From a distance, the cream coloured pipes and rusty conveyor belts of the old Molycorp Minerals rare earths mine could become lost in the desert backdrop. Folded in among the quiet hills and vast stretches of dirt and pebble in Mountain Pass, California, there is little life here except for the desert tortoise and the rare driver speeding past on Interstate 15.

Hints of Las Vegas, about an hour to the north-east, are scattered along the road in the occasional neon-lighted casino resort or billboard advertising a 24-hour all-you-can eat buffet.

About 95 per cent of the mine’s workers drive down this highway every day from Nevada to work. They don hard hats and coveralls before starting to work with their hands. In a few years’ time, when the mine facilities are completely rebuilt and churning out tonnes of neodymium, lanthanum, and the like, the work force will triple in size to 300.

“Rare earths are a metaphor of the future,” says John Kaiser, an analyst with Kaiser Bottom-Fish Online, an internet research portal. “After 30 years of losing manufacturing jobs, there’s a sudden realisation that the country has disembowelled itself in a world with China and India marching on.”

Mr Kaiser is referring to the US economy in general, but the rare earths market in particular. In the 1980s, China was able to produce these metals so cheaply, mines in other parts of the world were forced to shut down and China took control of 97 per cent of the world’s supply.

Now that rare earths are becoming increasingly important for the manufacture of smartphone screens, wind turbines, and catalytic converters, US politicians are desperate to have a source of these materials on their own soil.

Mike Coffman, US congressman from Colorado, says: “[Domestic] rare earth production is a matter of national security for our nation. A reliance on foreign sources poses an unbelievable threat.”

Molycorp, based in Colorado, is seizing the moment and the momentum to rebuild the Mountain Pass mine. It hopes to recapture the heyday of the 1960s when the mine produced enough of the rare earth element europium to brighten and enhance the picture of every colour television in the US.

This time, it plans to use a new technology to prevent the harmful chemical spills that forced it to shut down in 2002. Rather than ship the toxic solution – which it needs to separate the rare earth metals from the rock – back and forth to Las Vegas, it is going to use a secret process that recycles the byproduct of the chemical separation and reuses it for subsequent batches.

The company claims this will ultimately reduce the cost of production to $2.77 per kg, half of China’s costs, thus insulating it, should China attempt to lower prices by flooding the market with a sudden increase in exports.

Even with capital costs of $781m, and a string of acquisitions under negotiation – Molycorp will not reveal total start-up and operating costs – financiers appear eager to back the company. After an initial public offering last summer, plus the issuance of preferred and common stock, Molycorp says it is $100m shy of meeting its funding needs for capital expenditures. But it is still asking the US Department of Energy for $280m in loans, to cover intellectual property requirements and technology advancements, says Mark Smith, chief executive.

“I certainly hope they don’t get the loan,” says Mr Kaiser. “I think the market situation is robust enough to fund this with pure equity.”

What Mr Kaiser predicts will be a likely financing method for the Mountain Pass mine is an upfront investment from technology companies that use rare earths in exchange for a guaranteed percentage of the supply. Rather than lose money because they do not have enough rare earth materials to scale up production of their products, Mr Kaiser says, companies would be better off with a secure supply that they can control.

Whether through these kinds of investments or traditional contracts, Molycorp is hoping to attract US companies to buy its minerals.

“We think it will create a nice hub from which lots of different manufacturing sectors can then utilise a very secure supply of these materials to bring manufacturing jobs back into the US,” Mr Smith says.

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