US-based MP Materials, the lone producer of rare earth materials in the Western hemisphere, announced financial results for the three months ended March 31, 2022.

MP Materials operates the Mountain Pass rare earth mine and processing facility in California, one of the few rare earth operations outside of China.  The company reported a 177% y-on-y increase in revenue and a 431% increase in y-on-y net income this quarter. Moreover, the rare earth producer indicated a 20% and 10% advance in sales and production volumes, respectively.  This production growth from 9,849t REO in Q1 2021 to 10,828t in Q1 2022 was attributed to improvements in the efficiency of its processing operations, mainly from higher ore feed rates and recoveries, as well as slightly higher mill uptime.

Rare earth prices are expected to continue to increase owing to uncertainty related to supply and stockpiling issues in China, which accounts for ~70% of global rare earth production.  Over the last few months, China has seen environmental shutdowns, COVID-related restrictions, and border closures with Myanmar, from where China sources 50% of its HREEs. 

MP ships its rare earth concentrate to China to be separated into rare earth oxides (REO) but going forward will limit dependence on China with its stage II and III operations underway.  Stage II will see its concentrate processed into separated REO that will then be sold directly to end-users, while the stage III will involve turning NdPr into alloy flakes and permanent magnets.

Rare earth elements, like neodymium and praseodymium, are essential components in permanent magnets, used in the manufacturing of EVs, wind turbines and military equipment. MP’s positive financial performance can partly be owed to the surge in demand in the EV sector and the ongoing transformation of the global energy sector. Of course, on the other hand, if REE prices continue to climb and REE magnets become too expensive to manufacture, more effort might be placed on substituting REE components with more affordable ingredients.