Molycorp, Daido Steel, & Mitsubishi Corporation Announce Joint Venture To Manufacture Sintered NdFeB Rare Earth Magnets

Joint Venture Has Been Provisionally Awarded a Magnet Supply Agreement with a Major Automobile Manufacturer
 
GREENWOOD VILLAGE, CO (11:30 a.m. Eastern, November 28, 2011) – Molycorp, Inc. (NYSE: MCP) (Molycorp), Daido Steel Co., Ltd. (Daido), and Mitsubishi Corporation (Mitsubishi) today announced the formation of a joint venture to manufacture and sell next-generation neodymium-iron-boron (NdFeB) permanent rare earth magnets.
 
The joint venture will manufacture sintered NdFeB permanent rare earth magnets with technology licensed from Intermetallics, Inc., a partnership between Mitsubishi, Daido, and Dr. Masato Sagawa, co-inventor of the NdFeB magnet.  The capital contribution ratio of the newly formed company will be 30.0% by Molycorp, 35.5% by Daido, and 34.5% by Mitsubishi.  The joint venture will be financed by the three shareholders and by a government subsidy sponsored by Japan’s Ministry of Economy, Trade, and Industry (METI).
 
The joint venture plans to construct an initial 500 metric-ton-per-year magnet manufacturing facility in Nakatsugawa, Japan (Gifu Prefecture), with operations expected to commence by January 2013.  The companies expect to begin work on the new facility next month and eventually expand operations in the U.S. and elsewhere.
 
The technology to be used by the joint venture is a new and novel approach that does not depend on the use of patents held by other magnet companies.  The technology allows for the manufacture of permanent rare earth magnets that deliver greater performance with less reliance on dysprosium, a relatively scarce rare earth.  The process also results in higher production yields.
 
Made with the rare earths neodymium, praseodymium and dysprosium (or terbium), NdFeB magnets are the world’s most powerful permanent magnet and are key components in many advanced technologies, including high-performance motors used in the power trains of electric vehicles, hybrid vehicles and wind power generators, as well as in motors in home appliance and industrial applications.  Electric motors are estimated to use approximately 45 percent of global power consumption, according to the International Energy Agency.  Using NdFeB magnets in motors can help reduce electric power consumption by 20 percent and would contribute to reducing global CO2 emissions by an estimated 1.2 billion tons.
 
Target markets for the joint venture are the automotive and home appliance markets.  These markets, as well as other markets for environmentally friendly technologies, are forecast to be significant drivers of demand growth for permanent rare earth magnets.  The joint venture has been provisionally awarded a supply agreement for a next-generation electric vehicle with a major automotive manufacturer.
 
The new company will engage in the manufacturing and sale of next-generation NdFeB magnets and will take full advantage of Daido’s commercial-scale magnet manufacturing technologies, Mitsubishi’s domestic and international marketing and sales network, and Molycorp’s rare earth oxide, metal, and alloy manufacturing resources and capabilities.
 
According to the independent market analysts at Roskill, China currently supplies approximately 94 percent of world’s demand for rare earths.  Export restrictions and other controls by China have made procurement of stable supplies difficult, which underscores the importance of Molycorp’s ability to provide the joint venture with stable supplies of rare earth materials for magnet manufacturing.
 
“I am happy and very honored that Molycorp is able to partner with these extraordinary companies, who are global leaders and innovators in so many areas,” said Mark A. Smith, President and CEO of Molycorp.  “Molycorp also is pleased that the joint venture can break ground almost immediately and will be able to produce some of world’s most powerful rare earth magnets in as little as 14 months.”
 
Smith added:  “The next-generation magnet manufacturing technologies being utilized by the joint venture are a perfect compliment to the advanced technologies Molycorp is deploying across our own rare earth manufacturing supply chain.  This initiative is a major milestone in Molycorp’s mine-to-magnetics strategy and continues our strong focus on technology innovation, efficiency, and operational excellence.”

