Ramaco Resources (METC) Q3 2025: Rare Earths Platform Targets $500M EBITDA, Met Coal Output Cut Amid China Pressure

October 28, 2025 | By EarningsIQ Research

Ramaco Resources’ Q3 2025 marked a strategic pivot as rare earths commercialization accelerated and met coal output was trimmed in response to ongoing Chinese oversupply. Management’s focus on building a vertically integrated critical minerals platform—anchored by the Brook Mine—now dominates the investment case, with $500 million EBITDA potential projected from rare earths by 2028. The company’s record liquidity and cost discipline underpin its ability to weather coal market headwinds while it fast-tracks pilot operations and offtake discussions for critical minerals.

Summary

• Rare Earths Transformation: Brook Mine’s scale, resource quality, and vertical integration drive Ramaco’s shift toward critical minerals leadership.
• Met Coal Rationalization: Production guidance cut again as management refuses to sell into loss-making export markets.
• Execution Leverage: Record liquidity and pilot plant progress position Ramaco to capitalize on Western supply chain bifurcation.

Performance Analysis

Ramaco’s Q3 2025 results reflect a business model in transition, with rare earths and critical minerals now commanding the strategic narrative. The met coal segment continued to face severe pricing pressure due to Chinese steel oversupply, prompting further production curtailments and a reduction in full-year guidance. Despite these headwinds, Ramaco maintained industry-leading cost discipline, with Q3 cash costs at $97 per ton and September costs dropping to $86 per ton, placing the company in the first quartile of the US cost curve. Cash margins of $23 per ton remain among the highest in the peer group, even as US coal indices fell nearly $20 per ton year-over-year.

On the balance sheet, Ramaco closed the quarter with record liquidity of $272 million, bolstered by a $200 million equity raise and refinancing activities. This financial strength allows the company to avoid selling coal at a loss and provides flexibility to fund rare earths development. The rare earths business is rapidly advancing, with pilot plant construction underway and initial ore stockpiled for testing. Management projects the Brook Mine rare earths platform could generate over $500 million in annual EBITDA at steady state, with a pre-tax NPV above $5 billion, highlighting the outsized potential of this new business line.

• Met Coal Output Trimmed: Production and sales guidance reduced as Ramaco avoids unprofitable spot sales, prioritizing value over volume.
• Rare Earths Pilot Accelerated: Pilot plant groundbreaking completed, with offsite testing and engineering designed to de-risk and fast-track commercialization.
• Liquidity Buffer: Record cash and refinancing provide resilience against coal market volatility and support rare earths investment.

Ramaco’s dual-platform strategy—met coal for cash flow, rare earths for growth—remains in place, but the rare earths business now sets the long-term trajectory.

Executive Commentary

Strategic Positioning

1. Rare Earths Platform: Vertical Integration and Scale

Ramaco’s rare earths strategy centers on vertical integration—upstream resource, midstream processing, and downstream stockpiling—anchored by the Brook Mine. Management claims the site offers unique geology and resource quality, with high-value critical minerals such as scandium, gallium, and germanium. The company’s plans include a commercial oxide separation facility and the creation of a Strategic Critical Minerals Terminal, enabling fee-based storage and supply chain resilience for public and private customers.

2. Met Coal Retrenchment: Cost Leadership and Optionality

Facing persistent Chinese steel oversupply and depressed export prices, Ramaco continues to cut met coal production rather than sell at a loss. The company’s first-quartile cost position enables survival through the cycle, while idling higher-cost mines and minimizing growth capex. Management remains opportunistic on potential low-cost asset acquisitions but prioritizes capital for rare earths.

3. Capital Allocation: Record Liquidity and Disciplined Spend

With $272 million in liquidity and a net cash position, Ramaco is well capitalized to fund rare earths development and absorb coal market shocks. The company raised $200 million in equity and refinanced debt, while maintaining a conservative approach to new capital commitments. Growth capex in met coal is minimized until market conditions improve, freeing resources for the critical minerals buildout.

4. Execution Focus: Pilot Plant and Engineering Acceleration

Pilot operations for rare earths are being fast-tracked, with parallel test work at multiple labs, offsite pilot plant fabrication, and early site work enabled by existing permits. The company is leveraging external expertise (Hatch, Zeton, Fluor veterans) and in-house talent to de-risk technical execution and optimize flow sheets for extraction and separation.

