MP Materials Magnet Shipments Loom as Rare-Earth Output Doubles

MP Materials Corp. delivered magnets to General Motors for qualification testing during the second quarter, with commercial shipments still slated to begin in the fourth quarter. The milestone marks the first time the company has completed the full chain from its own Mountain Pass ore to finished magnet, CEO James Litinsky said on the earnings call.

Revenue plus PPA income more than doubled year over year to $126.1 million, driven by a 127% increase in neodymium-praseodymium sales volumes. Adjusted EBITDA swung to $28.5 million from a loss of $12.5 million a year earlier. The Materials segment contributed $113.2 million of the top line and $32.5 million of adjusted EBITDA, a $45 million year-over-year improvement.

NdPr production hit 840 metric tons during the quarter, up 41% from a year earlier, despite an extended planned plant shutdown in April, Litinsky said. COO Michael Rosenthal said third-quarter production should top 1,000 metric tons as reliability and throughput improve. The company is working through circuit-level issues and expects benefits from higher throughput, process efficiency, lower maintenance intensity and the restart of its chlor-alkali facility to build progressively through 2027.

CFO Ryan Corbett guided Q3 NdPr oxide realized prices in the high-$90s per kilogram, with PPA income of roughly $10 per kilogram. Materials sales volume should be "flattish" sequentially, depending on shipment timing, sales mix and metallization lead times. As of June 30, the company held roughly 650 metric tons of NdPr oxide and metal on hand, in transit, at toll processors or awaiting shipment.

Heavy Rare-Earth Separation and the Gadolinium Deal

MP Materials achieved mechanical completion of its first heavy rare-earth separation circuit in May and is preparing to introduce feed into the facility. The company remains on track to begin producing terbium and dysprosium later this year, Rosenthal said, though the exact ramp pace depends on commissioning activities and product quality focus.

The company also announced a long-term agreement to supply gadolinium oxide to a U.S. aerospace and defense manufacturer. Litinsky described it as a sizable nine-figure deal over multiple years. Corbett said the contract includes locked-in economics and could offer opportunities for greater volumes over time.

MP Materials is advancing a samarium program with first production planned for 2028. Following an extended pilot campaign, the company is also moving forward with engineering and procurement for a gadolinium separation project on a similar timeline. Rosenthal said the company plans to break ground during August on an expanded Mountain Pass area intended to house magnet recycling and additional heavy rare-earth separation and finishing capacity.

Management said the company is evaluating opportunities across other rare earths contained in its ore body, including yttrium. The heavy rare-earth separation circuit was designed to process third-party feedstocks as well.

Magnet Manufacturing and the 10X Facility

At the Independence facility in Texas, the company delivered magnets to General Motors for in-vehicle qualification testing during the quarter. Initial commercial magnet shipments are still expected in the fourth quarter, followed by a gradual production ramp.

Rosenthal said the facility is demonstrating the capability and consistency needed to support customer volume ramp requirements, though qualification also involves capacity staging, batch traceability, quality systems integration and vehicle-level testing. Corbett said early magnet production will create variable quarterly financial results as precursor product sales decline and commercial magnet volumes begin to scale.

The Magnetics segment's revenue declined slightly from the first quarter, reflecting a greater proportion of costs tied to magnet-production startup rather than precursor production. Precursor production generated adjusted EBITDA margins above 40% during the quarter.

MP Materials has roughly $46 million of prepaid revenue from magnetic precursor products remaining to be recognized over the next three to four quarters, declining modestly each quarter. Once that prepayment is fully recognized, the company expects to dedicate metal production capacity to its own finished magnet manufacturing rather than external precursor sales.

Capital expenditures totaled $230.3 million during the second quarter, with more than 60% directed toward the Magnetics segment. The company acquired the 10X site for roughly $80 million during the quarter, bringing year-to-date capital spending to $308 million as of June 30. It maintained full-year capital expenditure guidance of $500 million to $600 million.

Construction at 10X is advancing, with foundation work underway and long-lead equipment ordered. Litinsky said during closing remarks that the company had received confirmation it was "officially vertical" at the site.

MP Materials ended the quarter with $1.45 billion in cash and short-term investments. Corbett said the balance sheet, together with anticipated improvement in operating cash flow from increasing oxide and magnet sales, fully funds the company's long-term capital plan.

Litinsky also discussed Project Swarm, an initiative intended to aggregate and standardize future magnet demand among U.S. and allied drone manufacturers. The company has signed subscription agreements with several participants and views the program as a way to provide emerging autonomous-system companies access to future manufacturing capacity while retaining flexibility in product development.

The company operates the Mountain Pass Rare Earth Mine and Processing Facility in California, the only commercially viable rare earth mining and processing site in the United States.