In 2015, money manager James Litinsky visited the Mountain Pass rare earths mine and was captivated by its potential as the only U.S. source for strategic metals, including neodymium used in supermagnets for various applications. After Molycorp filed for bankruptcy, Litinsky took a risky bet to salvage both the mine and his investors’ money, despite having no experience in mining. He was confident in the numbers and potential federal support for rare earths business.
China mines and refines 80% of the world’s rare earths, which poses a strategic concern for Washington policymakers. Litinsky secured $105 million in federal support and received surprising assistance from the Chinese in financing and rebuilding the Mountain Pass site. Despite challenges, his gamble paid off, making him worth at least $400 million. Litinsky wound down his hedge fund, JHL Capital Group, and now serves as CEO of MP Materials, operating the thriving Mountain Pass mine and refining rare earths.
MP went public in 2020 and saw its stock price soar due to the spike in the price of neodymium-praseodymium powder. However, China flooded the market, causing prices to drop and MP’s shares to decrease. Despite this, MP still has a market cap of $2.4 billion, with Litinsky’s stake worth $265 million. He has vertical integration plans to reduce vulnerability to commodity price swings, including building a new supermagnet plant in Texas to manufacture high-performance magnets for electric vehicles.
Litinsky’s success story is marked by gutsy bets and strategic maneuvers. He launched JHL Capital Group in 2006 and navigated the financial crisis by shorting REITs and regional banks. His acquisition of the Mountain Pass mine involved legal maneuvers and securing financing from Chinese partners. Despite the initial challenges and skepticism, Litinsky successfully restarted the mine and increased production, netting significant profits in high rare metal price years.
Litinsky plans to boost output and expand the mine’s production capacity, with potential plans to process additional rare earths if the demand and technology trends align. He remains optimistic about the site’s potential and has positioned MP Materials for further growth and success in the rare earths market. His story serves as an example of seizing opportunities and taking calculated risks in the finance and mining industries, leading to substantial wealth and achievements.
