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Only producing U.S. rare earths mine goes on the block

The gavel is coming down on Mountain Pass tomorrow, as the only producing rare earths mine in the United States goes up for auction.

The California mine formerly owned by Molycorp closed in 2015, when the Colorado-based company, once valued at $6 billion, went bankrupt.

According to Wyoming Business Report there are two rival groups bidding for the mine: ERP Strategic Minerals, Swiss private equity firm Pala Investments and Peak Resources (ASX:PEK), an Australian rare earths company. The other potential buyer is a group of Molycorp’s creditors including QVT Financial of the US and Chinese rare earths mining company Shenghe Resources.

ERP Strategic Minerals was selected as the “stalking horse bidder” by the Chapter 11 trustee for Molycorp Minerals LLC, a unit of Molycorp, at the end of April. A stalking horse bidder is the first bidder to make a bid out of a bankruptcy.

Mountain Pass was the only rare earths mine operating in the United States, before it went bankrupt in 2015 – a victim of low rare earth oxide prices. At the time Molycorp listed $1.7 billion in debt. Through bankruptcy proceedings Molycorp was restructured, allowing it to receive $130 million in debt financing.

Molycorp then moved Mountain Pass into care and maintenance, while continuing to serve customers through its production facilities in Estonia and China.

Mountain Pass was expected to be America’s flagship source of rare earths. In 2010 Molycorp sensed an opportunity to capitalize on reduced rare earth oxide exports from China – which supplies about 90 percent of the world’s rare earth minerals – which had caused the prices of REOs to spike. When China subsequently relaxed export rules, however, prices fell, leaving Molycorp to pay the bill for a $1.25 billion state-of-the-art processing facility.

Hit by lower rare earth prices, Molycorp warned it might not have enough money to remain in business. Three months later, it filed for chapter 11 bankruptcy protection.