PNE Shock! MP Materials Rebounds! When Will Strategic Resources' Rally Begin?

Strategic Resources Aims to Supply Steel Companies

Companies such as ArcelorMittal, Salzgitter, thyssenkrupp, and SSAB are investing in electric arc furnaces and direct reduction plants to reduce CO₂ emissions from steel production. This requires particularly high-quality iron ore pellets. According to the International Energy Agency, hydrogen-based direct reduction requires iron ore with an iron content of around 67%. However, high-grade pellets currently account for only a small portion of the iron ore traded globally.

The latest projects by major steel companies also highlight this demand. ArcelorMittal, for example, plans to expand capacity for its CO₂-reduced XCarb steel in Sestao, Spain, to 1.6 million metric tonnes per year by the end of 2026. The more steel mills switch to DRI and EAF processes, the more critical the supply of suitable high-grade iron ore is likely to become.

Strategic Resources sees this as an opportunity. The company is planning a facility in Port Saguenay, Québec, Canada, with an initial capacity of 4 million metric tonnes of high-purity iron ore pellets per year, which could allow it to benefit from the structural transformation of the steel giants. Access to the St. Lawrence Seaway enables the company to supply both North America and Europe. Previous feasibility studies estimate the project's value at up to CAD 2 billion. Currently, the company is valued at less than CAD 20 million on the stock market.

In addition to Canada, Strategic Resources is also active in Europe. In northern Finland, the company operates the Mustavaara vanadium-titanium-magnetite project. From there, Strategic Resources will supply vanadium-rich magnetite concentrate to the FutSteel research project at the University of Oulu. The project is researching the transformation of steel production and aims, among other things, to explore the potential of hydrogen-based iron production. Green steel is of particular importance to Finland, as the steel industry is one of the country's largest sources of emissions.

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MP Materials: New Momentum After a 50% Share-Price Drop

At MP Materials, the report on second-quarter 2026 developments triggered a jump in the share price. As a result, the stock's performance in 2026 is at least break-even. Last fall, the Trump administration's investment in the domestic rare earths producer caused quite a stir. At that time, the stock soared to USD 100. Currently, the share price stands at around USD 50, and the market capitalization is an impressive USD 9.7 billion.

MP Materials significantly increased its revenue and operating metrics in the second quarter of 2026. NdPr production rose by 41% year-over-year to 840 metric tons, while sales increased by 127% to 1,006 metric tons. Consolidated revenue rose by 89% to USD 108.5 million. In addition, the company recognized USD 17.6 million from a price hedging agreement. Adjusted EBITDA improved from a loss of USD 12.5 million in the prior year to a profit of USD 28.5 million. However, MP Materials remained in the red with a net loss of USD 20.3 million. At least the loss was reduced compared to the USD 30.9 million in the same quarter of the previous year.

On the operational front, MP Materials is simultaneously pushing ahead with the expansion of its vertical integration. The company signed a long-term purchase agreement with a new US customer in the aerospace and defence industry for separated gadolinium, thereby expanding its business with heavy rare earths. In addition, "Project Swarm" was launched—an initiative designed to consolidate demand from the drone industry and standardize product specifications. At the same time, magnet qualification at the Independence site and construction of the planned 10X facility are progressing.

PNE: Too Expensive?

PNE's stock has slipped by over 20% in the past two trading days. Investors are reacting to the news that, in the ongoing process of acquiring the entire company, the offers received so far have been below the current market price. At that time, the share was still trading above EUR 10. It currently stands at around EUR 8. The market capitalization stands at around EUR 618 million.

However, the company's wind farms, at least, appear to be in demand. Last week, PNE announced the sale of the two wind farm projects "Wulfsdorf A" in Schleswig-Holstein and "Kuhstedt III" in Lower Saxony to a group of private investors. Both projects are repowering initiatives in which older wind turbines are being replaced with higher-capacity models. "Wulfsdorf A," featuring four Vestas turbines, will have a total capacity of 24.4 MW and is scheduled to go into operation in December 2026. "Kuhstedt III" comprises three Nordex turbines with a combined capacity of 20.6 MW. Commissioning is scheduled for the turn of the year 2026/27. Together, the two wind farms will have a capacity of 45 MW and are projected to generate enough electricity to power approximately 31,000 three-person households per year.

Despite the sale, PNE remains connected to the projects through its subsidiary energy consult GmbH, which will assume operational management. The transaction is one of several project sales this year. These include, among others, the French "Romescamps" wind farm with 10.8 MW, the German "Bokel" wind farm with 25.2 MW, as well as wind and solar projects in Poland with planned capacities of 72 MW and approximately 40 MW, respectively.

Strategic Resources appears to be anything but overvalued. There is significant pressure in the steel industry to reduce CO₂ emissions. Strategic Resources can make an important contribution in this regard. MP Materials appears very expensive even at current price levels, even though the company is of strategic importance to the US. PNE is also likely worth less than previously thought. Given the uncertainty surrounding the potential sale of the company, the stock is probably only suitable for highly speculative investors.