When rare earth minerals miner Molycorp Inc. (NYSE: MCP) re-opened California’s Mountain Pass mine last year, the focus was on a variety of minerals known as the “light” rare earths. These minerals are used in a variety of high-tech products including wind turbines, electric vehicles, and compact fluorescent light bulbs. Now the company is set to announce that it will also develop a deposit of “heavy” rare earth minerals, which are even scarcer than the light variety.

According to a report in The New York Times, data on the heavy rare earth deposits have been overlooked since the days when Unocal owned the mine.  The heavy minerals have been there, it’s just that no one noticed.

Molycorp’s discovery comes at the same time that Vale SA (NYSE: VALE) revealed that it has discovered rare earth minerals at one of its Brazilian copper mines. That discovery, according to The Wall Street Journal includes what are supposed to be “safe” radioactive elements that could be classified as rare-earth minerals.

China holds a dominant place in the current production of rare earth minerals, including about 99% of total global production of the heavy variety. Australian miner Lynas Corp. (OTC: LYSCF) is in the early stages of rare earth production and ultimately plans to meet 20% of global demand for rare earth minerals as China seeks to diminish its role as virtually the world’s sole supplier. Molycorp aims to be the world’s largest supplier of light rare earths by the end of 2014.

As more deposits are found and mining begins, the astronomical prices recently seen for the rare earths will decline. Companies that use rare earth minerals in manufacturing are also actively seeking substitutes for the scarce and high-priced rare earths. Molycorp also hopes that its revelation of the heavy mineral deposit will head off some of that searching.

Rare earths are not really rare, they just occur in such low concentrations that finding a deposit worth mining is difficult. And mining produces low-level radioactive waste, which is a regulatory problem for some companies, though Molycorp dodges that by having a permit to mine issued in the 1950s. Avalon Rare Metals, Inc. (AMEX: AVL) does have Canadian regulatory permits for some of its projects, while Rare Element Resources Ltd. (AMEX: REE) continues with exploratory drilling at its property in northeast Wyoming.

Avalon shares are up more than 3%, to $2.50, in a 52-week range of $2.29-$10.11. Losers include Rare Element Resources Ltd. (AMEX: REE), which posted a new 52-week low of $3.86 this morning and China Shen Zhou Mining & Resources, Inc. (AMEX: SHZ) is down more than -4%, at $1.14, in a 52-week range of $0.97-$10.84.

For its part, Molycorp shares are up more than 7%, to $32.30, in a 52-week range of $26.02-$79.16. The Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) is down about -0.5%, at $14.33, in a 52-week range of $13.82-$28.91.

Paul Ausick