MP Materials Corp. (MP) Earnings Call Transcript
August 12, 2026
Earnings Call Speaker Segments
Good morning, everyone. I'm George Gianarikas, one of Canaccord Genuity's sustainability analysts, and thank you to everyone for attending our -- the second day of our 46th Annual Growth Conference. We're very happy to have with us today MP Materials CFO, Ryan Corbett, who's come here a few times before and always has a really interesting things to say actually. So I'm looking forward to the conversation.
Thanks for having me again.
Of course. I have the quote here in front of me. I want to read it. I thought it was super interesting from Michael, the COO. And he said, we're going to start with Stage 1. We are highly encouraged by early exploratory drilling results that suggest the potential for additional ore within the existing Pit Contours. Translating that, I think it means that you have potentially more mine life. And so maybe if you can explain to us where it stands today and where it could stand after you're done with this drilling.
Sure. Yes. I like that quote, too. I gave them a little bit of cra* Pit Contours. It sounds very. The reality though is, I think we've said pretty consistently, there has not been a significant exploratory drilling campaign at Mountain Pass, frankly, for decades. What we have seen within our existing resource and reserve report and what we file annually is we very consistently have positive reconciliations on actual results versus what the block model is telling you should be there. And so our view has been pretty consistently that when we do undertake a more fulsome exploratory drilling campaign, we can sort of at least fill out those blocks a bit, if not sort of expand what the pit shell ultimately could look like. We've taken -- we've undertaken sort of an early smaller scale amount of drilling. And I think we're seeing exactly what we expected to, which is what Michael is alluding to is that within the individual blocks of the block model, we believe that very clearly, we'll be able to bring more ore into those blocks within the model over time. I'm not going to promise you it will be this year's S-K 1300, maybe it will be next year's. But undoubtedly, I think it speaks to the scale and long-term nature of this resource. I mean, Mountain Pass has been in existence in some way, shape or form since the '50s. We are consistently surprise to the upside on how high quality this resource base is. And so I think the great thing is that not only are we seeing the ability to bring in more quantity of resource, which would certainly extend the mine life at existing throughputs, but it continues to be extremely consistent in mineralogy, which is something that obviously allows us to maintain the cost structure that we have.
Interesting. You operate in California. Does that mean new permits? Or can you operate? Thank goodness now.
No, we have our mining permit and whether the mine gets bigger or smaller, that mining permit is still there. I think -- the great thing, though, is despite having a facility that mining is viewed as dirty, the way that we do it is not. And we have a tremendously positive relationship with the regulators and the government within California. And so I think that -- what we continue to see is, frankly, an ability to expand the asset base at Mountain Pass. I mean if you go out there today, the amount of cranes that you will see, expanding the heavy rare earth separation capabilities, the recycling facility that's being added there, as thinking about Stage 1, we've talked about some of these technologies that are generally sort of basic mining technologies that we haven't needed to bring to bear, but we think really make a lot of sense now, ore sorting and things like that to be able to leverage some of the theoretically lower grade ore and upgrade it before it goes through our process. And so there's a significant amount of capital going into the ground at Mountain Pass.
And you've had this program in the past. And I think you've sort of achieved this based on some of the quarterly run rates, but upstream 60,000. Is that still a target of the firm and potentially, to put any words in your mouth, maybe even higher than that at some point?
Look, I think that we continue to believe firmly the mining constraint on the entire business. If you look at the full stream, the mining constraint to continue to grow magnet production in the Western world is access to NdPr. And so undoubtedly, that presents us with interesting opportunities, including looking at expansion of Mountain Pass. To your point, from an upstream perspective, I mean, we've hit 13,500 tons in a quarter on upstream REO production before. And so we've gotten quite close to that 60 number. But I think when we laid out upstream 60,000, we said it will be 4-plus years and pretty backloaded in capital. We got 60%, 70% of the way there with very minimal capital and very quickly. But some of the other things that will sort of take us eventually to higher levels like I laid out are being brought to bear in '27 and '28 regardless, like ore sorting and things like that.
Now moving to Stage 2, which is refining the material. You've talked about getting to -- it used to be 6,075 -- you're very...
Yes, I think we...
So 6,000 tons of NdPr run rate refining production by the end of the year. Maybe just talk about some of the things that you have to figure out to make sure you get there by then.
