The creation of U.S. government stockpiles of rare-earth minerals would worsen a tight supply situation, said Molycorp Inc., the country’s only producer of the minerals used in missiles, wind turbines and hybrid cars.
U.S. Rep. Mike Coffman, a Colorado Republican, introduced a bill in April to establish a strategic inventory of rare earths to supply government contractors and provide government- backed loans to fund new producers.
“When you’re in a very, very difficult supply situation like we are in right now, any kind of government stockpiling just makes that situation even worse,” Molycorp chief executive Mark Smith said Thursday in a telephone interview. “It just takes more material out of the market and makes the supply situation even more difficult for the market to try to figure out.”
In July, China announced that it would cut export quotas by 72 percent, sending the price of some rare earths up sixfold.
China produces about 95 percent of the world’s supply of 17 elements known as rare earths, which are the only materials suitable for technology and defense applications such as magnets used in guided missiles.
The Bloomberg Rare Earth Mineral Resources Index of 17 rare-earth companies more than doubled last year, and climbed 14 percent this year through Wednesday.
Molycorp, based in Greenwood Village, fell $3.55, or 4.9 percent, to $68.46 Thursday in New York Stock Exchange composite trading.
The shares have gained 37 percent this year.
Molycorp is on schedule to produce about 20,000 tons of rare earths by the end of 2012, Smith said.
