It’s the kind of announcement that will raise hackles among U.S. nationalists and especially those concerned about the loss of control of America’s strategic mineral resources.
According to a recent story in the Wall Street Journal (requires subscription), Russian-born billionaire Vladimir Iorich is connected to a Swiss investment fund that has put a bid on the Mountain Pass Mine formerly run by Molycorp before it was forced into bankruptcy. The news outlet states that Pala Investments, established by Iorich in 2007, is part of a buyout group that bid $40 million for the mine’s assets.
A former member of Forbes’ list of the world’s richest billionaires, Forbes says that Iorich is a Russian-born German citizen who made his fortune as a large shareholder in Russian mining and steel company Mechel AOA, run by Russian billionaire Igor Zyuzin.
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. Through bankruptcy proceedings Molycorp was restructured, allowing it to receive $130 million in debt financing.
The Greenwood, Colorado- based company then moved Mountain Pass into care and maintenance, while continuing to serve customers through its production facilities in Estonia and China.
According to papers filed in January by a bankruptcy court in Delaware, Mountain Pass – including land and equipment – will be put up for auction in March.
The Wall Street Journal reported that the new ownership of Mountain Pass is likely to be reviewed by the Committee on Foreign Investment in the U.S. (CFIUS), a body which reviews transactions that could have an effect on U.S. national security. Among their many uses, rare earths are utilized in military applications such as weapons guidance systems.
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 expansion of Mountain Pass.
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.