After months of uncertainty, the fate of Molycorp Inc.’s (OTCMKTS:MCPIQ) Mountain Pass rare earths mine in California has been sealed, as the company announced Wednesday it has decided to shut it down, at least for now.
Molycorp, the U.S.’s only miner and processor of rare earths, said it would transition the facility to a “care and maintenance” mode, adding it plans to continue serving its rare earth customers via its production facilities in Estonia and China.
Mountain Pass was expected to be America’s flagship source of rare earths. But the company struggled to ramp up production, and the mine operated in the red for years.
Hit by lower rare earth prices, Molycorp had warned in March it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.
“Rare earth pricing, which has declined dramatically over the past four years, was a key factor in the decision to suspend rare earth production at Mountain Pass,” Molycorp said in the statement. It didn’t say how many employees would be affected by the decision.
Only last month, the troubled miner said it was weighing a number of options for the California operation, adding that a complete shutdown was not an option.
The company, which went public in 2010 and two years later paid $1.3 billion for Canada’s Neo Material Technologies, carries a $1.7 billion debt load, with $206.5 million in convertible notes that mature in June 2016.
Shares collapsed on the news. They were down over 7% in New York at 10:00am ET. In the last three months, the stock has lost more than 80% of its value.