Molycorp Minerals, LLC, a subsidary of Molycorp, Inc. (NYSE:MCP) has acquired a 90% controlling stake in AS Silmet, one of only two rare earth processing facilities in Europe, in a transaction valued at approximately $89 million.
Molycorp acquired 80% of the outstanding shares of AS Silmet from AS Silmet Grupp, which will retain a 9.977% ownership interest going forward. Molycorp acquired another 10.023% from Treibacher Industrie AG.
The acquisition provides Molycorp with its first European base of operations as well as doubles the company’s rare earth production capacity from approximately 3,000 tons per year of rare earth oxide (REO) equivalent to 6,000 tons.
AS Silmet will immediately begin sourcing rare earth feed stocks for production of its products from Molycorp’s Mountain Pass, California rare earth mine and processing facility, making it the first rare earth oxide and metal producer in Europe that is not dependent on rare earth materials sourced from China.
As part of the transaction, the company also will change its name to AS Molycorp Silmet.
The facility’s main focus will be on the production of rare earth oxides and metals–including didymium metal, a critical component in the manufacture of neodymium-iron-boron permanent rare earth magnets–from feed stocks supplied by Molycorp’s Mountain Pass, California rare earth mine and processing facility. (Permanent magnets are a critical component for many clean energy technologies.)
The transaction also expands Molycorp’s manufacturing capabilities beyond rare earths into the production of the rare metals niobium and tantalum, which between them have a wide variety of uses in electronics, materials manufacture, optics, health care, chemical process equipment, power generation systems, aerospace, superconductive materials, and others.
AS Silmet’s manufacturing operation, which employs approximately 550 workers, is located in Sillamäe, Estonia. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.
"This acquisition provides Molycorp with a European base of operations as well as a larger global customer base, greater rare earth production capacity, and an expanded product line that extends our interests into other strategic metals and technologies," said Mark A. Smith, President and CEO of Molycorp, Inc. "We have already begun shipping feed stocks from Mountain Pass to be processed into finished products at AS Molycorp Silmet. In the short-term, this will greatly increase our ability to supply our products into the increasingly tight global rare earth market and provide a convenient base from which to supply European customers. In the mid- and long-term, AS Molycorp Silmet will help us expand our manufacturing capabilities to a broader range of strategic materials."
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