NEW YORK Vertically
integrated rare earths producer Molycorp Inc. reported a 2012
net loss of $449.6 million in contrast to a $117.5-million
profit the previous year as lower sales prices, rising costs
and significant asset impairment charges were only partially
offset by increased output.
Greenwood Village, Colo.-based
Molycorp, which had postponed the release of its earnings
report to determine the amount of its "substantial" 2012
non-cash goodwill impairment charge (
amm.com, Feb. 28), on March 14 reported a total
goodwill impairment charge of $258.3 million and an impairment
charge of other long-lived assets of $11.9 million.
Contributing to the impairment
charges were a "longer-than-anticipated soft pricing
environment for rare earths and certain rare metals; loss of
some end markets due to high rare earths prices in 2011 not
returning to lower levels as quickly as anticipated; stalled
growth for some new bonded magnet applications due to a peak in
neodymium prices in 2011; and delays in ramping up its Mountain
Pass facility in California that deferred the companys
ability to enter into longer-term contracts," Molycorp
The charges more than offset a
33.3-percent jump in sales to $528.9 million from $396.8
million in 2011.
In the fourth quarter, Molycorp
logged a net loss of $359.6 million vs. net income of $26.6
million in a year earlier on sales that rose 1 percent to
$134.3 million from $132.9 million.
Molycorp said it expects further
financial weakness in the first half of 2013 due to typical
seasonality and the expectation that its Mountain Pass
operation wont achieve full-scale production until
mid-2013, but after that the outlook improves.
"The company expects global
supply and demand for rare earth oxides will approach a
healthier balance during 2013, and pricing within many key
applications of rare earths will be beneficial to both
customers and suppliers," Molycorp said, citing forecast
strength in a number of end-use sectors, including automotive
catalysts, fluid cracking catalysts and the automotive and
small battery sectors.
"We must complete our current
production ramp at Mountain Pass and bring it to full-scale
commercial run rates; instill greater discipline and
accountability across the company; improve performance across
all business units; and make sure we achieve our cost savings
and capital reduction goals," Molycorp president and chief
executive officer Constantine Karayannopoulos said in a
Molycorps former president and chief executive
officer, Mark A. Smith, stepped down in December, although the
company didnt give a reason for his exit (
amm.com, Dec. 12).