Sure. I think -- to your point, it is still technically 6,075. But if you look at the journey we've been on, we've really been refining at scale for 2.5 years, right? So we went from 0 refined product production to run rating where we are today in pretty rapid pace. It's taken peers out there with similar facilities 7-plus years to achieve what we've achieved in 2.5 and so I just want to reiterate, for if Michael is listening, which he's probably not: Incredibly proud of the team and what they've been able to achieve. I think the very exciting thing about getting to the ultimate targeted throughput is this is not -- it's not a technical challenge. It's a mechanical challenge. And it is a pretty typical one at a facility of the scale that we're talking about, certainly with some of the upgrades and new assets that we brought to bear and then the recommissioning of assets that were built in the 2010 time frame. Primarily, what we're focused on at this point is materials handling and mechanical reliability. And so the good thing about that, none of the debottlenecking process is fun or good, but it is necessary. It's a matter of continuing to push throughput while maintaining uptime. And so the numbers that we report to you guys, obviously, I think people look at them and see, that's your theoretical output. But there's two levers. There's uptime and there's throughput. And so it's really making sure that we're managing both. And we're going to continue to do that thoughtfully, hitting a number just to hit a number in a quarter, if it upsets the cost structure, produces bad WIP, et cetera, is not the right way to go. And so we just want to be very methodical in how we approach it.
I remember when I spoke with Michael last, he talked about it's like a pipes and hoses kind of problem.
Yes, upgrading. I mean, it's literally -- you run something at 350 tons a month and the pump sizes are fine. You push it to 400 tons a month and you're like, okay, these pumps are getting overwhelmed, put the pumps out throw new pumps in. I mean it's annoying, but eminently solvable.
And he did mention, just to give -- if he is listening, to give credit to some of the people that work there that he had someone on his team go on a Sunday to the Port of Los Angeles to get a -- some piece of equipment that -- it was an interesting story.
No doubt. Pretty typical.
So moving to heavies because you're starting to separate those two. Maybe just talk broadly for the audience, what you plan to do there, what the facility is capable of. And there are -- and we'll get there eventually, but this list of heavy -- it's not just DyTb, there are other things that you're going to refine that could provide value to the market.
Sure. So we have been focused on bringing our initial heavy rare earth separation capability to bear. I think we actually started engineering in 2021. The team has done a great job getting our initial facility that's focused on at first dysprosium and terbium really ready to go. We're filling cells as we speak. And so commissioning is in full swing. Our intention is to have sufficient on-spec dysprosium and terbium product to bring to independence within this year. So that continues to move a pace. The interesting thing is if you look at the heavy fraction, right, we've been producing and stockpiling what we call SEG+, samarium europium gadolinium and then everything heavier than that since we started refining NdPr. Obviously, we're taking the lights. We're doing the NdPr separation, cerium and lanthanum. And then we were leaving the SEG+ in effectively a concentrate form, a mixed product. When we do the separation to bring dysprosium and terbium out, we create an SEG samarium, europium, gadolinium and then we create a yttrium-holmium plus fraction. What you heard us announce on the last call is, obviously, Samarium is very useful for certain defense applications. And so as part of our Department of War public-private partnership that we announced in July of last year, we talked about the fact that we would extend the separation capability to separate from that SEG, the Samarium. And so that's already in the works. That will be ready for production at the beginning of 2028. The exciting thing that we've since added on is a long-term contract with a leading aerospace and defense firm to produce separated gadolinium on a long-term basis. And so I think this speaks to we have all 17 rare earth elements in the ore body. We have a lot of them in pretty exciting quantities, given how big of an operation Mountain Pass is. And so there continues to be very interesting investment opportunities for us where we can create long-term high-return projects out of some of these -- what people would use as sort of ancillary product streams. But certainly, the gadolinium announcement is one where it's a very logical next step for us and something that we're very excited about.
Nine figures, you mentioned that.
Nine figures.
It's a lot for an ancillary product, right?
Well, that's the thing that I think often gets lost when you look at the scale of Mountain Pass. I mean it is truly an unbelievable world-class asset. And so the thing that I sort of alluded to on the call is gadolinium, very significant potential product stream. We've got the other side of the coin. We've got yttrium-holmium plus. All of those products have real and exciting use cases and are starting to be viewed as very strategic commodities given everything that we're seeing geopolitically. And so we have those. We have the technology to separate them. And so hopefully, there'll be more to come there.
And you're going to start separation by the end of the year for other heavies, not the gadolinium side of.
So for dysprosium and terbium, we're -- I mean, cells are getting filled. So that will -- dysprosium and terbium will be -- will certainly sort of have quite a bit of action and initial product within the year.
I asked that question specifically because one of your peers reported earlier this week, they talked about there being an issue with scarcity of heavies. So you've been ahead of the curve a little bit in trying to get some feedstock and...