5. Market Dynamics: Western Supply Chain Bifurcation

Recent Chinese export restrictions on rare earth elements and critical minerals have driven a sharp pricing bifurcation between Western and Chinese markets. Ramaco expects to benefit from price premiums and strong demand for reliable Western supply, particularly for scandium, where US reliance on imports is total and the Department of Defense has signaled willingness to pay elevated prices.

Key Considerations

This quarter highlights Ramaco’s strategic pivot from a pure-play met coal producer to a critical minerals growth story, with execution, capital allocation, and market access as key levers for value creation. Investors must weigh the pace and risk of rare earths commercialization against the cash flow and cost management discipline in coal.

Key Considerations:

• Rare Earths Commercialization Path: Pilot plant progress, flow sheet validation, and offtake contract timing will determine the pace of EBITDA ramp and valuation re-rating.
• Met Coal Downside Protection: Cost discipline and production cuts protect margins, but sustained pricing pressure could limit cash generation in the near term.
• Liquidity and Funding: Ample liquidity supports rare earths investment, but future capex needs for the commercial facility remain large and will require additional financing or partnerships.
• Western Supply Chain Opportunity: Decoupling from Chinese pricing and supply creates a window for premium realization, but execution risk and policy support are critical.

Risks

Ramaco faces significant execution risk in scaling its rare earths platform, including technical validation, permitting, and customer acceptance hurdles. The met coal business remains exposed to ongoing Chinese steel oversupply and volatile export pricing, which could persist longer than anticipated. Policy and regulatory support for domestic critical minerals is a tailwind, but delays or shifts could impact project economics and timelines.

Forward Outlook

For Q4 2025, Ramaco guided to:

• Met coal production of 3.7 to 3.9 million tons for the full year (down from prior 3.9 million), with sales of 3.8 to 4.1 million tons.
• Ongoing cost discipline, with further improvement in mine cash costs expected in October, though holiday months will temper results.

For full-year 2025, management adjusted guidance:

• Lowered DDNA to $70 to $72 million, reduced tax rate to 20 to 25%, and slightly increased EIDL expenses.

Management highlighted several factors that will influence forward results:

• Finalization of rare earths pilot plant and flow sheet validation, with commercial facility engineering to begin in 2026.
• Customer offtake discussions for critical minerals and ongoing policy engagement for permitting and support.

Takeaways

Ramaco’s investment thesis is shifting from met coal cash flow to rare earths growth, with execution milestones in critical minerals now the primary driver of long-term upside.

• Rare Earths Commercialization is the Catalyst: Pilot plant progress, offtake contracts, and Western supply chain dynamics will determine if Ramaco can realize the projected $500 million EBITDA and re-rate as a critical minerals leader.
• Met Coal Remains a Cash Flow Engine—For Now: Cost discipline and production cuts shield margins, but long-term growth pivots to minerals.
• Watch for Permitting, Offtake, and Capex Updates: Investors should monitor technical validation, customer contracts, and funding plans for the commercial facility as key inflection points.

Conclusion

Ramaco’s Q3 2025 marked a decisive step in its rare earths transformation, with pilot plant execution and strategic positioning for Western supply chain leadership now at the forefront. While met coal remains a source of cash and optionality, the company’s long-term value will be determined by its ability to deliver on the Brook Mine’s critical minerals promise.

Industry Read-Through

Ramaco’s rare earths pivot highlights the emerging opportunity for US-based critical minerals producers amid rising geopolitical tensions and Chinese export restrictions. The company’s experience underscores the importance of vertical integration, technical de-risking, and policy support for building resilient Western supply chains. For the coal sector, Ramaco’s willingness to curtail production rather than chase volume at a loss signals a broader shift toward capital discipline and supply rationalization as Chinese overcapacity persists. Investors in both mining and advanced materials should monitor the pace of Western rare earths development and the evolving price bifurcation between Chinese and non-Chinese markets.

METC Materials Metals & Mining Rare Earths Critical Minerals Met Coal Vertical Integration Supply Chain