Reorganizing rare earth processor Molycorp Inc. asked a Delaware bankruptcy court Thursday to allow cancellation of its insurance on the company's spun-off and shuttered Mountain Pass mine, saying the more than $2 million annual premium is an inappropriate burden on surviving companies.

The request was packaged in a motion to lift a Chapter 11 automatic stay on cancellation of insurance policies covering the mine's owner, Molycorp Minerals LLC, a former Molycorp subsidiary now operating independently in its own Chapter 11 under a court-appointed trustee.

Molycorp moved to pull the mine's insurance days after the Molycorp Minerals spinoff's trustee asked Judge Christopher S. Sontchi to dismiss the mine's Chapter 11 entirely, a move that would effectively abandon what was once North America's largest rare earth mine to creditors and regulatory agency actions under state law.

The trustee, Ballard Spahr LLP partner Paul E. Harner, said the mine had been billed in excess of $200,000 monthly by Molycorp for reimbursement of insurance costs alone, although Molycorp said it has not been paid. Available cash to maintain the entire site, now averaging $2.4 million monthly, will likely run out by mid-September, the trustee said.

The Molycorp Minerals trustee is represented by Matthew G. Summers, Tobey M. Daluz, Leslie Heilman and Vincent J. Marriott III of Ballard Spahr LLP.