HOUSTON, August 7th (Argus) - US rare earth producer MP Materials increased its production of praseodymium-nickel oxide to 840 metric tons in the second quarter, a 41% increase compared to the same period last year. As the company gradually approaches its year-end target for operating capacity, it is expected that the oxide praseodymium-nickel production in the third quarter will exceed 1,000 tons.
The company stated on August 6th that in April, the annual maintenance at California's Mountain Pass limited production. The maintenance disruption lasted longer than planned.
MP's praseodymium-nickel sales in the second quarter exceeded production again. MP sold 1,006 tons of praseodymium-nickel in the second quarter, up 127% from the same period last year, reducing the inventory built up during the production period.
MP expects the actual realized price of oxide praseodymium-nickel in the third quarter to be over $90 per kilogram. Additionally, under the price guarantee mechanism in its public-private partnership with the US Department of Defense (DoD), the company will also receive an additional $10 per kilogram. At the beginning of the third quarter, the market price of oxide praseodymium-nickel was approximately $110 per kilogram. Due to the expected almost no price floor subsidy for the praseodymium-nickel products stored in the inventory in the form of concentrate, the company expects the overall revenue from this cooperation plan to slightly decrease compared to the previous quarter.
The company held approximately 650 tons of praseodymium-nickel oxide and metal as of June 30th, in transportation, processing, or awaiting shipment.
MP Materials completed the mechanical completion of its first heavy rare earth separation line in May and is currently preparing to introduce raw materials for production in the near future. According to the current progress, the company still expects to start producing two key heavy rare earth products, dysprosium and terbium, later this year.
At the same time, the company plans to start transporting heavy rare earth products produced at Mountain Pass to the magnet factory in Fort Worth, Texas, for subsequent magnet manufacturing.
MP Materials signed a long-term gadolinium oxide supply agreement with an unnamed US aerospace and defense manufacturer in July. The total value of the contract spans multiple contract years and reaches "billion-dollar level". The economic terms of the contract have been locked, so MP will not face the risk of spot market price fluctuations.
With future demand growth, the company has the opportunity to expand supply at higher incremental returns, as most capital expenditures have been completed in the early stages of the project.
Gadolinium oxide is sourced from the residual enriched material in the heavy rare earth separation process, which is the subsequent product obtained after the separation of dysprosium and terbium. Currently, the company is advancing the design of separation engineering and equipment procurement specifically for gadolinium production, with a construction schedule similar to the samarium project. The samarium project is expected to achieve its first production in 2028. Additionally, yttrium will become the company's next product to be evaluated and developed as a key rare earth product.
The heavy rare earth separation line of MP was designed to handle third-party raw materials and can adapt to different types and purities of raw materials. Therefore, the company is seeking raw material supply opportunities globally, rather than seeking upstream mine assets.
Meanwhile, the company continues to reduce the use of heavy rare earths in magnet production through grain boundary diffusion and other process improvements. The company expects that the vast majority of products produced by the "10X" magnet factory in the future will not require heavy rare earths, or only require a very small amount of heavy rare earths.
MP will launch an expansion project at Mountain Pass this month. The new area will be used for magnet recycling business and additional heavy rare earth separation and processing capabilities. The company has completed production reagent tests covering the entire plant and plans to switch to a non-Chinese supplier's reagents in late this year. Although direct costs will increase slightly, it helps establish a more independent supply chain. In addition, the company plans to advance a new pre-flotation process to a large-scale application by 2028. The benefits brought by the improvement in unit production cost are expected to gradually manifest and continue to strengthen during the period of 2027.
The output of the magnetic material factory is sold to General Motors (General Motors) and Apple at 1,000 tons per year, meeting the vehicle qualification requirements of General Motors. The first batch of commercial shipments will be made in the fourth quarter.
The loss of MP in the second quarter narrowed to $20 million, with revenue of $108 million. In the same period in 2025, the loss was $31 million and the revenue was $57 million.
