The rise and fall of Molycorp (NYSE: MCP), and other rare earth mineral stocks, has been a caution tale for investors speculating on high-potential and high-risk stocks. When China reduced exports of rare earth minerals, buyers of the materials couldn't reduce demand, and prices went through the roof.
But when Molycorp and Lynas Corp in Australia began production, prices quickly fell. Their expansion plans continued as prices fell, and soon the market was flooded with rare earth minerals. Prices dropped, leading to massive losses.
Now, Molycorp's operations are burning through cash at a rate of nearly $50 million per quarter, and the company may not last another year without further financing. Specialist Travis Hoium covers how Molycorp got here, and what investors can learn from its rise and fall.
