Molycorp sues contractor for over $45 million

Molycorp Inc. (NYSE:MCP), one of the only non-Chinese producers of rare earths, has sued the engineering company responsible for designing the chemical processes at its troubled Project Phoenix for over $45 million in damages.

The rare earths miner claims that M&K Chemical Engineering Consultants Inc. violated contractual obligations to help expand the company’s Project Phoenix refinery in California.

The new facility, aimed to start producing rare earths by the end of the year, is said to present hazardous design flaws that, if not rectified, could have resulted in serious injury or death to personnel working in and around the mine, said Molycorp in the lawsuit filed on Oct. 31, 2012.

The document also says that M&K Chemical Engineering Consultants of Granite City, Illinois, "failed to perform its work in accordance with good engineering practices…and consistently failed to provide its work product in accordance with the contractual work schedule."

Molycorp’s Executive Vice President and General Counsel, John F. Ashburn, Jr., said in a press release the defects would not impact the timing of the company's plans to ramp up production at its Mountain Pass rare earths facility.

The new heavy rare earth project marks the beginning of the US company's bid to challenge China’s rare earth dominance.

Image: Detail of the Mutual accusation after the fall. Hildesheim, Dom (cathedral) – Bernwardstür. By petrus.agricola