Molycorp, Inc. (NYSE: MCP) announced that its subsidiary Molycorp Minerals, LLC (Molycorp) has acquired Arizona-based Santoku America, Inc. (SAI), one of a few producers of high-purity rare earth alloys and metals outside of China.
The acquisition, which closed on April 15, was an all-cash deal for $17.5 million.
The acquisition provides Molycorp with the capability to immediately begin manufacturing and selling rare earth alloys to produce neodymium iron boron (NdFeB) magnets (used in electric and hybrid cars, advanced wind energy turbines, and many high tech electronics and applications) and samarium cobalt (SmCo) magnets (used in defense and other applications), as well as a variety of other specialty alloys and products.
SAI 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 metal and alloy producer in North America that doesn’t depend on rare earth materials sourced from China.
Based in Tolleson, Arizona, the facility has been producing specialty alloys, including rare earth alloys, for more than 30 years.
The company will change its name from SAI to Molycorp Metals and Alloys, Inc.
Said Mark Smith, President and CEO of Molycorp, "This acquisition further strengthens and expands the excellent relationship Molycorp and Santoku Corporation have enjoyed for many years. It also accelerates our plans to deploy a fully integrated ‘mine-to-magnets’ manufacturing supply chain in the U.S. In addition to working with Santoku Corporation as our distributor of strip cast NdFeB alloys manufactured at the Arizona plant, we also look forward to continuing our supply relationship in support of Santoku’s ongoing alloy manufacturing operations in Japan."
Colorado-based Molycorp, Inc. is the only rare earths producer in the Western Hemisphere, currently manufacturing over 3,000 metric tons of commercial rare earth materials per year.
In addition to its rare earth mine and processing facility at Mountain Pass, California, Molycorp also owns a controlling interest in the Estonia-based Molycorp Silmet AS (acquired earlier this month), which has a production capacity of 3,000 metric tons of rare earth products and 700 metric tons of rare metal products annually and is one of the largest rare metal and rare earth metal producers in Europe.
Following the execution of Molycorp’s "mine-to-magnets" strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass. The Company expects to achieve an annual production capacity at Mountain Pass by the end of 2013 of approximately 40,000 metric tons of REO equivalent per year after the completion of Phase 2.
Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets. The company currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.
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