MP Materials (NYSE: MP) announced Thursday that it has entered a binding, long-term agreement with General Motors (NYSE: GM) to supply domestically sourced rare earth materials, alloy and finished magnets for electric motors in more than a dozen GM models.
To fulfill the GM supply order, MP will develop a 200,000 square foot greenfield metal, alloy and neodymium-iron-boron (NdFeB) magnet manufacturing facility in Fort Worth, Texas. The facility will also serve as the business and engineering headquarters for the rare earth producer’s growing magnetics division, MP Magnetics.
GM told Reuters that it does not plan to take a stake in the Texas facility, which should open by 2023.
NdFeB permanent magnets are critical inputs to the electric motors and generators that enable EVs, robots, wind turbines, drones, defense systems and other technologies to transform electricity into motion and motion into electricity.
Although development of permanent magnets originated in the US, the country has virtually no capacity to produce sintered NdFeB magnets.
MP owns and operates the Mountain Pass mine, the only rare earth mining and processing site of scale in North America. The company is the largest producer of rare earth materials in the Western Hemisphere, producing approximately 15% of the rare earth content consumed in the global market in 2020.
MP’s initial magnetics facility, using material sourced from its California mine, will have the capacity to produce approximately 1,000 tonnes of finished NdFeB magnets per year, with the potential to power approximately 500,000 EV motors annually.
The NdFeB alloy and magnets produced will also support other key markets, including clean energy, electronic and defense technologies. The facility will also supply NdFeB alloy flake to other magnet producers to help develop a diverse and resilient US magnet supply chain.
Shares of MP Materials surged 6.6% by 12:25 p.m. on the NYSE. The Nevada-based rare earth miner has a market capitalization of $8.3 billion.
For GM, the magnet supply agreement with MP comes shortly after its announcement of a joint venture with South Korea’s POSCO to build a battery cathode materials plant in North America by 2024.
Also on Thursday, the American automaker and Germany-based Vacuumschmelze said they will jointly build a US rare earth magnet plant, though terms of that deal are still being finalized.
It is not immediately clear if GM, MP or Vacuumschmelze will license the NdFeB patents – some of which are now held by a division of Hitachi – for domestic production.
MP said in a Reuters interview it is confident it can either license the patents or engineer new ways to make the magnets that do not infringe the patents.
(With files from Reuters)