Molycorp Inc. — the only U.S. producer of rare earth elements used in high-tech communications, transportation and industrial products — filed for Chapter 11 bankruptcy protection amid competition from China and waning demand.
The Greenwood Village, Colo., company, which included its subsidiaries in the U.S. and Canada in the Thursday filings, struck a deal with creditors to restructure $1.7 billion in debt.
The agreement includes $225 million in new financing so that operations, including its Mountain Pass mine in the Mojave Desert, can continue as usual. Employees are working their normal schedules, according to the company.
In February, Molycorp said Mountain Pass production in the fourth quarter of 2014 — including praseodymium and neodymium for use in magnets and lanthanum for — nearly doubled from the previous quarter. Not quite 500 employees work at the mine, according to regulatory filings.
Molycorp said it plans to exit bankruptcy before the end of the year but expects the New York Stock Exchange to delist its shares within nine days and transfer them to an over-the-counter exchange.
The company’s shares have lost 59% since the beginning of 2015 and are down 86% from a year ago. Molycorp stock was down nearly 6%, or 2 cents, to 36 cents a share in early afternoon trading in New York.
The company’s operations in Europe and Asia are not included in the filings.
Molycorp’s Mountain Pass facility once supplied the majority of the world’s rare earth elements. Just five years ago, the mine couldn’t produce the minerals fast enough to satiate companies hoping to use them in smartphone touch-screens, wind turbines and fuel cells.
The company benefited as well from a limited-export policy from China, the world’s largest rare earth producer by a wide margin. But in recent years, the Asian superpower relaxed its restrictions and released larger rare earth supplies into the global marketplace.
As the influx from the East pressured Molycorp’s pricing prowess, technological advances meant that many electronics designers discovered workarounds to rare earths and no longer were as dependent on the minerals.