Betting On Rare-Earth Metals

Fortune reports on Molycorp:

Smith also says he is banking on new, environmentally sound mining technology that promises to lower prices. When Molycorp is finished replacing its milling and refining facilities at Mountain Pass, it claims it will not only be the cleanest producer of rare earths in the world (the original mine was dogged by environmental violations stemming mostly from its wastewater, which was radioactive because of small amounts of thorium and uranium found in the ore), but also the world's lowest-cost producer. Since adding environmental safeguards usually adds to the cost of any extraction process, that would be a remarkable feat.
John Burba, Molycorp's chief technologist, explains it this way: Rather than using expensive, trucked-in chemicals to separate the rare earths from the ore, the company will use recycled saltwater, a byproduct of mining. And instead of buying expensive electricity off the grid, Molycorp is going to produce its own energy: Vanderweil Engineers is building on the mining site a 49-megawatt power plant, fired with cheap natural gas from a nearby pipeline. The old Molycorp used to dump its tailings in a slurry behind a dam. Now it will use a high-pressure system to squeeze out most of the water, leaving behind a "paste" that will be reburied in what's essentially a 90-acre landfill just west of the pit mine. All told, the company claims it will produce rare earths for $1.25 a pound. China's cost is $2.53 a pound, while some experts believe that production from Australian mines, owned by Molycorp rival Lynas, will cost a whopping $4.59. "We've been through the situation before where we weren't the low-cost producer in the world," says Smith, referring to the 1990s, when Mountain Pass was undercut by Chinese rivals. "We didn't like it."

Hopefully their bet pays off.  I bought this stock last year when it rallied to $54.  I figured I'd get ahead of the bubble suckers on this one, but I was the sucker.  It peaked at $77 and now is trading at $33.  Oh well, sometimes you're the windshield, sometimes you're the bug.