Las Vegas is better known for its elaborate casinos, its high-rolling, jet-setting gamblers, its incredible buffets and, of course, A-list entertainers — Elvis and Sinatra in the old days, and Celine Dion and Garth Brooks today.
So how, on this good earth, did a Las Vegas-based firm, become the world’s second-largest producter of rare earth elements (REEs)?
“I wanted to be part of something different and something very unique within the US,” said Randy Ruesch, a longtime gold miner and now manager of mining and ore delivery at MP Materials open pit mine.
It’s a feeling that will likely be shared by the more than 200 new workers MP Materials expects to hire over the next year.
The hiring push is part of a larger plan to invest US$200 million toward upgrading the mine, known as Mountain Pass Mine, located 15 miles west of Primm in California’s Mojave Desert, according to a report by Subrina Hudson at Las Vegas Review-Journal.
During its heyday up until the 1990s, the 2,200-acre mine made the US a dominant producer of REEs, but a series of headwinds such as Chinese competition and a bankruptcy left it with an uncertain future until MP Materials acquired the mine in July 2017.
The company plans to establish the full rare earth supply chain at the mine in less than four years, and its vision has joined a national conversation on restoring rare earth production in the US — now considered a mission of national security importance.
REEs have a variety of uses with the most important being in magnets, used in electric vehicles and generators in wind turbines, said Simon Jowitt, a UNLV asssistant professor of economic geology.
“The Chinese dominate rare earth supply and if they decide to turn that cap off — where are we going to get our rare earth from?” asked Jowitt.
“If you have this supply at Mountain Pass that doesn’t need to be exported to China, but could go straight into manufacturing then that would rapidly improve security of supply … because rare earths are used in military purposes. So, I think the Department of Defense is a little concerned about China cutting off supply.”
Rare earths, a group of 17 minerals, are used in everything from missile defense systems, to fighter jets, to electric cars, big-screen TVs and lighting.
A report from the US Geological Survey noted rare earth minerals are actuallly “relatively abundant” but mineable concentrations are less common.
From 1964 to the late 1990s the US was the world’s dominant rare earth producer, thanks to Mountain Pass Mine, but China quickly and deliberately elbowed its way into the market — a deliberate calculated action, some suspect.
China now processes nearly 90% of the world’s rare earth minerals, according to research firm Adamas Intelligence, which frightens the hell out of the US and its allies.
Meanwhile, the US imported 80% of its rare earth materials from China between 2016 and 2019, according to USGS.
The assumption China will maintain its lead as a rare earth supplier is something MP Materials CEO James Litinsky, and the US government of Joe Biden, wants to change.
“Our mission is to restore the full rare earth supply chain here in the United States so that the Tesla, GM and Apples of the world have a choice of an American supplier. Right now, their choices are mainly a Chinese supplier, a Chinese supplier (and another) Chinese supplier,” he said.
Litinsky is the founder of Chicago-based hedge fund JHL Capital Group, which won the bid to purchase the mine during its bankruptcy auction in 2017 for US$20.5 million.
The mine now employs 300 workers and produced more than 38,000 metric tons of rare earth oxides in 2020, which MP Materials estimates to be about 15% of global rare earth element production.
MP Materials set up its headquarters in Las Vegas, near McCarran International Airport, to be near the mine and its workforce of mostly Nevadans.
The company spent three years restarting the site and adding employees. Its total workforce is 350 including the 300 employees at the mine.
It also went public through a merger with blank-cheque company Fortress Value Acquisition Corp. in November, listing on the New York Stock Exchange. The IPO and the March issuance of a green convertible note raised more than US$1.2 billion.
MP Materials COO Michael Rosenthal said it has already started stage two of its three-stage business plan.
He said the company has been adding new employees nearly every week, efforts that will help reach its goal of at least 200 full-time workers and about 1,000 construction jobs for its plan to establish refining capabilities.
Stage three would be manufacturing magnets by 2025 though it anticipates reaching the goal sooner.
MP Materials currently sends its rare earth concentrate to distribution partner, Shenghe Resources Holding Co., which refines the separated rare earth oxides and manufactures it into magnets.
Rosenthal said no other facility currently exists outside of China that can separate the rare earths mined at Mountain Pass.
“If we want to make that product valuable by doing the separation, we either need to wait (and) start it up here or we ship it to China where they do the separation,” he said. “So we’ve used our Chinese distributor to help us distribute our product which helps give us revenue to reinvest in the growth here.”
While MP Materials also has ambitious plans, Litinsky said it’s in a better position than its predecessor who made several operational blunders.
“We’re a very young company, but we’ve been able to accomplish so much,” he said. “We’ve been able to go from eight people to 350 and get to profitability — taking on Chinese industry is extremely challenging. We’re just getting started.”
MP Materials, whose market capitalization is an estimated US$4.8 billion, reported revenue of US$60 million for the first quarter, up 189% year-over-year. Net income also jumped more than 700% to US$16.1 million for the quarter.
It was also awarded another federal grant this month from the Department of Energy for US$3 million.
President Joe Biden picked up the baton when he signed an executive order in February to review four sectors of the country’s supply chain including REEs, semiconductors, pharmaceuticals and large-capacity batteries.
“This is a nonpartisan issue — everyone wants this supply chain capability here and we’re years ahead of anyone else and we’ve shown that we can be profitable,” Litinsky said. “The fact that there’s a Nevada company leading the way … is cool.”
Sources: Las Vegas Review-Journal