Rare-earths producers from China and Japan have approached Molycorp Inc. about buying some of the bankrupt miner’s non-U.S. assets, according to two people with knowledge of the matter.
The facilities include plants in various parts of Asia. They produce and process metals, including neodymium, which is used in making magnets for electric cars and wind turbines, said the people, who asked not to be named because the offers have not been made public.
The development comes two months after the bankruptcy filing by the largest U.S. producer of rare earths — a group of 17 obscure elements used in technology from smartphones to missiles and military aircraft. Selling the international assets would further reduce Molycorp’s rare-earths market share.
The Greenwood Village-based company, which is in the process of mapping out a reorganization, also announced last week that it will shut down its
Selling these assets will not be the miner’s priority as it focuses on restructuring its business, said one of the people. The deal also would require approval from Oaktree Capital Group, Molycorp’s rescue lender that extended a $400 million loan last year, because the credit line is secured by the assets, the people said.
Such a sale of non-U.S. assets also isn’t likely to trigger a review by the Committee on Foreign Investment in the U.S., which examines acquisitions by overseas buyers to mitigate national security risks, the people said.
The committee only has jurisdiction over the sale of U.S. businesses.
Jim Sims, a spokesman at Molycorp, and Carissa Felger, a spokeswoman for Oaktree at Sard Verbinnen & Co., declined to comment.
In May 2011, , which controls about 95 percent of the world rare-earths supply, moved to restrict exports of the minerals. The ban was lifted last year and rare-earths prices began to tank as supply from China ballooned. Chinese exports of the minerals last month doubled from a year earlier and reached their highest level in more than four years, according to government data.
Molycorp suffered from the dropping commodities prices as well as operational glitches from the Mountain Pass mine. The company also doubled down on the business near the minerals’ price peak, buying Neo Material Technologies Inc., a Canadian metals processor for $1.2 billion in 2012.
Molycorp, still unsure whether it will restructure or be forced to sell some or all of its business units, wants to pay performance incentives to its seven most senior executives and retention bonuses to 19 workers needed to mothball its Mountain Pass rare-earth facility.
For the top executives of the global rare-earths and rare-metals producer, bonuses would be tied to achieving financial, operational and restructuring-related metrics.
The program’s total cost is estimated to be about $1.8 million at the threshold level, $2.3 million at the target level, and $2.9 million at the maximum level, Molycorp said.
Both bonus programs are scheduled to be considered at a hearing Sept. 15 in Delaware bankruptcy court.
The creditors’ committee wants a later hearing on the executive incentive program, saying there are “enough actual emergencies in Chapter 11 cases,” and this isn’t one of them.
with a tentative deal for holders of $650 million in 10 percent secured notes to provide $225 million in financing and assume ownership in exchange for debt.
