Backdrop: The decision follows deteriorating ties between the U.S. and China. What started as a trade war has morphed into a technology war, and at times, possibly a currency war. The latest move suggests rare earths may be the next front, or could be used as leverage in some of those battles. The Biden administration has indicated it would maintain pressure on China (no quick lift for tariffs) but take a more multilateral approach. China's Foreign Ministry also said last year it would also sanction Lockheed Martin, Boeing (NYSE:BA) and Raytheon (NYSE:RTX) for selling arms to Taiwan, the self-ruled island which Beijing claims as its sovereign territory.
What are rare earths? The minerals are a group of 17 chemical elements used in everything from high-tech consumer electronics like smartphones to military equipment. Despite the name, there are deposits of some of them all over the world, but it is unusual to find them in a pure form or in concentrated quantities, hence the title "rare." The U.S. is highly dependent on them for its defense capabilities (i.e., a recent Congressional Research Service report found that each F-35 required 920 pounds of rare earth materials).
Outlook: Hopes of U.S. companies that looked to break into the industry have been dashed in the past due to strict environmental regulations on extracting and processing. China also undercut world prices in the 1990s, leading to additional barriers to entry. There is currently no refining capacity in the U.S. (ore mined here must even be sent to China), but that may be changing. The Pentagon recently signed contracts with American and Australian miners to boost their onshore refining capacity, awarding contracts to MP Materials (NYSE:MP) and Lynas Rare Earths (OTCPK:LYSCF) for facilities in California and Texas.
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Thu, February 18, 2021, 10:43 AM·3 min read
MP Materials Corp. (NYSE:MP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. MP Materials Corp. owns and operates integrated rare earth mining and processing facilities. With the latest financial year loss of US$6.8m and a trailing-twelve-month loss of US$45m, the US$6.4b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is MP Materials' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
According to the 2 industry analysts covering MP Materials, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$45m in 2021. So, the company is predicted to breakeven approximately a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 47% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving MP Materials' growth isn’t the focus of this broad overview, however, take into account that by and large metals and mining companies, depending on the stage of operation and metals mined, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one issue worth mentioning. MP Materials currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.
An experienced management team on the helm increases our confidence in the business – take a look at who sits on MP Materials’s board and the CEO’s background.
https://finance.yahoo.com/news/analysts ... 49843.html
MP Materials Corp. (NYSE: MP) ("MP Materials"), the largest rare earth materials producer in the Western Hemisphere, today announced that members of the executive management team are scheduled to participate in one-on-one meetings and a fireside chat at the Baird 2021 Sustainability Conference on Wednesday, February 24, 2021 at 10:00 a.m. Pacific time (1:00 p.m. Eastern time).
A live webcast and replay of the fireside chat will be available on the company’s investor relations website at investors.mpmaterials.com.
About MP Materials
MP Materials Corp. (NYSE: MP) is the largest producer of rare earth materials in the Western Hemisphere. With more than 275 employees, the Company owns and operates the Mountain Pass facility. This iconic American industrial asset is the only rare earth mining and processing site of scale in the Western Hemisphere and currently produces approximately 15% of global rare earth content. Separated rare earth elements are critical inputs for the magnets that enable the mobility of electric vehicles, drones, defense systems, wind turbines, robotics, and many other high-growth, advanced technologies. MP Materials’ integrated operations at Mountain Pass uniquely combine low production costs with best-in-class environmental standards, thereby restoring American leadership to a critical industry with a strong commitment to sustainability. More information is available at https://mpmaterials.com/.
https://thestonkshub.substack.com/p/mou ... ll-version
Jun. 26, 2021
MP Materials supplies key rare earth minerals for use in electric vehicle motors.
The global rare earth mineral market is expected to increase by a double-digit annual pace, driving demand for the company's products.
MP Materials (MP) owns and operates the Mountain Pass rare earth mining and processing facility in California where the company supplies 15% of the world's rare earth minerals. The company mines for the elements, neodymium [Nd] and praseodymium [Pr], which are used to make the magnets for electric motors. These elements are poised to see increased demand as the electric vehicle [EV] market continues to grow through this decade.
MP Materials is the only rare earth mining and processing facility in North America.
The global EV market is projected to grow from 3.1 million vehicle sales in 2020 to reach about 145 million vehicle sales in 2030. This is a growth rate of 53.3% per year. As a result, the global rare earth elements market is expected to grow by about 12% annually through 2026. If these growth projections turn out to be close to accurate or higher, MP Materials is likely to experience strong growth for Nd and Pr to be used in EV motors. This should provide steady revenue and earnings growth for MP Materials through the decade.
