mountain Pass facility on a consistent basis; the success of Molycorp’s cost mitigation efforts in connection with the optimization and ramp up of the Mountain Pass facility, which, if unsuccessful, might cause its costs to exceed budget; the final costs of Molycorp’s planned capital projects, which may differ from estimated costs; Molycorp’s ability to achieve fully the strategic and financial objectives related to its acquisitions, including in respect of Molycorp’s financial condition and results of operations; risks and uncertainties associated with intangible assets, including any future goodwill impairment charges and the ability to develop and protect intellectual property related to products and operations; risks associated with Molycorp’s ability to protect its intellectual property, including the infringement of intellectual property of third parties; market conditions, including prices and demand for Molycorp’s products; Molycorp’s ability to control its working capital needs; foreign exchange rate fluctuations; the development and commercialization of new products; unexpected actions of domestic and foreign governments; various events which could disrupt operations, including natural events and other risks; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures and economic returns, REO prices, production costs and other expenses for operations, which are subject to fluctuation; uncertainties regarding global supply and demand for rare earths materials; uncertainties regarding the results of Molycorp’s exploration programs; Molycorp’s ability to enter into definitive agreements with its customers, its ability to supply such customers, and its ability to maintain customer relationships; Molycorp’s ability to maintain appropriate relations with unions and employees; Molycorp’s ability to attract and retain employees with the necessary experience, skills and training; Molycorp’s ability to successfully implement its vertical integration strategy; environmental laws, regulations and permits affecting Molycorp’s business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining; and the outcome of the current stockholder class action litigation and derivative litigation, including any actions taken by government agencies in connection therewith.

For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and of the Company’s Quarterly Reports on Form 10-Q. Any forward-looking statement contained in this release or the Annual Report on Form 10-K or the Quarterly Reports on Form 10-Q reflects Molycorp’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp’s operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.


Raj Shah

Editor:

Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>


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Comments

  • Jack Lifton

    Raj,

    I have some questions both for Siemens and for Molycorp that have to be answered before I congratulate either of them on this “deal.”

    1. Late last year at a meeting of an EU organization in Milan Siemens was asked if it would pay a “premium” for non Chinese produced rare earths for magnet production. The Siemens representative said that the company would consider paying the China “export” price but no more.

    2. The Nd-Fe-B magnets used in the type of wind turbine generator to be produced by Siemens are very large SINTERED NOT BONDED constructions certainly beyond the installed capabilities of Molycorp (neo) to manufacture. So is it the case that the ore concentrates produced at Mountain Pass will be separated to produce the didymium, or neodymium and praseodymium, oxide in California at Mountain Pass, at Zibo (Molycorp-Neo China), at Silimae (Molycorp, Estonia), or at Shin-Etsu’s separation plant in Viet Nam, or by a Shin-Etsu operation direct or toll in China?

    Will the large amount of Nd-Fe-B or Didymium-iron-Boron powder be produced by one of Molycorp (Neo)’s facilities in China or nearby Asia, or by Shin-Etsu, and, if Shin-Etsu, where, In Japan or at Shin-Etsu’s metal/alloy making facility in China?

    Finally where will the large sintered magnets be machined and magnetized? In China or in Japan?

    I am going through this litany to point out that Molycorp will most likely be just a supplier of didymium oxide or of Nd and Pr oxide to a Siemens supplier that will most likely make the metals and then the alloy blocks itself and machine them itself .

    I want to know how far along in the supply chain Molycorp (neo) will participate? Because if Molycorp is only a supplier of separated didymium, Nd pr Pr oxide then before it delivers any material to Siemens Tier One Supplier, Shin-Etsu, it will need to be competitive with the delivered price inside China, which as of its last quarterly review, it is not.