Yes. Look, I think our view is that it's easy to focus on the scarcity of heavies, particularly when you ignore what I think is the elephant in the room, which is access to NdPr. If you're not really focusing on where the market is going from a magnet perspective, I mean, we've talked about our progress. And admittedly, we started our magnet business in -- effectively in 2021. And so the Chinese and the Japanese have had quite a head start on us. But the amount of progress we've been able to make in heavy rare earth reduction within our magnets. And I think often what people will look at is they say, oh, it's grain boundary diffusions -- it's GBD. It's much more than that. GBD is helpful, but it starts all the way up at the strip cast operation. It's how do you hone the microstructure of the rare earth elements within the strip cast alloy flake to be able to support higher coercivity with less heavy rare earths. How do you create the formulation with using other elements instead of dysprosium and terbium? It's -- so it's microstructure, it's alloy formulation. It's certainly GBD. It's, frankly, particle size in how you produce powder. I mean there are so many elements to this that over time, we've continued to push down the heavy rare earth requirements for a given use case and a given specification. And I think that will continue. And so certainly, there's a bit of hysteria in the market about heavies at the moment. I think Jim, our CEO, has been quite public in saying he's not particularly bullish dysprosium and terbium prices because he sees our results when you look at growth in demand of magnetics, it's 1 for 1 with NdPr, if not more than 1 for 1 because generally, you go from 30% NdPr to 31% NdPr if you're tweaking down the heavy rare earth content. And that ratio is kind of the opposite on those heavies. I think we're a lot more bullish sort of the other heavies. But that is something that we think about. And so certainly, we are well positioned for what we need to do from a magnetics perspective, but that's generally how we see the market.
Can we talk about that light scarcity because you've mentioned this in the past, Japan has a deal with Lynas, and you're vertically integrated. And so your point has always been, well, where is...
Where is it coming from?
Yes. And so it's...
Do you know?
Can you tell me?
Well, look, I think that at the end of the day, I mean, certainly, this market has changed drastically. You have the two largest ex-China producers, both with minimum price floor guarantees from governments, right? And so we've sort of protected the base of that industry. And so I think a lot of people would say, okay, prices are up, there's a minimum price floor guarantee, mission accomplished. And look, as we've said, as we grow our business, we'll look at expanding. Lynas talks about expanding. But I mean, these are -- if you look at the scale of ultimate magnet demand, you're not going to get there by just expanding Mountain Pass and expanding Mount Weld. It's not even going to come close. And so one of two things has to be true. Either not all that capacity in magnetics is going to get added, which, frankly, from the way we've positioned our business, if that capacity is not added, look, how much more valuable our capacity is on the magnetic side. And then the flip side is, okay, it is going to get added. So where is the NdPr coming from? Our view is the incentive price to drive the scale of NdPr oxide capacity is many multiples of the current price. People really are not taking into account when they build these models. I mean, capital cost -- some people are using sulfuric acid, sulfuric acid doubled in price. Luckily, we don't have to use sulfuric acid, but it's doubled since the Iran conflict. This is not easy stuff. And so just saying, oh, prices are $110, that's going to take care of it, not even close. And so if that's true, the earnings power of the...
It's pretty high.
The materials segment is incredible. And so we are really excited about how we position the business where it's like heads I win, tails you lose, right, in the sense that no matter what the outcome is, the way we've positioned the business is one where we're incredibly excited about the future, and we think that the earnings power of the business is significantly higher.
Well, that's been something we've written about. It's hard to discern exactly what that clearing price is for the n-th kilogram of NdPr that you need to get to full independence for the United States from the West...
Yes.
Moving to magnets. So you're starting production, you're getting your sea legs under you, so to speak. So what does the qualification process look like now for General Motors or for other customers in the pipeline?
Yes. I think certainly, the automotive, we call PPAP process, production part approval process -- is really intense. And we knew that going in. And frankly, we think that our ability to get through this process with our initial scaled customer is going to set us up for success across the board. We're very encouraged with our interactions with General Motors and sort of what we've seen so far. This is much more than are you making a part to our specification? Like that's easy. We were doing that 3, 4 quarters ago. It's a full understanding and alignment of making the parts to scale to spec and then sort of feathering them into where they're needed in our customer supply chain. And so if you think about what needs to happen here over the next several quarters, right now, we have magnets that are doing in-vehicle testing, in motor testing. A lot of those results take many months for us to ultimately get. And so that's part of sort of what takes time is getting those ultimate results. If we need to make any tweaks here or there, we can do that. But then it's -- there are multiple part numbers. There are multiple production facilities. There are multiple suppliers potentially that we might be supplanting. And so when you think about how the growth trajectory of ultimate magnet deliveries will look, I think oftentimes, outsiders will oversimplify and be like, well, how much can you make and that's how much you sell. It's not going to be exactly that way. It's going to be not just how much can we make, but have we gotten all the paperwork done on Part A for facility A and then Part A for facility B, how much inventory is existing at facility B and sort of feathering that in over the next several quarters. And so I think that overall, from a quality perspective, from a manufacturability perspective, like can we do this? We're incredibly encouraged. And it's just working through these processes with our customer over the next several quarters to get ramped up.
