Molycorp, Inc. is a rare earth oxide producer in the Western hemisphere

Molycorp surges after winning contract from Siemens to supply rare earths

Molycorp (NYSE:MCP) surged in morning trades after the rare earth and metal materials producer said it will supply rare earth materials for use in Siemens AG's (OTCMKTS:SIEGY) wind turbine generators over the next 10 years.

Shares jumped 36 percent to $0.728 at 10:14 a.m. in New York.

Molycorp will supply materials such as dysprosium, from its Mountain Pass, California facility to Shin-Etsu Chemical Co. Ltd., which will produce the rare earth magnets Siemens intends to utilize in its wind turbines, the Greenwood Village, Colorado-based company said in a statement today.

Siemens officials noted that key factors in choosing Molycorp were Molycorp's ability to provide greater global diversification and reliability to its supply chain, as well as the environmental and process innovations Molycorp has built into its Mountain Pass rare earth facility.

Among those innovations are the facility's ability to recycle water, regenerate the chemical reagents needed in rare earth production, generate power from a high-efficiency natural gas cogeneration power plant, and dispose of mine tailings through an innovative paste tailings system.

Siemens officials said that the magnets to be used in its direct drive wind turbines will contain reduced levels of heavy rare earth elements (HREEs), such as dysprosium.

In collaboration with Siemens Wind Power, Molycorp and Shin-Etsu will improve the magnet material to reach zero HREEs, Siemens said. At the same time, Siemens added, supply chain reliability will be increased and costs will be reduced.

"The contract with Shin-Etsu and Molycorp is an important step for us in sourcing magnet materials for our direct drive wind turbines," said Morten Rasmussen, Head of Technology at Siemens Wind Power and Renewables Division, in the statement.

"This agreement underscores Molycorp's commitment to partner with our customers to support their product development efforts and serve as an integrated, long-term provider of reliable rare earth supply," Geoff Bedford, Molycorp's chief executive officer, said.

Molycorp's stock has lost most of its value since peaking above $70 in 2011.