(Reuters) -Rare earths miner MP Materials posted a better-than-expected quarterly profit on Thursday and said it has started refining small amounts of the strategic metals in California.
Rare earths are a grouping of 17 metals used to make magnets found in motors that turn electricity into motion. China is the world's largest producer and consumer of rare earths and rare earth magnets.
The company, which operates California's Mountain Pass mine, posted second-quarter net income of $7.4 million, or 4 cents per share, compared to $73.3 million, or 38 cents per share, in the year-ago quarter.
Excluding one-time items, the company earned 9 cents per share. By that measure, analysts expected earnings of 6 cents per share, according to IBES data from Refinitiv.
For the past three years, MP has processed rock that it extracts from its California mine into rare earths concentrate. The company produced 10,863 tonnes of that concentrate during the quarter, about 5% higher than the year-ago period.
That concentrate is sent to Chinese partners where it is further processed into neodymium and other rare earth metals used to make magnets.
MP said that "in recent weeks" it had started refining small amounts of its own rare earths in California, a goal the company had been pursuing for more than three years. The company did not provide volumes and said it was working to complete commissioning of the refining equipment.
Executives said they were comfortable with the chemistry that underpins the refining, but that more work remained to calibrate the physical processing equipment. They said they could not yet forecast 2024 production or revenue from sales of rare earths refined by the California equipment.
"There's a little bit more work to do before we can say that all the bugs are worked out or that we're 100% confident," Michael Rosenthal, MP's chief operating officer, told investors on a conference call.
"But the general processes are working. We feel comfortable that what we've designed is able to perform to the design basis of our circuits and that with time, we'll get to greater throughput, reliability and performance yield."
Shares of the Las Vegas-based company rose slightly to $22.25 in after-hours trading.