5. Technology & Engineering
Molycorp has developed technology to increase recoveries of REE from feedstock. This technology has been proven in their current 3000 mt/yr operation and is the enabler of their ability to produce REO's for 1/2 the cost of other mining companies. They also hold the patents on their XSORBX® technology that enables the removal of arsenic and other heavy metals from industrial waste water streams. Molycorp also had some engineering luck; they were in the right place at the right time to double capacity.
Molycorp's ability to double capacity so easily was just that, luck. Now like any lucky company or person they did perform some good preplanning that happened to make it possible, but they were lucky that the market enabled the choice before their current plans were too far along. What a lot of people do not know is that it can take a year or two from the time a company places an order for a major piece of operating equipment in order to get actual delivery. Before the equipment is ordered a very long engineering phase also needs to be completed to determine feasibility and the exact specification that the equipment needs to be manufactured to. Molycorp made is own luck because they always had plans that they may want to increase production rates and as such had performed engineering studies that had involved multiple plant configurations. They choose the conservative route to start with less production, but this other work had still been completed. As prices rose Molycorp decided to look long term and instead of refurbishing some of their old mining facilities that would allow only for lower production rates they selected to build new facilities that would allow for full 40000 mt/year production. As prices rose even further they only had a few large pieces of equipment that required detailed engineering in order to increase the equipment size and plant capacity. Even so, not everything needed for double production will be on site at the beginning of 2012 which is why they will reach full production in 2013.
Luckily they were able to increase their unit sizes before the fabrication shops started production. These larger unit sizes will also help to reduce future operating costs. Molycorp's last bit of luck was that we are just coming out of a global recession. There are not many large scale industrial fabrication shops in the world. During the recession many of the orders for these shops were canceled. Molycorp got in while the line was short and in a few years when these other mines want to get their equipment produced the wait times will be much longer than they are today adding up to a year to delivery time.