With the exception of Tesla Motors’ blockbuster public sale last month, clean technology IPOs have been disappointing this year. And the trend continues today with Molycorp Minerals, miner of many of the rare metals used in green technologies, debuting at $13.25 a share -- down from the anticipated range of $15 to $17.
All told, the Greenwood, Colo. company raised $394 million, pricing its shares at $14. The stock has performed weakly since this morning, dipping as low as $12.
While it’s not exactly a traditional green technology company, Molycorp does provide the raw materials for advanced batteries (for plug-in vehicles, primarily), wind turbines, and energy-efficient light bulbs. More and more demand for its products is coming from the sector, which means its success relies largely on the shaky and uncertain growth of other green technologies.
This may be a major reason its IPO followed in the footsteps of similar sales by biofuel maker Codexis and solar cell maker Jinko Solar, both of which sold for less and raised less on the public markets than expected. Cylindrical solar module maker Solyndra couldn’t even get its IPO out the door.
Investors just don’t seem to be hot on cleantech stocks. There’s a lot of risk involved in green plays, and returns sometimes don’t come for years.
Molycorp, in particular, is in a sticky spot. The company plans to use the money raised in the offering to jumpstart its mine in Mountain Pass, Calif. that has been defunct since 2002, when radioactive waste from the site contaminated a local lake. The project is more vital than ever, considering China’s growing dominance in the rare earth elements market (it owns 95 percent of global production), and Molycorp’s dependence on its own operations in China.
Geopolitical disputes over rare earth metals have stolen the spotlight recently, especially following the discovery of a massive pocket of lithium in Afghanistan that could be used to make millions of new batteries. Bolivia, which reportedly contains half of the world’s known lithium supply, has prohibited foreign mining and exports. If China decided to do the same -- already a concern for U.S. government officials -- Molycorp and companies like it might be sunk.
Seeing this possibility on the horizon, Molycorp seems to be rushing to beat the clock. Not only is it working to get its California mine up and running by the end of the year (in order to hit full capacity by 2012), it’s applying for a $280 million loan guarantee through the U.S. Department of Energy to expedite development. The company hopes its IPO will buoy its application. It expects to spend $511 million in the next two years alone.