morongobill's  Instablog

It seems to be the "in" thing in the "investment community" to gang up on Molycorp right now. No matter where you surf to for "investment advice," you seem to find articles knocking this stock, this company and its' plans to bring rare earth elements mining and processing back to the western hemisphere. A perfect example can be found here, albeit with a more respectful tone than most.

This blogger agrees that the company has had some problems with the implementation of the Phoenix Project, but after all, we are talking about a billion dollar crash investment and building program. Yes, there are also questions about disclosure and reported troubles with a contractor, but again, we are talking a major campaign here to develop the most environmentally friendly and cost effective, state of the art rare earth processing facility on the planet!

Can we give Molycorp management a break from all the backstabbing for just a little bit? Perhaps even step back to better take in the view of what all has been accomplished at Mountain Pass and other facilities worldwide by Molycorp, and breathe in the scent of the lanthanides?

The giant mining pit at Mountain Pass is perhaps the key to a continued meaningful American manufacturing industry. We are in a new economy, a green economy, and one that we are rapidly losing ground to the rest of the world in. Our hopes to catch up in some ways depend on what happens out west at this mining facility in the Mojave Desert.

Virtually everything made nowadays in the information age contains lanthanides, rare earth elements, from the phosphors used in our computer and television screens to components in our smart phones. These products mined and processed by Molycorp here and at other locations such as Estonia, are vitally needed by the most advanced industrial manufacturers such as Siemens and Boeing, among others too numerous to mention- and a reliable and reasonably priced source is absolutely critical for them as well as for our defense industry. It can be argued that this facility is vital to the national interests for our nation; some might even say that as Molycorp's future goes, so does the United States' as well.

Another thing not mentioned by the doom and gloom folks, is just how environmentally friendly the new ore processing facility is and just how cheaply it all can be done. They never mention the fact that Molycorp has their own natural gas electric generation station providing them with all the power required by the state of the art processing facility, at a 3 cent per kilowatt cost! It is also rarely mentioned that net water loss in the processing of the ore is effectively zero compared to the old days when it ran about 800 gallons per minute being drained off to the dry lakebed miles away. This is an astounding accomplishment, one that they deserve to be praised for. And for your information, this writer has blogged extensively for two years on behalf of the Mojave, at my old blog, so I feel that I am in a position to know enough to form a reasoned opinion on this subject.

Did I mention that there are no more tailings piles? It is a common sight in the Mojave, which by the way has been extensively mined in its' history, to see tailings piles everywhere. Not anymore, at least not at the Mountain Pass facility. Simply put, the ore dug out of that giant pit is crushed, separated, processed with water and acids, the rare earth elements are taken out and the remaining slurry has the water and such removed, leaving a paste which is mixed with concrete and spread out in a designated area- no more worries about chemicals leaching into the ground.

What does all this mean? Per the company, they claim that their finished products will cost less to produce than anywhere in the world, including China. Now you may not have heard about the situation in China and Inner Mongolia where they mine most of their lanthanides, it is an environmental disaster already happening and it has gotten so bad that the government is now forcing some of the companies out of business over there. People are getting sick and dying off, and it is a problem that must be cleaned up or else. China has a unique geological situation with their rare earth elements mostly found in clays, which can be easily washed out with acids, and this had led to the proliferation of "mom and pop" style mining concerns that have mined the land for the profitable minerals and along with the giant mining operations, wrecked their land and water environment.

So as events play out in the Far East, Molycorp will be profitably and safely processing their now 36 % enhanced mineral reserves as recalculated recently. It would be nice, but probably expecting too much, if investors recognized that fact by placing their confidence more in the company management than in all the nattering
nabobs of negativity found in the so called "investment community."

William McDonald

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.