Money manager James Litinsky has managed to turn a bad junk bond bet into a $400 million fortune through his company, MP Materials, which operates the only U.S. source for certain strategic metals, including the neodymium used in “supermagnets” needed for electric vehicles. Litinsky, despite having no background in mining or rare earths chemistry, took a risky gamble to salvage both the mine and his investors’ money after Molycorp filed for bankruptcy in 2015.
China currently mines and refines 80% of the world’s rare earths, creating concerns for Washington policymakers given the metals’ industrial and military importance. Litinsky was able to secure $105 million in federal support from both the Trump and Biden administrations and also received assistance from Chinese investors who helped finance and rebuild the Mountain Pass site. Despite some challenges along the way, Litinsky’s gamble has paid off, making him worth at least $400 million, according to Forbes estimates.
Litinsky has shut down his Chicago-based hedge fund, JHL Capital Group, and now serves as the CEO of MP Materials, operating the now-thriving Mountain Pass mine. MP went public in 2020 and saw its stock price skyrocket due to the spike in the price of neodymium-praseodymium powder. However, prices have since fallen as China flooded the market, causing MP’s shares to drop. Nevertheless, MP still has a market cap of $2.4 billion, making Litinsky’s 11% stake worth $265 million.
Litinsky is now focused on making MP less vulnerable to commodity price swings by vertically integrating its operations. The company is investing around $200 million to build the nation’s first new supermagnet plant in decades at a facility in Fort Worth, Texas. The plant will produce high-performance magnets for electric vehicles and other applications, with a contract already in place to sell magnets to General Motors.
Litinsky’s success with MP Materials is not his first gutsy bet, as he launched his own hedge fund in 2006 with backing from Chicago real estate investor Judd Malkin. Litinsky has a track record of making bold investment moves, including the acquisition and revitalization of the Mountain Pass mine. With plans to increase production and explore additional rare earths hotspots, Litinsky is positioning MP Materials for further growth in the coming years.
Despite the challenges faced during the restart of the Mountain Pass mine, Litinsky’s team has successfully increased output and optimized the refining processes. The mine has seen significant growth in net income, even during periods of fluctuating metal prices. Litinsky plans to continue expanding production and exploring new opportunities for MP Materials, ensuring the company remains a key player in the rare earths market for years to come.
