MP Materials Sees Lower Rare Earth Costs as Output Rises, Despite Planned 2027 Downtime

Key Points

• MP expects NdPr output of 5,000–6,000 metric tons next year, with higher production lowering per-unit costs as fixed expenses are spread across more output. Its chlor-alkali facility is also designed to turn refining waste into chemicals used in processing, although bringing its first train online will require downtime and the company has not quantified expected savings.
• Magnet deliveries are expected to ramp gradually after MP’s General Motors qualification, with initial deliveries scheduled for the fourth quarter of 2026. Customer interest has exceeded the planned capacity of its 10X facility, but customer qualification and production ramp-up will take time.
• MP is pursuing additional growth through products such as dysprosium and terbium, defense-related demand, and recycling partnerships. However, the company says recycling collection economics remain unresolved, while secure NdPr supply outside China is still a constraint for magnet makers.

MP Materials NYSE: MP expects its rare earth production costs to decline as output rises and a chemical recycling facility comes online, though planned downtime will affect production early in 2027, Chief Financial Officer Ryan Corbett said at the D.A. Davidson Critical Minerals Conference.

Corbett said the company expects to produce between 5,000 and 6,000 metric tons of neodymium-praseodymium, or NdPr, next year. The company had operated above a monthly run rate of 450 tons during portions of the third quarter, according to D.A. Davidson analyst Matt Summerville, who hosted the Nov. 9 discussion.

Corbett said remaining work to sustain higher output includes addressing materials handling and maintenance needs as throughput increases. He said the production outlook also reflects downtime needed to bring the first train of the company’s chlor-alkali facility online early next year.

Cost Reductions and New Products

The chlor-alkali facility is designed to use waste from rare earth refining as feedstock to produce hydrochloric acid and caustic soda, which Corbett described as significant components of refining costs. The facility has three trains, and additional capacity will be introduced over time, he said.

Corbett declined to provide a specific cost-reduction estimate before the initial train is running. He said higher production should also reduce costs per unit by spreading fixed expenses across more output.

MP reported production of just over 1,000 tons in its latest quarter, and Corbett pointed to the potential economies of scale as output approaches 1,500 tons per quarter. He also said additional products could eventually absorb some shared costs currently allocated to NdPr.

Those products include dysprosium and terbium, which Corbett said would be in commercial form in the fourth quarter. Gadolinium and samarium separation are expected to come online in 2028, he said.

Magnet Deliveries to Ramp Gradually

Corbett said MP expects a measured increase in magnet deliveries following its recent qualification by General Motors. Initial deliveries are scheduled to begin in the fourth quarter of 2026, but he expects the next couple of quarters to be “quite modest” as customers introduce magnets across products and plants.

Qualification requires more than meeting part specifications, Corbett said, citing work instructions, quality controls, material flow and equipment approvals. He added that the company had initially limited automation at its Texas magnet plant to preserve flexibility and is now automating more material handling.

Customer inquiries and requests for quotes have exceeded the planned capacity of MP’s 10X facility, Summerville said. Corbett said the company has flexibility to select commercial partners because of its offtake framework with the Department of War. He identified robotics, hard disk drives and data center infrastructure as potential sources of demand.

Corbett also said secure NdPr supply remains a constraint for magnet makers outside China. He argued that prices would need to rise substantially to justify enough new upstream capacity to support planned downstream expansion.

Defense and Recycling Opportunities

Corbett pointed to defense uses for rare earth products in optics, lasers and coatings, as well as growing potential demand for magnets in drones and other technologies. MP recently announced a nine-figure, long-term gadolinium agreement with a U.S. aerospace and defense customer, Summerville said.

Discussing restrictions on defense sourcing from China and the associated waiver process, Corbett said policymakers were taking a tougher approach. He cautioned, however, that 10X would not be ready to fulfill an order for those customers on Jan. 2.

On recycling, Corbett said MP’s partnership with Apple gives it a pathway to convert various feedstocks into usable NdPr oxide. The company can produce material that is not mixed with primary material or incorporate recycled feedstock into other production, he said.

MP does not currently collect or strip magnets from end-of-life products, Corbett said, adding that the economics of sorting and collection still need to be resolved. He expects recycling to become a larger part of the business over time as demand grows.

About MP Materials (NYSE:MP)

MP Materials operates the Mountain Pass rare earth mine and processing facility in California. The site is a major North American source of rare earth materials, which are used in products such as electric vehicles, wind turbines, electronics and defense systems.

The company mines and processes rare earth ore into concentrate and separated products, including neodymium-praseodymium (NdPr), a key input for high-strength permanent magnets. MP Materials is also developing domestic magnet manufacturing capabilities to extend its business further along the supply chain.

Mountain Pass has a long history of rare earth production, and MP Materials acquired the site's operating assets in 2017.

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