Litinsky said he was attracted to the SPAC market as it is more flexible than a traditional IPO. The SPAC trend will bring some success stories and likely some laggards, he said.
“We structured a deal that had to be good for all stakeholders,” Litinsky told Benzinga.
About MP Materials: MP Materials is the only rare earth mining company of scale in the U.S. and the Western Hemisphere, the CEO said.
China controls 80% of the industry, with MP Materials holding a 15% market share in rare earth mining.
“Mountain Pass is an iconic asset,” Litinsky said, referring to the company's mining site in California.
The company has invested $2 billion in the operation.
Mining makes up only 10% of the cost structure of the mine, and MP Materials has the best ore body in the world, the CEO said, adding that the mine was worth $6 billion decades ago.
“The scale of investment that is required is pretty substantial.”
Government Support: MP Materials has a new deal signed with the Department of Defense, which includes a financial award to help with Phase II investment for MP Materials.
“This is a critical area for the government and for our national and commercial national security purposes,” Litinsky said.
The company is seeing bipartisan support from “both sides of the aisle,” he said.
The Biden administration is focused on climate change, which helps MP Materials as a supplier to electric vehicles and wind turbines.
“We need to have these supply chains here,” the CEO said.
Why Rare Earth Mining Now: Benzinga asked Litinsky about the history of Mountain Pass mine, which has had several owners over the last 50 years.
The mine was profitable for decades before China took over, he said.
The mine was sold to private equity buyers, who Litinsky said had a vision that was ahead of the operations. The old owners “sold a great story,” he said.
Litinsky compared the old mine to internet 1.0 vs. 2.0 or Pets.com vs. Amazon.com (NASDAQ:AMZN) today.
Electric Vehicle Thing Behind The Thing: The growth of the electric vehicle market is increasing demand for magnets and rare earth minerals, Litinsky said.
He mentioned the ambitious plans Elon Musk has laid out for Tesla Inc (NASDAQ:TSLA).
“The new bull market is just emerging,” Litinsky said of electric vehicles.
MP Materials is well positioned to take advantage of the new upcycle in electric vehicles, in his view.
The company is a pick-and-shovel play on the electric vehicle market, the CEO said: the thing behind the thing.
People who sold picks and shovels were the ones who made real fortunes in the gold mining boom, Litinsky said.
MP Materials is well-positioned to make money no matter what company emerges as the EV leader, the CEO said, mentioning Tesla, Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM) and Nikola Corporation (NASDAQ:NKLA).
Tesla and General Motors have to buy their magnets from China under current operations, but in the future Litinsky said he hopes MP materials can sell direct to businesses.
He also mentioned Apple Inc (NASDAQ:AAPL) as another company that buys its magnets from China.
“We want the Teslas and Apples of the world to buy our magnets here.”
MP Price Action: Shares of MP Materials were trading 3.71% higher at $15.65 at last check Thursday.
A satellite image of the Mountain Pass mine.