NEW YORK (AFP) - Molycorp, the sole US miner and producer of rare earth elements crucial in high-tech manufacturing, filed for bankruptcy protection on Thursday as it struggles with a mountain of debt.

Hit by falling prices for its minerals after China, the world's largest rare earths producer, loosened controls on its exports, Molycorp said it was already moving to restructure its debt to remain in business.

"The actions we have taken today are important steps toward achieving a restructuring of our US$1.7 billion debt with our major creditor constituencies," said Geoff Bedford, Molycorp president and chief executive, in a statement.

Under an agreement mapped out with holders of more than 70 per cent of its senior debt, the company will obtain up to US$225 million (S$300 million) in new financing to support its operations while it completes negotiations with all creditors.

Bedford said it expects to exit Chapter 11 bankruptcy protection before the end of the year "with an appropriate financing framework to support our business going forward."

Molycorp said the bankruptcy action did not include operations outside of North America, with the exception of some non-operating companies.

"Our operations in Europe and Asia are not a part of today's filings, and these businesses are cash-flow positive and play a vital role in many key industries worldwide," Bedford said.

"All of the company's facilities in North America and around the world will continue operating as usual."

Molycorp owns the only rare-earths mine in the United States, located in Mountain Pass, California.

With operations in 10 countries, the company produces 17 rare earths - including scandium, ytrium and lanthanum - that are used in a wide range of products, from electronics and defence systems to batteries, magnets and wind turbines.

The Greenwood Village, Colorado-based company has posted annual losses for the last three years as it fights a sharp decline in commodity prices.

Molycorp shares soared after debuting on the New York Stock Exchange in 2010, helped by China's tight restrictions on the export of rare earths.

But following a World Trade Organisation ruling in 2014 in favour of complaints filed by the United States, the European Union and Japan, China was forced to scrap its restrictions and prices fell.

The NYSE suspended trading in Molycorp shares on Thursday and said it would move to delist the company.

Shares slumped 5.6 per cent to 36 cents on Wednesday, after having peaked at US$75 in April 2011.