MP Materials Accomplishments
MP Materials has numerous accomplishments that demonstrate the company's ability to improve and scale up operations. The company took over the idle Mountain Pass facility in 2017 to turn it into a productive mine and processing operation. The company turned the location into a best-in-class globally competitive rare earth producer. MP Materials produced almost 39,000 metric tons of rare earth oxides in concentrate over the past 12 months.
During Q1 2021, MP Materials achieved record production and sales volume where revenue almost tripled year-over-year to $60 million. Adjusted EBITDA increased over 6x in Q1 to $33 million. Adjusted EBITDA margin increased 32pts. y-o-y and 14 pts. sequentially to 57%. This demonstrates the company's ability to drive success on both the top and bottom lines. The efforts toward low cost production helped drive the EBITDA margin higher.
The company's challenge is to compete in a market where China currently dominates. At the same time, the company has to comply with California's strict environmental standards.
MP Materials stated that they are positioned to be the lowest cost producer with its state-of-the-art facility that reduces transportation, shipping, and environmental costs. The company also believes that it has advantages because of scale, time-to-market, and scarcity value.
Strong Outlook for NdPr
The NdPr combination which is used to make magnets in electric motors is expected to see growing demand. The global NdPr oxide market is projected to increase by 13% annually to $12.7 billion by 2030. The total global market size for NdPr was only $3.9 billion in 2018.
MP Materials is positioned well to benefit from the direct demand growth of NdPr through this decade. Estimates show that EVs consume about 5% of annual NdPr production today, but are forecast to consume about 100% of current annual NdPr production by 2035. This has positive implications for annual demand growth for the company's NdPr over many years.
MP Materials has an ore body that contains a little higher than a 7% mix of rare ores. That is one of the highest in the world. Most mines are in the 1% to 2% range. The higher percentage mix of rare ores gives MP Materials a production efficiency advantage. The competition with a lower percentage mix of rare ores has to mine 3x to 7x more total rock to get the same rare earth output. This advantage can enable MP Materials to price its products below the competition and/or allow the company to benefit from higher margins.
The company has a mission to restore the rare earth supply chain to the United States. Currently, China dominates the rare earth market with 80% of worldwide production. As more EVs are sold over time, MP Materials can gain market share to be the go-to producer for North and South America since the company is the only rare earth mining and processing facility in these regions.
MP Materials completed Stage 1 of its 3-stage plan to improve the company's position in the market. Stage 1 involved reactivating the mining, milling, and flotation processes to produce a high-quality rare earth concentrate which is sold to Asia. Stage 2 is in progress and expected to be complete by 2022. Stage 2 involves improving the existing processing facility to make separated rare earth oxides more reliably, with a lower environmental impact, at lower costs. Stage 3 involves expanding the business to be involved in producing magnets. The successful implementation of Stage 3 would reduce the world's reliance on China as a single source for the supply chain. Stage 3 is expected to be completed in 2025 or later.
The company has ambitious plans included in its three stages. Becoming vertically integrated by getting involved with producing magnets would be a smart long-term move. This can be done through acquisition, expansion of the business, or through a joint venture. It is positive to see how MP Materials has a vision for the long-term growth of its business. The company can capture significantly more market share with this mindset and focus.
MP Materials is trading with a PEG ratio of just 1.27. I felt that it was appropriate to use the PEG ratio because it takes the company's 3 - 5 year projected earnings growth into consideration. The company is expected to achieve strong double-digit earnings growth averaging about 54% per year over the next 3 to 5 years.
MP Materials is trading attractively with its PEG ratio below 2 which tends to be a good valuation for the growth stocks that I cover. The stocks of these growth companies tend to increase approximately in line with earnings growth over the long-term when the PEG is below 2. Of course, there is no guarantee that this will happen, but the stocks that I've covered with similar valuations and strong growth tend to trend higher in this way.
MP Materials stock chart
The daily chart above shows the stock having positive recent upward momentum as the RSI rose above 50. The green MACD line just crossed above the red signal line. So, a change in trend from positive to negative has been confirmed. The money flow [CMF] has been positive for over a month which shows strength after the weakness in March and April. These indicators suggest that the stock might continue higher in the months ahead.
MP Materials Long-Term Investment Outlook
MP Materials is poised to achieve strong growth over the next decade as the demand for EV motors continues to grow. The rare earth magnets used in electric motors are not just for electric and hybrid vehicles. They are also used in robotics, wind turbines, consumer electronics, and defense systems. It is important to keep in mind that the projected growth for these markets suggests that EVs will probably be the biggest market for MP Materials' rare earth elements.
