Weak prices for rare earths have hit American producer MP Materials recently, reporting in its latest financials a 51% drop in prices for the rare earth oxides (REO) that it mines near Las Vegas, Nevada. Others in the market, notably Neo Performance Materials which produces neodymium powder from rare earth raw materials, encountered similar headwinds in its Neo Magnequench unit but much less dramatically. Prices have bottomed and now are stabilizing, say key players.
At MP Materials, revenue plummeted 58% from the same period a year ago, as it reported for its third quarter ended September 30. At the same time, the company made significant progress in its continuing efforts to develop processing capability for the ore from its Mountain Pass mine — the only sizeable, rare earth mine in the U.S., and to add magnet production to its portfolio.
“In the third quarter, we produced separated NdPr on U.S. soil, repatriating a critical national security capability. This is a tremendous milestone for the company and American supply chain independence at large,” said James Litinsky, CEO. “In addition, we are excited to announce ‘Upstream 60K’ where we will target a 50% increase in REO production within four years with modest incremental investment. In addition, we have begun trial production of NdPr metal and continue to make steady progress in our magnetics business, both technically and commercially.”
A 14% decrease in REO sales volume during the quarter was due to the start-up of separated rare earth (Stage II) production, as a sizeable portion of the REO produced, which could otherwise have been sold as rare earth concentrate, was used to charge the Stage II circuits, establish separations work-in-process inventory, or produce packaged and finished separated rare earth products. REO production volumes were relatively unchanged year-over-year. MP Materials’ Mountain Pass facility is the largest source of rare earth production in the Western Hemisphere. For years, it has had to ship its ore to China for processing but the new efforts aim to change that.
Price declines in the rare earths market were also evident at Neo Performance Materials but less so, helped by its greater diversification as a company and its more upstream activity in the magnetics market. Its Neo Magnequench business unit, reporting for the same period, registered greater tonnage but less revenue. Volume for Neo Magnequench in the quarter was 1,389 tons compared to 1,097 a year ago, while revenues were $54,414 compared to $67,402. For the nine-month period, volume was 3,413 tons compared to 3,620 tons, while revenues were $158,908 compared to $210,828.
Neo Magnequench revenue in the third quarter declined by about 19% compared to the prior year period, due to substantially lower pass-through prices for magnetic rare earth elements. Volumes improved compared to the prior year period, although the permanent magnet industry remains slow in the near-term, the company said.
The Magnequench business unit is a global leader in bonded neodymium-iron-boron (NdFeB) magnetic powders, magnets and their applications. Its powders and magnets are used to provide high performance magnetics for automotive, factory automation, high-efficiency motors, residential appliances and many other industries.
“I am pleased with the direction of our third quarter results as the underlying impact of a more stable rare earth pricing environment validates what the normalized earning power of Neo looks like,” said Rahim Suleman, CEO. “During the quarter, we saw rare earth prices near bottom and show signs of a steady strengthening which we have seen continue in the current quarter. Combined with continued positive customer sentiment in Neo’s key end markets, this provides us with confidence in the stability and improving trends in markets and more stable pricing and improved volumes.”
“Our sintered magnet plant construction in Estonia is on track, and we look forward to emerging as the first major producer of rare earth permanent magnets for electrified vehicles and wind energy in Europe,” he added. “Positioning Neo to be able to deliver permanent magnets where and when our customers want them is critical to Neo and our customers.”