Strategic Materials

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>>> MP Materials eyes magnet business amid US plans to refine rare earths


S+P Global Market Intelligence

8-30-19

by Kip Keen


https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/mp-materials-eyes-magnet-business-amid-us-plans-to-refine-rare-earths-53922737


MP Materials wants to break into the rare earth magnet market, on the heels of plans to bring rare earth refining back to the U.S. at its Mountain Pass mine in California, as demand for electric vehicles grows.

"We'd like to be leaders in the domestic development of this supply chain," MP Materials Co-Chairman James Litinsky said in an interview with S&P Global Market Intelligence.

The rare earth supply chain, which China dominates, has come under increased scrutiny amid a U.S.-China trade war and as the U.S. administration pushes to protect and grow domestic production of materials it considers key to national security.

In 2018, the U.S. placed rare earths on a list of critical minerals. More recently, Trump labeled processing capacity of the metals as crucial to the U.S. defense sector through a series of "presidential determinations." Meanwhile, the Pentagon is reportedly assessing supply of rare earths in the U.S. and Australia, one of the few countries that produces them outside of China.

While MP Materials mines rare earths in the U.S. and sends its concentrate to China for separation, it recently outlined plans to restart separation capacity in the U.S. through an expansion at Mountain Pass.

MP Materials, largely relying on existing facilities, plans to process its concentrate into neodymium and praseodymium, two rare earths that are key inputs to high-strength or "permanent" magnets.

"We'll be making separated rare earths by the end of next year," Litinsky said.

MP Materials is majority-owned by Chicago hedge fund JHL Capital Group and QVT Financial LP. Shenghe Resources Holding Co. Ltd., a Chinese firm, owns a 9.9% interest.

Once separation begins, MP Materials would like to move downstream as a direct manufacturer of rare earth magnets, Litinsky said. In part, the strategy aims to capture demand for the magnets from the growing electric vehicle sector, where they are used in motors.

MP Materials has said it produces over 5,000 tonnes of concentrate a month, accounting for about 10% of the global market.

A recent media report pegged part of the expansion cost at US$200 million, but Litinsky said it would not require that intense of a capital investment. Clarifying, he said the investor group has already spent about US$200 million assembling assets and restarting production at Mountain Pass.

To help refine Mountain Pass concentrates, MP Materials expects to build roasting facilities to remove unwanted cerium from its concentrate. Otherwise it will restart existing facilities at Mountain Pass that were constructed by previous owners. "We're not building out solvent extraction," he said. "It's already built out."

Mountain Pass' previous owner Molycorp Inc. shuttered the mine in 2015. The asset was bought in 2017 by MP Materials' owners for US$20.5 million and resumed operations last year.

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