Supply agreement between the only U.S. rare earth miner and China Rare Earth Company

Rare earth miner MP Materials reported a better-than-expected quarterly profit on Thursday and said it had begun refining small amounts of the strategic metal in California.

Rare earths are a group of 17 metals used to make magnets in electric motors, which convert electricity into motion. China is the world's largest producer and consumer of rare earths and rare earth magnets.

The company's second-quarter net profit was US$7.4 million, or US$0.4 per share, compared with US$73.3 million, or US$0.38 per share, in the same period a year earlier. Excluding one-time items, the company earned 9 cents per share. By that measure, analysts expected earnings of 6 cents a share, according to IBES data from Refinitiv.

Over the past three years, MP has processed rocks extracted from California mines into rare earth concentrates. The company produced 10,863 tonnes of concentrate during the quarter, approximately 5% higher than the same period last year. The concentrates are sent to partners in China, where they are further processed into neodymium and other rare earth metals for use in making magnets.

MP said that "in recent weeks" the company has begun refining its own small amounts of rare earths in California, a goal it has been pursuing for more than three years. The company did not provide specific quantities and said it was working to complete the commissioning of the refining equipment. Executives said they were pleased with the chemicals underpinning extraction, but more work remained to calibrate the physical processing equipment. They said they could not yet predict production or sales revenue from rare earths refined at the California facility in 2024.

"There's a little bit more work to do before we can say that all the vulnerabilities have been addressed or that we're 100 percent confident," MP COO Michael Rosenthal told investors on a conference call.

"But the overall workflow is moving forward. We believe that we are designing products that are consistent with the design fundamentals of our process, and over time we will achieve higher throughput, reliability, and performance." The Rathway-based company Shares of Gass company rose slightly to $22.25 in after-hours trading.