One of the main risks for the company are government policies that could make doing business more expensive or challenging. The strict environmental regulations in California is a great example of this. Another example is the U.S. government's recent decision to look outside the country for the raw materials to build EVs.
Despite the challenges, MP Materials implemented smart technology to comply with California's environmental demands while keeping costs low. The company also sells its final product to China. So, the company's business hasn't changed despite the recent government decision to source rare earths from outside the U.S. The company's products are likely to make their way back into the U.S. indirectly after the magnets for motors are produced. MP Materials can eventually enter the magnet producing business which is one of the company's goals. This is likely to help the company sell its products in the United States directly.
Overall, MP Materials is likely to achieve above average stock gains over the next decade as it grows revenue and earnings at a strong pace from an attractive valuation level.
https://seekingalpha.com/article/443669 ... -ev-market
** Shares of rare earth miner up as much as 4.92% at $37.93 premarket
** Co posted a better-than-expected quarterly profit on Thursday on rising prices for the minerals used to make high-end electronics and weaponry
** Co's Q2 sales of rare earth oxides fell about 4% partly due to shipment timings, but that was offset by a 137% price increase
** MP expects to produce roughly 6,000 tonnes of rare earth metals neodymium and praseodymium in California annually by 2023
U.S. rare earths miner MP Materials Corp posted a better-than-expected quarterly profit on
The company, which relies on China to process rare earths from its California mine, reported second-quarter profit of $27.2 million, or 15 cents per share, compared to a net loss of $62.5 million, or 92 cents per share, in the year-ago quarter when it was a private company.
Excluding one-time items, MP earned 17 cents per share. By that measure, analysts expected earnings of 13 cents per share, according to IBES data from Refinitiv.
Currently, MP lightly processes rare earths it extracts from California's Mountain Pass mine and ships the material to China for separation into various rare earth metals because there are no U.S.-based options.
The U.S. government has funded the Las Vegas-based company in part to help bring processing back to the country, where the rare earths industry had its genesis in the mid-20th Century.
Aug 10 (Reuters) - A Democrat in the U.S. House of Representatives introduced legislation on Tuesday extending tax credits to companies that domestically produce rare earth magnets, a sector currently dominated by China.
The bill is the latest in a string of U.S. legislation attempting to cobble together a national strategy to produce more lithium, rare earths and other so-called strategic minerals used to make electric vehicles (EVs), weaponry and electronics.
Representative Eric Swalwell, a California Democrat, introduced the Rare Earth Magnet Manufacturing Production Tax Credit Act, a bill co-sponsored by Representative Guy Reschenthaler, a Pennsylvania Republican.
The bill sets up a $20 per kilogram credit for neodymium iron boron magnets made in the United States, with the credit growing to $30 per kilogram for magnets made with rare earths sourced from American mines.
"As the Biden administration makes a strong commitment to vehicle electrification, it’s more important than ever that the United States secures all of the necessary components of the supply chain," said Swalwell, who unsuccessfully ran for the U.S. presidential nomination in 2020.
Rare earths are 17 metals that are difficult and costly to mine and process cleanly. MP Materials Corp's Mountain Pass mine in California is the only U.S. rare earths mine, but that facility relies on Chinese processors. There are no facilities in the United States to produce rare earths magnets.
China is the world's largest producer of these minerals and magnets, and has threatened to stop their export to the United
The credit would be a boost to MP, which has said it aims to produce magnets at some point in the country, as well as privately held USA Rare Earth and other domestic projects.
"These credits would be a boost to U.S. manufacturing of rare earth permanent magnets essential to electric vehicles, as well as to U.S. defense and industrial supply chains," said Pini Althaus, chief executive of USA Rare Earth, which is developing a rare earths project in Texas.
Tue, September 14, 2021, 2:00 PM
MOUNTAIN PASS, Calif., September 14, 2021--(BUSINESS WIRE)--MP Materials Corp. (NYSE: MP) ("MP Materials" or the "Company"), today announced that on September 13, 2021, the Company priced its registered secondary public offering of 4,250,000 shares of common stock by certain existing stockholders of the Company (the "Selling Stockholders") at a price to the public of $35.00 per share. This represents an increase of 250,000 shares from the previously announced offering size of 4,000,000 shares of common stock.
The underwriters have a 30-day option to purchase up to an additional 637,500 shares of common stock from the Selling Stockholders. MP Materials is not selling any shares of common stock and will not receive any proceeds from the proposed offering, which is expected to close on September 16, 2021, subject to customary closing conditions.
https://finance.yahoo.com/news/mp-mater ... 00369.html