China’s move to capture the market did not stop at magnet technology and Magnequench. At one point, the country almost acquired Molycorp, which owns the Mountain Pass mine in California, the only rare earth mine in the U.S. Molycorp purchased Mountain Pass in 1951. In 1978, Unocal purchased Molycorp. In 1982, Mountain Pass Mine began processing samarium oxide and in 1989, it began processing neodymium oxide, both critical components of two types of permanent magnets. In 2005, China National Offshore Oil Corporation (CNOOC) submitted an $18.5 billion cash bid for Unocal, outbidding Chevron by half a billion dollars. 24 CNOOC’s bid raised a great deal of concern for U.S. energy security. While there was a media frenzy over these concerns, one issue received little attention – repercussions of China gaining control over Molycorp through CNOOCs purchase of Unocal. If the deal were to have gone through, China would have gained control over Mountain Pass and therefore the country would have had a complete monopoly over all the current major rare earth element resources in the world.
China has also pursued a stake in some of Australia’s rare earth resources. In early 2009, Lynas Corporation, an Australian mining company, had plans to build a large rare earth mine at Mount Weld in southwestern Australia. In February, however, the company suspended construction of the project because of funding problems. In May 2009, China Non-Ferrous Metal Mining Co. was poised to invest $252 million to provide much needed debt funding in return for a 51.6 percent stake in Lynas. Before the deal could be finalized, the Australian government had to approve it following a review by the Foreign Investment Review Board (FIRB). Normally, the board has 30 days to decide. However, FIRB had requested at least three resubmissions, which suggested that the Australian government was carefully considering the full implications of the deal’s impact on the world’s supply of rare earth elements.25 Finally, in September 2009, China backed out of the deal after Australia’s Foreign Investment Review Board requested several alterations to the deal, “including a reduction of its stake to below 50 percent. 23