Interview Synopsis

MP Materials – 2021 outlook

  • Multi Asset
  • Materials
  • North America

Rare earth metals are an increasingly sought-after resource, particularly in high-tech, low-carbon industries. For example, increased production and use of permanent magnets is directly related to electric vehicles. Third Bridge Forum spoke to a former C-level executive at Nevada-based MP Materials to discuss the company’s supply-chain investments, geopolitical risk and the 2021 outlook.

MP Materials seeking to turn rare earths challenges into opportunities

The first question related to MP Materials’ role in solving the various challenges posed by China’s supply-chain monopoly, moving on to how its approach to rare earth mining differs to that of its predecessor, Molycorp.  

Recognising the heavy dependence on China for rare earths, the Interview then noted how the US Department of Defense is helping to move the needle on project viability and production economics. Indeed, MP, Blue Line and Lynas, among others, have received capital injections. And “I think you’ll see that [support] continue”, the expert said. “I think the government recognises the entire supply chain needs to be enhanced and… relations [with China] have historically been difficult and [it] looks like they’re not getting better any time soon.”

How MP can compete with China’s producers and international players given import tariffs was also on the agenda. “Really, the only lever that they [MP] have is continuing to strive to be the lowest-cost producer.” Meanwhile, MP has secured its reagents domestically, further reducing operating costs. How MP achieves its USD 1.50 per kilo production costs, and whether this is sustainable, was also discussed.

One of MP’s competitive advantages is that it has one of the highest ore contents, of approximately 7.5-8% rare earths, whereas China must produce a significantly higher volume of ore to capture the same amount (typically 2-3%).

Among the specialist’s closing remarks was that, leveraging government funding as much as possible, a continued focus on increasing production and always striving to be the low-cost producer will be the key drivers of success for MP. “They do have the strategic advantage of their high-quality ore as well as their relatively low cost structure, and so continuing to focus on those two, as well as capital management, are going to be the three key areas that they really need to focus on in the next two to three years.”

To access all the human insights in Third Bridge Forum’s MP Materials – 2021 outlook Interview, click here to view the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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