Molycorp up 10 percent after congressman introduces rare earth legislation

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Coffman, Republican congressman quartz crusher from Colarado, introduced legislation on Wednesday calling for a variety of measures that would better ensure that the United States has secure access to rare earth metals.

Molycorp stock finished Thursday at $ 68.45. The stock’s 52-week range is $ 12.10 to $ 68.79.

Avalon Rare Metals, a Canadian-based exploration company also focused on rare earth metals and minerals, was up. Avalon rose 9.47% to $ 9.13 a share on Wednesday trading.

Some of the provisions national key projects within Coffman’s proposed legislation are the following:

• Directing appropriate federal agencies to expedite the permitting process in order to increase the exploration and development of domestic rare earth elements, without waiving environmental laws, and establishing a multi-agency Task Force to carry out this process;

• Setting up a Defense Logistics Agency (DLA) rare earth inventory — where DLA enters into long-term supply contracts and then makes the supplies available for purchase to federal government contractors — to generate a domestic market and facilitate the domestic sourcing of rare earth alloys and magnets;

• Making loans, backed by the federal government, available to start production should lending from the capital markets not be available;

• Requiring the various cabinet Secretaries to appoint Executive Agents for rare earths;

• Establishing a rare earth program at the U.S. Geological Survey.

Molycorp is a Colarado-based rare earth miner that runs the Mountain Pass, an open pit rare earth element mine in California. The mine is being expanded and modernized. Work is supposed to finish this year. By 2013, the company expects the mine to produce 40,000 metric tonnes of rare earth iron ore sotne crusher oxide, a doubling of the mine’s production capacity.

China, which produces 97% of the world’s supply of rare earth metals, is placing restrictions of the rare earth metal exports.

Interest rate rises in a shrinking economy.

Where an economy is in recession and inflation starts to rise from food and energy inflation, the economy finds it extremely difficult to absorb such inflation, in all areas of the e economy. Traditional economics would have central banks attempt to ensure that such inflation does not flow into other areas, but it can only use interest rates to do it. This is like a misdirected sledgehammer in so many cases as it now imposes yet another burden on businesses that are struggling to survive and ensure minimum profitability. The effect of interest rate rises in this climate is to curtail business activity even more. At its worst, it can eventually precipitate a depression. By damaging already weak consumer confidence, its impact is that much greater and that much more difficult to recover from.  If confidence is already undermined, then such further cost pressures send it spiraling downward. The U.K. may experience this situation in 2011 and 2012.

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