Molycorp Co. Ltd (NYSE:MCP), largest molybdenum mining company in U.S., announced to expanding production capacity from 20 thousand tons to 40 thousand tons. The expanding plan was interpreted to impose pressure on China's rare earth export by some experts.

Mark Smith, CEO of MCP, said they are going to invest $895 million and plans to increase global market share from nowadays 4 percent to 30 percent, but the time schedule was not given.

According to annual report, the company's production was less than 5000 tons last year, and 60 percent were export to Japan.

China's Ministry of Industry and Information Technology reported that China is the largest rare earth products producing and exporting country. China is providing 95 percent of global demand with only 36 percent of global reserves. During 1990to 2005, China's rare earth exporting increased approximately 10 times, but the price dropped 50 percent.

"It's no doubt that MCP is the largest rare earth producer following China. With the abundant reserves of rare earth in America, the production capacity expansion of MCP would of course impose pressure on the nascent recovered China's rare earth price," said Zhang Limin, an analyst of Mysteel.com.

But according to Wang Siyu, an analyst in Umetal, several foreign companies have announced to expand producing capacity to get rid of China's exporting, but eventually make no substantial progress.

"U.S. highly values their resources, it's not probable to mine rare earth with such a large scale for MCP," Wang added.

There are many problems for rare earth mining in China, and China falls far behind U.S. and Japan in application technology of rare earth, much more fundamental research is needed in this field.

"The reason for other countries to reserve rare earth is not only to protect environment, low price of importing China's rare earth production is also an important reason. So China should steer from quantity control to price control," added Zhang.