The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from Business Wire

Molycorp, Daido Steel, & Mitsubishi Corporation Announce Joint Venture To Manufacture Sintered NdFeB Rare Earth Magnets

<p> <i><b>Joint Venture Has Been Provisionally Awarded a Magnet Supply Agreement with a Major Automobile Manufacturer</b></i> </p>

Monday, November 28, 2011

Molycorp, Daido Steel, & Mitsubishi Corporation Announce Joint Venture To Manufacture Sintered NdFeB Rare Earth Magnets11:30 EST Monday, November 28, 2011 GREENWOOD VILLAGE, Colo. (Business Wire) -- Molycorp, Inc. (NYSE: MCP) (Molycorp), Daido Steel Co., Ltd. (Daido), and Mitsubishi Corporation (Mitsubishi) today announced the formation of a joint venture to manufacture and sell next-generation neodymium-iron-boron (NdFeB) permanent rare earth magnets. The joint venture will manufacture sintered NdFeB permanent rare earth magnets with technology licensed from Intermetallics, Inc., a partnership between Mitsubishi, Daido, and Dr. Masato Sagawa, co-inventor of the NdFeB magnet. The capital contribution ratio of the newly formed company will be 30.0% by Molycorp, 35.5% by Daido, and 34.5% by Mitsubishi. The joint venture will be financed by the three shareholders and by a government subsidy sponsored by Japan's Ministry of Economy, Trade, and Industry (METI). The joint venture plans to construct an initial 500 metric-ton-per-year magnet manufacturing facility in Nakatsugawa, Japan (Gifu Prefecture), with operations expected to commence by January 2013. The companies expect to begin work on the new facility next month and eventually expand operations in the U.S. and elsewhere. The technology to be used by the joint venture is a new and novel approach that does not depend on the use of patents held by other magnet companies. The technology allows for the manufacture of permanent rare earth magnets that deliver greater performance with less reliance on dysprosium, a relatively scarce rare earth. The process also results in higher production yields. Made with the rare earths neodymium, praseodymium and dysprosium (or terbium), NdFeB magnets are the world's most powerful permanent magnets and are key components in many advanced technologies, including high-performance motors used in the power trains of electric vehicles, hybrid vehicles and wind power generators, as well as in motors in home appliance and industrial applications. Electric motors are estimated to use approximately 45 percent of global power consumption, according to the International Energy Agency. Using NdFeB magnets in motors can help reduce electric power consumption by 20 percent and would contribute to reducing global CO2 emissions by an estimated 1.2 billion tons. Target markets for the joint venture are the automotive and home appliance markets. These markets, as well as other markets for environmentally friendly technologies, are forecast to be significant drivers of demand growth for permanent rare earth magnets. The joint venture has been provisionally awarded a supply agreement for a next-generation electric vehicle with a major automotive manufacturer. The new company will engage in the manufacturing and sale of next-generation NdFeB magnets and will take full advantage of Daido's commercial-scale magnet manufacturing technologies, Mitsubishi's domestic and international marketing and sales network, and Molycorp's rare earth oxide, metal, and alloy manufacturing resources and capabilities. According to the independent market analysts at Roskill, China currently supplies approximately 94 percent of world's demand for rare earths. Export restrictions and other controls by China have made procurement of stable supplies difficult, which underscores the importance of Molycorp's ability to provide the joint venture with stable supplies of rare earth materials for magnet manufacturing. “I am happy and very honored that Molycorp is able to partner with these extraordinary companies, who are global leaders and innovators in so many areas,” said Mark A. Smith, President and CEO of Molycorp. “Molycorp also is pleased that the joint venture can break ground almost immediately and will be able to produce some of world's most powerful rare earth magnets in as little as 14 months.” Smith added: “The next-generation magnet manufacturing technologies being utilized by the joint venture are a perfect complement to the advanced technologies Molycorp is deploying across our own rare earth manufacturing supply chain. This initiative is a major milestone in Molycorp's mine-to-magnets strategy and continues our strong focus on technology innovation, efficiency, and operational excellence.” About Molycorp, Inc. With offices in the U.S., Europe, and Japan, Molycorp, Inc. is the largest rare earth oxide (REO) producer outside of China. In addition to its current production of rare earth oxides at its flagship rare earth mine and processing facility at Mountain Pass, California, the Company produces rare earth metals, rare earth alloys (such as neodymium-iron-boron and samarium-cobalt alloys) and rare metals such as niobium and tantalum. The rare earths and rare metals Molycorp produces are critical inputs in existing and emerging applications including: clean energy technologies, such as hybrid and electric vehicles and wind power turbines; multiple high-tech uses, including fiber optics, lasers and hard disk