The Associated Press April 4, 2011, 3:28PM ET

Molycorp buys rare earth processor

Mining company Molycorp, Inc. bought a controlling share of AS Silmet, a rare earth processor in Estonia, for $89 million, boosting Molycorp's presence in the market for rare earth minerals.

Molycorp said Monday that its subsidiary Molycorp Minerals LLC bought 90.02 percent of AS Silmet's stock. AS Silmet is one of only two rare earth processing facilities in Europe.

Shares of the company rose $6.17, or 10 percent, to $65.42 in midday trading after the announcement.

Molycorp said the purchase will bolster its own rare earth mine and processing facilities in Mountain Pass, Calif.

The company said the acquisition expands its ability to make the rare metals niobium and tantalum, which are used in manufacturing a wide variety of electronics products. Molycorp will provide rare earth minerals from its mine in California to AS Silmet, making that facility the first in Europe that doesn't depend on China for any material.

The company will change its name to AS Molycorp Silmet. AS Silmet employs about 550 people at three factories in Estonia.

Shares of Molycorp rose $7.35, or 12.7 percent, to $66.78 Monday afternoon.

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