And you've talked in the past about being almost partners with GM and other potential customers and helping them simplify the magnets that they use in their products. Is that happening?
Well, I think that one of the amazing things, frankly, is that I can't think of a better initial customer than GM because they did a lot of that work on their own, particularly from a powertrain perspective, right? There's a tremendous amount, and they're very public about this. This is not any unique information to me. But the way they've standardized their powertrain portfolio, it is one that allows parts providers like us to have a much simpler life in providing high volume for them. And so I think they did a lot of that on their own. What we see with really every automotive OEM, though, particularly when April 2025 rolled around and everyone realized, I'm not getting out of China, what I thought I was getting out of China is there is -- I mean there are magnets everywhere. People are figuring out they have magnets in seatbelts that they didn't realize they had. And so what you've seen over the last 10, 15 years is everything was cheap and easy to get out of China. And so in typical, we have this debate with our engineers all the time where they had a factor on top of a factor, on top of a factor, and it's like, do we really need all of this? You see that in magnetics as well, where, okay, we're going to plan for 150 degrees C of temperature exposure. And so you need the magnet to perform at that temperature. And then you'll ask the folks in procurement at those companies, does this product ever see 150 degrees C? No. And so then that's sort of the discussion that I think a lot of OEMs are having right now is have we overspecified, and this gets back to your heavy's question, too, is demand may be artificially higher because it was just -- it was easy. And so there's a lot of rationalization happening. And certainly, that's a big part of the conversation that we're having with our customers. That's a big driver behind Project Swarm as an example, where they don't -- there's -- their issue is different where they're not coming from a legacy of 50 different tiered suppliers, all with different requirements and a lot of them with too much engineering fluff on top of them. They're coming from it from a greenfield perspective. And what we're trying to do is tell them, hey, have these things in mind as you look at your motor technologies because it will simplify manufacturability for magnets that are so critical.
Maybe last question, we have 1.5 minutes left. I just want -- I'm trying to gauge what sort of freakout moments the industrial supply chain is having and calling you because there are two things that happened recently that are super interesting. Number one, the executive order that focused on defense supply chains. And number two, I have another quote. This comes from Peter Navarro that we've written in one of our notes, and it's just so interesting. I had to read out loud regarding China. What they're doing is they're lying to us, first of all, all their deals, they told us they'd give us magnets, they're not. And so how does that not cause your phone to ring off the hook from several customers?
Well, it is. And I think that oftentimes, and we get asked this consistently, people mistake not announcing a deal every 20 minutes for not getting a phone call every 20 minutes. I think if you believe and we believe everything that I just laid out in terms of the strategic value of what we've built, particularly given the way that we've set up the business where we have contracted cash flows at both magnet facilities, you would want me to be in no rush because the strategic value of that capacity is increasing by the day. We believe that to be true. And so I think I talked a little bit about sort of our deal process on the call, but there is a tremendous freakout moment. And if you think about the use cases in magnetics that are poised for very significant growth, and we get this question a lot, like what happens if everyone hugs and shakes hands in November, the growth vectors are all dual-use items. So it doesn't matter. I mean this is literally equipping the future of warfare, the future of economic competition between two great powers. There's no way a switch flips and everything goes back to normal. And so I think it sort of speaks to the strategy of being methodical and making sure that we extract really maximum strategic value from the assets that we're building.
Before I let you go, I warned you this is going to happen. So I was doing riddles with my daughters this weekend, and I decided to add a little flavor to our presentations here. So I'm going to ask a riddle of the audience. And whoever gets it right gets a CG -- a very high-quality CG Hydro Flask. And so...
Made in U.S.?
That's a good question. I don't know. I don't think there are any magnets in it actually, but -- so here it is. A cowboy rode into town on Friday. He stayed three days. And he left on Friday. How is that possible? Speak up any answers?
The horse's name is Friday.
That's right. The horse is named Friday -- thank you so much. Thanks, Ryan. Appreciate it as always.
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