MP Materials: Rare Earth Mining Company Is The Thing Behind The Thing For EVs, Other Sectors
Benzinga routinely examines a stock that might be considered a little under the radar. The company may not be well-known, but chances are the line of work it’s in is pretty familiar.
This is called the “thing behind the thing.”
A company that provides rare earth minerals needs for several sectors is this week’s featured “Thing Behind The Thing.”
About MP Materials: In 2020, MP Materials Corp (NYSE: MP) announced a SPAC merger to go public. The deal brought the decades-old Mountain Pass mining site in California public in a new effort to help the U.S. become less reliant on China’s rare earth mineral mining.
MP Materials has a mission to “restore the full rare earth supply chain to the United States of America.” The company is the largest rare earth materials producer in the U.S. and the Western Hemisphere.
“MP Materials has the best ore body in the world,” CEO James Litinsky told Benzinga in a previous interview.
The company laid out a growth plan of three stages in its investor presentation, with Stage II set to be completed by 2022 and Stage III starting in 2025 to expand the company into magnets.
Thing Behind The Thing: MP Materials is “the thing behind the thing,” as it works to provide the vital rare earth materials used in sectors that include wind turbines, automation, robotics, electric vehicles, drones, electric public transportation and electric aviation.
Electric vehicles could consume the current supply of rare earth minerals within a decade, MP said last year.
Litinsky called MP Materials a pick-and-shovel play last year, noting the ones who made real fortunes in the gold mining boom were those who provided the materials.
MP Materials could benefit no matter which electric vehicle companies dominate. Investing in MP Materials could be a bet on the emergence of electric vehicles rather than an individual company.
Companies like Tesla Inc (NASDAQ: TSLA), Apple Inc (NASDAQ: AAPL) and General Motors Company (NYSE: GM) have to buy their magnets from China under current operations, but that could change when all three stages of MP Materials business plan are operating.
“We want the Teslas and Apples of the world to buy our magnets here,” Litinsky said.
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Growth Ahead: At the time of the SPAC deal, the company said China had an 80% market share for rare earth minerals, with MP having 15% share.
With a potential battle between China and the U.S. over the exporting of rare earth minerals, MP Materials continues to benefit from the potential national security threat. The Department of Defense has helped finance and support MP Materials on several occasions.
The company said in its second-quarter earnings release that it was on track for its Stage II completion in 2023. MP Materials also highlighted its progress into Stage III.
“Our Stage III team is making significant progress on our strategy to repatriate magnet manufacturing in the United States and we intend to announce the site of our initial facility this year,” Litinsky said.
MP Materials Financials: MP Materials reported second-quarter revenue of $73.1 million, a year-over-year increase of 141%. Net income in the second quarter was up 583% year-over-year to $33.4 million.
The company produced 10,305 metric tons of rare earth minerals in the second quarter, up 11% year-over-year. The second quarter saw record production, revenue and net income for the company.
The company’s original investor presentation called for fiscal 2021 revenue to hit $171 million. Through the first six months of 2021, MP Materials has reported revenue of $131.1 million and is on pace to far exceed this total.
The price realized per metric ton was $7,343, up 137% year-over-year and the company reported a cost per metric ton of $1,538 in the second quarter.
MP Price Action: MP Materials shares trade at $36.98 at the time of writing. Over the last 52 weeks, shares of MP have traded between $10.80 and $51.77.
Photo: A satellite image of the Mountain Pass mine.
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