REO Speedwagon: MP Materials (NYSE: MP)
This week we’re going to take a look into MP Materials (NYSE: MP), a rare earth elements (REE) mining and processing company based out of Las Vegas. Rare earth elements will play a vital role in the electrification of vehicles, robotics, and other appliances that require permanent magnets for motors. The case for scale is expansive and yet, relatively simple. Permanent magnets are found in the motors and not the battery, allowing for further scale when compared to battery materials such as lithium.
To scale the importance of REEs and future developments, securing the supply chain will be vital for the electrification of everything from vehicles, power transmission, and everyday household items.
MP Materials Overview
MP owns and operates the Mountain Pass Rare Earth Mine and Processing Facility, one of the few facilities located in North America. The firm is also in the process of building a vertically integrated processing facility in Fort Worth, Texas, that will separate and manufacture alloys and magnets made of NdFeB, or neodymium-iron-boron, permanent magnets and its precursor products.
At its Mountain Pass facility, MP produces rare earth concentrates and refines rare earth oxides (REO). Concentrates are primarily sold through offtake agreements to Shenghe, a China-based resources company that mines, smelts, separates, and processes rare earth elements. More recently, MP secured a long-term agreement with General Motors (NYSE: GM) to supply manufactured REEs and finished magnets for electric motors across GM’s Ultium Platform.
In q3’23, management announced their Upstream 60k initiative, a strategy targeting 50% expansion of REO output at their Mountain Pass mine and processing facility over the course of 4 years. This expansion is said to come with modest incremental investments that will yield its greatest results in the back end of the expansion.
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