The three-year deal extends and expands upon an existing supply relationship between the companies and significantly increases the amount of rare earth materials that Molycorp will provide Hitachi Metals. The volume begins at a level comparable to the companies’ current agreement and grows substantially when Molycorp reaches its Phase 1 production level in 2012 at its rare earth production facility at Mountain Pass, California, USA.

Molycorp’s oxide and metal production at the Molycorp Silmet facility in Estonia and the alloy production at the Molycorp Metals and Alloys facility in Tolleson, Arizona, will enable the company to produce the upgraded magnetic materials necessary to meet a significant portion of Hitachi Metals’ global requirements when Molycorp reaches Phase 1 production levels.

The company is expected to produce a total of between 4,541 to 5,813 metric tons of commercial rare earth materials in 2011 from its three facilities. It expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year from Mountain Pass and to achieve an annual production capacity at the same facility of approximately 40,000 metric tons of REO equivalent by the end of 2013. Molycorp currently sells products to customers in Europe, North and South America, Asia, Russia, and other previous Soviet Union countries.

"We are very pleased to be moving forward with this significant supply agreement to produce high-quality rare earth products for Hitachi Metals," said Mark A Smith, president and CEO of Molycorp. "Hitachi Metals has a long standing reputation as a global leader in the development and manufacture of advanced technology products that require rare earth materials, and we look forward to playing a very prominent role in their production supply chain.”

Molycorp and Hitachi Metals are however suspending discussions for now on their December 2010 letter of intent to create a joint venture in the US to manufacture neodymium-iron-boron (NdFeB) alloy and permanent magnets made from the alloy. The companies were unable to reach agreement on certain key matters affecting the value of the joint venture to each party.

“We remain fully committed to producing rare earth permanent magnets and to capturing the highest value of our rare earth materials throughout the supply chain,” said Smith. “In fact, we have been in advanced discussions with other companies regarding magnet joint venture opportunities for some time, and we look forward to sharing more details on these developments in the near future.”