In what seems to be a testament of the global pandemonium for supply of rare earths, American rare earths producer Molycorp, Inc. on Tuesday reported it had entered into customer supply agreements representing 78 per cent of expected output from the Phase 1 expansion works at its Mountain Pass, California rare earth mine and oxide manufacturing facility.

Molycorp, Inc. said 58 per cent of the expected 19,050 metric tonnes under its Phase I production has been allocated toward customer agreements, while some 20 per cent is reserved for producing its water treatment products. Another 6 percent of Phase 1's production is in final discussions with customers, the company added.

The Colorado-based Molycorp, Inc. did not detail exact terms, prices, duration and products as these vary from each customer.

Shares went up 3.63 per cent or $0.87 immediately after the pronouncement, reaching $24.85 each on the New York Stock Exchange.

Molycorp, Inc. is currently undertaking modernisation and expansion works at its rare earth oxide manufacturing facility at Mountain Pass.Phase 1 is scheduled to be mechanically complete in mid-2012. Phase 2 is expected to be completed in 2013, enabling the company to manufacture up to 40,000 metric tonnes annually of high-purity rare earth oxides.

In October 2011, Molycorp, Inc. said it will open the California processing plant three months earlier on schedule. It had spent an additional $114 million to fast-track the startup.

Molycorp will sell its proprietary cerium-based water treatment products across four market segments: municipal water treatment, recreational water, industrial wastewater and drinking water purification.

Rare earths are precious and critical elements needed for green technologies, defense systems and other high-tech applications. Rare earth oxides can often be found in magnets, hybrid-electric vehicles, wind turbines, florescent lighting, computers and missile guidance systems. Prices for rare-earth metals have surged over the past two years.

In November, Molycorp, Inc. reported a third quarter profit on higher sales volume and a jump in rare-earth prices.

Molycorp, Inc. is the only U.S.-based company that is fully integrated across the rare earth mine-to-magnets supply chain. It has been producing rare earth products for more than 59 years. 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.

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