drives; numerous defense applications, such as guidance and control systems and global positioning systems; advanced water treatment technology for use in industrial, military and outdoor recreation applications; and other technologies. For more information please visit www.molycorp.com. About Daido Steel Daido Steel Co,, Ltd. ranks as the world's latest manufacturers of specialty steel. With a history dating back to 1916, the Company has accumulated extensive skills in combining steel scrap with other materials to achieve the strength, workability, and other characteristics to match exacting requirements. Along with the manufacture of value-added steel, the Company offers many services that leverage its technological resources. Most services target high-end market sectors that demand the highest levels of quality and specialization. Daido Steel is one of the leading players worldwide in the manufacture of critical steel components where nothing less than absolute reliability is acceptable. These components include automobile transmissions and engine parts as well as components used in ships, aircraft, and electric generators. Daido Steel shares are traded on the First Section of the Tokyo Stock Exchange under the securities code 5471. About Mitsubishi Corporation Mitsubishi Corporation (MC) is a global integrated business enterprise that develops and operates businesses across virtually every industry including industrial finance, energy, metals, machinery, chemicals, foods, and environmental business. MC's current activities are expanding far beyond its traditional trading operations as its diverse business ranges from natural resources development to investment in retail business, infrastructure, financial products and manufacturing of industrial goods. With over 200 bases of operations in approximately 80 countries worldwide and a network of over 500 group companies, MC employs a multinational workforce of nearly 60,000 people. About Dr. Masato Sagawa Dr. Masato Sagawa received his bachelor and master degrees in electric engineering from Kobe University in 1966 and 1968, respectively, and his doctoral degree in materials engineering from Tohoku University in 1972. He joined the Fujitsu Company in 1972, where he was assigned to develop magnetic materials for electric relays. In 1982 he joined Sumitomo Special Metals (SSM) where he accomplished the invention of the NdFeB sintered magnets. Dr. Sagawa's honors include the Osaka Prize in 1984, American Physical Society International Prize for New Materials in 1986, Asahi Prize in 1990, Japan Magnetics Society Award in 1991, Honda-kinen Prize in 2003, etc. Safe Harbor Statement Regarding Forward-Looking Statements This release contains forward-looking statements that represent Molycorp's beliefs, projections and predictions about future events or Molycorp's and the proposed sintered NdFeB rare earth magnet joint venture's future performance. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp's actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements. Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp's ability to secure additional capital to implement its business plans; Molycorp's ability to complete its initial modernization and expansion efforts, including the accelerated start-up of the Mountain Pass facility, which management refers to as Project Phoenix Phase 1, and the second phase capacity expansion plan, which management refer to as Project Phoenix Phase 2, and reach full planned production rates for REOs and other planned downstream products; the final costs of the Project Phoenix Phase 1, including with accelerated start-up of the Mountain Pass facility, and Project Phoenix Phase 2, which may differ from estimated costs; uncertainties associated with Molycorp's reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earths materials; Molycorp's ability to successfully integrate recently acquired businesses; completion of the formation of the proposed sintered ndFeB rare earth magnet joint venture, which remains subject to the satisfaction of customary closing conditions; the proposed sintered NdFeB rare earth magnet joint venture's ability to successfully manufacture magnets within its expected timeframe; Molycorp's ability to maintain appropriate relations with unions and employees; Molycorp's ability to successfully implement its “mine-to-magnets” strategy; environmental laws, regulations and permits affecting Molycorp's business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; and uncertainties associated with unanticipated geological conditions related to mining. For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled “Risk Factors” of the Company's Annual Report on Form 10-K for the year ended December 31, 2010 and of the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K or the Quarterly Report on Form 10-Q reflects Molycorp's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp's operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law. MOLYCORPJim Sims, +1-303-843-8062Vice President Corporate CommunicationsJim.Sims@Molycorp.comorBrian Blackman, +1-303-843-8067Senior Manager, Investor RelationsBrian.Blackman@Molycorp.comorDAIDO STEEL CO., LTD.:Corporate Planning Dept., +81-52-963-7516publicity@ask.daido.co.jporMITSUBISHI CORPORATION:Corporate Communications Dept., +81-3-3210-2511takashi.shiwaku@mitsubishicorp.com