    IS SIEMENS TELLING US THAT IT WILL HAVE SHIN-ETSU MAKE MAGNET ALLOY OUTSIDE OF CHINA AND DELIVER IT TO A NON CHINESE WIND TURBINE MANUFACTURING LOCATION FOR MACHINING AND MAGNETIZING?? THAT WOULD BE BIG NEWS!

    UNTIL THEN KEEP IN MIND THAT IT IS VERY UNLIKELY THAT ANYONE OF SIEMEN’S SIZE WOULD TAKE TAKE DELIVERY ANYWHERE ON A PRODUCT THAT CAN BE BOUGHT FOR LESS. THE MOLYCORP SIEMENS AGREEMENT IS MOST LIKLEY A CONDITIONAL OFF-TAKE; THE CONDITION BEING AN AGREED PRICE INDEXED TO THE “MARKET” AT A DISCOUNT FOR VOLUME, ON TIME DELIVERY, AND ADHERENCE TO SPECIFICATION.

    I think that for Molycorp the above deal would be a vote of confidence by Siemens, but it is not money in the bank, and it does not “prove” the existence of any useful vertical integration by Molycorp in the wind turbine space.

    Siemen’s next problem is to “broaden” (diversify) its heavy rare earth supply base for terbium and dysprosium produced outside of China.

    I am watching to see which of the juniors it will give a conditional off-take for those materials.

    Jack Lifton

    April 15, 2015 - 9:21 AM

  • Aat Oskam

    Jack, in your opinion, what does this mean for the MOU in 2011 between Lynas and Siemens? (http://investorintel.wpengine.com/technology-metals-news/siemens-and-lynas-to-form-a-joint-venture-for-magnet-production/). Is this deal with MolyCorp a replacement or a complementary deal? And Alkane: which has a deal with Shin-Etsu, what will this mean for them? Your thoughts please?

    April 15, 2015 - 9:33 AM

  • Aat Oskam

    By the way, I asked Lynas to response to the first question, waiting for their reaction now…

    April 15, 2015 - 9:35 AM

  • Fixed

    Jack, I am guessing that it will not be any of your fab four…that will supply siemens as you would probably already know if your wannabes would be in the loop and you already know or are you playing dumb?… How about GWMG do they have the capability to supply the product needed to go to magnet manufacturers that could supply siemens with the sintered magnets needed?

    April 15, 2015 - 4:19 PM

  • Mike Sander

    Siemens should be commended for making the conscience decision as a large multinational company to get their supplies from an environmentally friendly and conflict free supplier. Other companies including Apple should follow suit.

    April 15, 2015 - 5:18 PM

  • Investor

    Irrespective of Molycorp’s fate, the way this deal was structured between raw material supplier and the end user like Siemens, via Shin-Etsu, is huge lesson learned for the junior miners!

    April 16, 2015 - 2:41 AM

  • Investor

    It will be interesting to see if you receive a response from Siemens on your questions Jack.

    April 16, 2015 - 2:46 AM

  • JJBeswick

    Jack it appears Shin-Etsu have at least one plant making sintered RE magnets; Takefu in Japan. As of a year ago they were constructing another 2 ktpa capacity in Vietnam, so at least some of the ducks you doubted do in fact line up.
    http://www.chemistryviews.org/details/news/6108871/New_Rare-Earth_Magnet_Plant_in_Vietnam.html
    http://www.shinetsu.co.jp/en/news/archive.php?id=365
    I wonder if their RE separation plant in Vietnam is being persuaded to source materials too as part of the deal? From-presumably- illegal Chinese material to Mt Pass concentrates. That would not only make an ex-China supply chain but a GREEN one. I assume those who buy wind turbines would prefer that.
    Lynas may well be another significant supplier to the Shin-Etsu metals plant as part of the source diversification the release touts.

    April 16, 2015 - 10:32 AM

  • Tim Ainsworth

    Given Moly’s current ability to supply NdPr I’m just wondering how Siemens current Chinese mag maker is reacting to Moly PR Inc.

    April 16, 2015 - 5:11 PM

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