About Molycorp

Molycorp is one of the world's leading rare earths and rare metals companies, and combines a world-class rare earth resource at Mountain Pass, California, with world-leading ultra-high-purity rare earth and rare metal materials processing capabilities. With 26 locations across 11 countries, Molycorp is vertically integrated across the global rare earth mine-to-magnetics supply chain. It produces custom engineered materials from 15 different rare earths, with purity levels of up to 6N (99.9999%), and from six other metals (niobium, tantalum, gallium, indium, rhenium, and zirconium) at purity levels of up to 8N (99.999999%). Through its Molycorp Magnequench subsidiary, the Company is a leading global producer of neodymium-iron-boron (NdFeB) magnet powders, used to manufacture bonded NdFeB permanent rare earth magnets. Through its joint venture with Daido Steel and Mitsubishi Corporation, Molycorp expects to begin manufacturing next-generation, sintered NdFeB permanent rare earth magnets in early 2013. The rare earths and rare metals materials that Molycorp produces are critical inputs in wide variety of existing and emerging applications, including the following: advanced transportation technologies, such as hybrid electric, plug-in hybrid electric, and all-electric vehicles; clean energy technologies, such as solar and wind power systems; energy efficiency technologies, such as high efficiency motors and appliances, compact fluorescent lights, and color displays; computing and communications applications, including fiber optics, lasers, and hard disk drives; defense and aerospace applications, such as satellites, guidance and control systems, and global positioning systems; and advanced water treatment technologies for use in municipal wastewater, industrial wastewater, pool & spa, and outdoor recreation applications. For more information please visit www.molycorp.com.

For more information:

Jim Sims, +1 (303) 843-8062
Vice President Corporate Communications
Jim.Sims@Molycorp.com

Brian Blackman, +1 (303) 843-8067
Senior Manager, Investor Relations
Brian.Blackman@Molycorp.com

Cautionary Note Regarding Forward-Looking Statements
Safe Harbor Statements This release contains forward-looking statements that represent Molycorp’s beliefs, projections and predictions about future events or Molycorp’s future performance, including those regarding Neo Materials. Forward-looking statements can be identified by terminology such as “may,” “will,” “would,” “could,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause Molycorp’s actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements. Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: Molycorp’s ability to successfully integrate Neo into Molycorp’s operations; Molycorp’s ability to achieve fully the strategic and financial objectives related to the acquisition of Neo, including the acquisition’s impact on Molycorp’s financial condition and results of operations, including any expected synergies and the acquisition being accretive to Molycorp’s earnings; Molycorp’s ability to secure additional capital to implement its business plans; Molycorp’s ability to complete its initial modernization and expansion efforts, including the accelerated start-up of the Mountain Pass facility, which management refers to as Project Phoenix Phase 1, and the second phase capacity expansion plan, which management refer to as Project Phoenix Phase 2, and reach full planned production rates for REOs and other planned downstream products, in each case within the projected timeframe; the success of Molycorp’s cost mitigation efforts in connection with Project Phoenix, which, if unsuccessful, might cause its costs to exceed budget; the final costs of the Project Phoenix Phase 1, including with accelerated start-up of the Mountain Pass facility, and Project Phoenix Phase 2, which may differ from estimated costs; uncertainties regarding global supply and demand for rare earths materials; Molycorp’s ability to achieve anticipated production costs and realize the cost benefits of new technologies; Molycorp’s ability to successfully integrate recently acquired businesses; uncertainties associated with Molycorp’s reserve estimates and non-reserve deposit information, including estimated mine life and annual production; uncertainties related to feasibility studies that provide estimates of expected or anticipated costs, expenditures, and economic returns; and REO prices, production costs and other expenses for operations, which are subject to fluctuation; Molycorp’s ability to maintain appropriate relations with unions and employees; Molycorp’s ability to successfully implement its “mine-to-magnets” strategy; environmental laws, regulations and permits affecting Molycorp’s business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by Molycorp; with unanticipated geological conditions related to mining; the effects of adverse general economic and business conditions; the rate of exchange of the U.S. dollar to the Canadian dollar, the Japanese yen, the Chinese Renminbi and the Euro; unexpected actions of domestic and foreign governments; and various events that could disrupt operations, including natural events. For more information regarding these and other risks and uncertainties that Molycorp may face, see the section entitled “Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2012. Any forward-looking statement contained in this press release or the Annual Report on Form 10-K or the Quarterly Report on Form 10-Q reflects Molycorp’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to Molycorp’s operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. Molycorp assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.

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