The sole US producer of rare earth elements has collapsed, which will complicate the ambitions of local rare earths miners and explorers amid expected subdued product prices.

Late last week Molycorp collapsed with $US1.7 billion of debts which it has moved to refinance, including receiving an additional $US225 million in fresh borrowings. The company has run into a series of problems with its plant processing material from its Mountain Pass mine which is located in the Mojave desert.

A move by China a few years ago to restrict exports of rare earths at a time of surging demand prompted companies such as Molycorp and the ASX-listed Lynas Corp to launch production of rare earths at new mines.

Since then, China has eased export restrictions which has sent prices of most rare earths lower, putting both Molycorp and Lynas under extreme financial pressure. Both Lynas and Molycorp have been seeking to lift output while also renegotiating loan terms to ensure their survival.

Lynas shares are holding around all-time lows as another ASX-listed company, Alkane Resources, recently won government approval to launch production at a mine near Dubbo, in western NSW. It is now seeking to finalise the financing of its $1 billion project.

Shares in Molycorp have collapsed from more than $US70 from their peak when surging demand pushed product prices sharply higher. Rare earth elements are used in a range of high-tech communications, transportation and industrial products. Since the start of the year, its shares are down 59 per cent and are down 86 per cent from a year ago. Molycorp stock was down nearly 6 per cent, or two cents, to 36 cents a share in early afternoon trading in New York Friday.

Molycorp's Mountain Pass facility once supplied the majority of the world's rare earth elements. Just five years ago, the mine couldn't produce the minerals fast enough to meet demand in a range of industries ranging fromsmartphone touch-screens to wind turbines and fuel cells.

The company benefited as well from a limited-export policy from China, the world's largest rare earth producer, but as China relaxed its restrictions and released larger rare earth supplies into the global marketplace, the financial pressure on Molycorp mounted.

Technological advances has also meant that many electronics designers discovered ways to cut rare earth use so that they are no longer as dependent on the minerals.