Iluka Resources Sees Share Rise Amid US Partner's Apple Deal

Rare earth miners' shares rise as US peer secures deal with Apple. Iluka Resources, an Australia-based critical minerals company, saw its mining and processing operations in South Australia and Western Australia. The company's project suite includes Wimmera, Victoria; Balranald, New South Wales; Atacama, South Australia, and Eneabba, Western Australia. Iluka's segments include Jacinth-Ambrosia/Mid West, Cataby/South West, Rare Earths, and United States/Murray Basin.

Rare earth miners' shares surged on Friday as MP Materials, a major player in the sector, secured a significant deal with Apple. The agreement, valued at $500 million, marks a strategic move in the ongoing effort to reduce reliance on China for critical materials.

The deal, reported by Reuters and Fox Business, involves Apple committing to purchase U.S.-made rare earth magnets from MP Materials' Texas facility. Additionally, the two companies plan to build a new magnet production line and recycling facility in Texas and California, respectively [2].

MP Materials, which owns the Mountain Pass mine in California, the only operational rare earth mine in the U.S., has seen its shares surge by 12.3% in premarket trading following the announcement [2]. The company's stock price reached $54.50, reflecting market optimism about its strategic positioning.

The deal is part of a broader effort by the U.S. government to secure domestic supply chains for critical minerals. Last week, the Pentagon invested $400 million in MP Materials, guaranteeing a minimum price of $110/kg for neodymium-praseodymium oxide (NdPr) for the next ten years [1]. This price floor, nearly double the current market level, aims to spur investment in domestic mines and processing plants.

The deal with Apple is expected to further solidify MP Materials' position in the rare earths market. The company's expansion plans include increasing annual magnet production to 10,000 metric tons by 2028, up from 1,000 tons today [3]. This growth is driven by the burgeoning demand for rare earth magnets in electric vehicles (EVs) and renewable energy, with the global rare earth magnet market projected to hit $15.2 billion by 2030 [3].

While MP Materials' stock has benefited significantly from the deal, other rare earth miners like Iluka Resources may face challenges in capturing similar premiums. Iluka, an Australian-based company, has existing long-term contracts that lock in market pricing, limiting its ability to benefit from potential price arbitrage [1].

The strategic context for this deal is the ongoing trade disputes between the U.S. and China, which has led to export restrictions on rare earth elements essential for advanced technologies [1]. The U.S. Department of Defense's investment in MP Materials and Apple's commitment to purchase U.S.-made magnets are part of a broader effort to secure domestic supply chains and reduce dependence on China.

The deal highlights the strategic importance of large, operational rare earth projects outside of China. The U.S. government's willingness to pay significant premiums for supply chain security signals a powerful precedent for the broader ex-China rare earths industry.

References:
[1] https://www.marketindex.com.au/news/why-lynas-iluka-resources-and-rare-earth-stocks-are-soaring-on-friday
[2] https://www.marketscreener.com/quote/stock/MP-MATERIALS-CORP-108730348/news/Apple-to-invest-500-million-in-rare-earths-mine-operator-MP-Materials-Fox-Business-reports-50511048/
[3] https://www.ainvest.com/news/rare-earth-revolution-apple-mp-materials-rewriting-rules-manufacturing-2507/